As Labor Day Approaches, HR Leaders Say Hiring is Slowing in Corporate America
Thursday, August 31st, 2023
The Conference Board CHRO Confidence Index surveys Chief Human Resources Officers and is comprised of three components: Hiring, Retention, and Engagement.
As Labor Day approaches, the Q3 survey reveals the pulse of hiring plans in Corporate America. Chief Human Resources Officers (CHROs) remain optimistic overall, but a slowdown in hiring drove confidence slightly lower in the third quarter.
The Q3 Index found that 38% of CHROs expect hiring to increase in the coming months, down from 51% in the Q2 survey. Overall, the Index fell to 55 in Q3, down from 58 in Q2. (A reading of more than 50 points reflects more positive than negative responses.)
"HR leaders are beginning to feel the impact of a weaker outlook for hiring and expansion. Also concerning is the growing share who report decreased employee engagement. CHROs should consider reevaluating the employee experience with a focus on critical drivers of engagement: strong compensation and benefits, managers who empower, and ways to connect what they do to a greater purpose," said Diana Scott, Leader of The Conference Board Human Capital Center.
The Index, conducted quarterly, was launched in Q1 2023. A total of 112 CHROs participated in the Q3 survey, which included additional questions on artificial intelligence. Key findings include:
The CHRO Confidence Index: Hiring component fell to 53 in Q3—down sharply from 61 in Q2.
On average, CHROs' workforce expansion plans have pulled back substantially in Q3:
38% of CHROs expect their hiring to increase over the next six months—down from 51% in Q2.
26% expect their hiring to decrease over the next six months—up from 13% in Q2.
While 25% of CHROs in Q3 plan to 'moderately decrease' hiring, just 1% expect to 'substantially decrease'—compared to 10% and 3%, respectively, in Q2.
CHROs' hiring plans are more closely aligned with CEOs in Q3 after surging ahead earlier this year:
40% of CEOs surveyed in Q3's Measure of CEO Confidence™ expect to expand their workforces in the months ahead—nearly identical to the 38% of CHROs who expect to increase hiring.
40% of CEOs anticipate 'little change' in workforce size—similar to the 37% of CHROs expecting their hiring to 'remain unchanged.'
The CHRO Confidence Index: Retention component ticked down to 54 in Q3 from 55 in Q2.
Q2's sharp decline in CHROs' expectations regarding employee retention has plateaued in Q3:
34% of CHROs expect their employee retention levels to improve over the next six months—unchanged from Q2 but still down significantly compared to 45% in Q1.
48% of CHROs expect employee retention to hold steady—again, unchanged from Q2 and up sharply from 36% in Q1.
The CHRO Confidence Index: Engagement component ticked down to 57 in Q3 from 58 in Q2.
More CHROs are seeing declines in employee engagement in Q3:
25% report engagement levels have decreased over the past six months—up from 14% in Q1 and Q2.
48% report engagement levels have increased—little changed from 45% in Q2.
Just 27% say engagement has held steady—down from 41% in Q1 and Q2.
Special Questions for Q3: Artificial Intelligence
For Q2 2023, the Index also surveyed CHROs on the anticipated impact of generative AI on various aspects of their organizations.
Most CHROs are optimistic that generative AI tools will have a positive impact on their companies:
- Large majorities expect generative AI to improve 'productivity' (80%), 'learning and development' (72%), 'innovation' (70%), 'creativity' (63%), and 'quality of deliverables' (60%).
- 53% of CHROs say their organization is taking generative AI into consideration in its strategic workforce planning—compared to 44% who are not.