After months of enthusiasm, CHROs’ outlook for the year ahead dropped 6.3 percent in November, to its lowest level of the year. At 7.3, our leading indicator—measured on a 10-point scale where 10 is excellent—shows dimmed optimism in the state of business 12 months from now—a forecast America’s HR chiefs attribute to a challenging workforce environment overall and the lingering effects of the pandemic.
Their assessment of current conditions is also down, at 6.9 out of 10, a decline of 3.4 percent since our last polling in late September.
“Our industry was decimated by Covid with a complete shutdown of the industry,” said the VP of HR of a Wisconsin-based industrial manufacturing firm. “We are still struggling to come back with Covid still affecting our industry.”
“We have four very distinct businesses, and part of those businesses are still in recovery mode from [the] pandemic,” echoed the CHRO of a large financial services company.
“The comeback from Covid-19 of the travel industry has been slower and more challenging than expected, mainly due to the Delta variant and the resistance to vaccination,” said the VP of HR of a small Texas-based travel company.
Beyond Covid complications, increasing labor costs and a reduced talent pool are contributing to many CHROs’ unease about what’s around the corner, with mounting frustration over government policies and regulations.
“I think [the] market is overreacting on pay,” said the chief talent officer of a media communications agency. “By changing the laws to allow potential candidates to only offer their ‘expectations’ for pay vs. their current pay, we are letting our candidates drive costs to unsustainable levels.”
“Many organizations are experiencing the impacts of ‘The Great Resignation,’ such that organizations are experiencing more turnover as well as more unfilled positions. This labor market paired with the uncertainty of new Covid-19 variants has likely reduced optimism levels among CHROs,” said Alexander Alonso, chief knowledge officer at the Society for Human Resource Management, a partner in this research.
Yet, at its current level, our forward-looking indicator remains in “very good” territory and the most optimistic of the C-Suite—more than a full point above that of CFOs and just shy of the same for CEOs.
Overall, 39 percent of senior HR executives in the U.S. say they expect conditions to improve over the next 12 months, compared to 17 percent who expect them to deteriorate. Most, however, don’t anticipate things to change (44 percent).
“I believe that inflation and wage pressures will continue and that, hopefully, Covid will subside to remain on equal footing,” explained the CHRO of a large New York-based digital brand.
The Year Ahead
When it comes to forecasting the year ahead, CHROs remain the most optimistic members of the senior executive team, with 81 and 71 percent expecting increases in revenues and profits, respectively, within the next 12 months—although approximately 30 percent expect those increases to be less than 10 percent.
In terms of hiring, three-quarters of polled CHROs say they expect to add to their workforce in 2022, with a focus on three key areas: operations (72 percent), IT (61 percent) and sales (57 percent). That is, they say, if they can surmount some of the biggest challenges of the current environment: competitiveness of offers and a narrow pool of skilled talent.
About the CHRO Confidence Index
The CHRO Confidence Index is a pulse survey of U.S.-based CHROs and HR executives at organizations of all types and sizes on their perspective of the economy and how policies and current events are affecting their companies and strategies. Every quarter, StrategicCHRO360 partners with SHRM (the Society for Human Resource Management) to ask participating CHROs about their top issues and challenges for the months ahead. The results are published on StrategicCHRO360.com and a report is distributed to participants.