CHRO Confidence Hub

CHRO confidence remained positive in Q3, but continued to edge down from its record high earlier this year. That’s according to the latest survey of US chief human resource officers (CHROs) from The Conference Board.

The CHRO Confidence Index declined to 56 in Q3 from 58 in Q2. A reading above 50 reflects more positive than negative responses. The hiring component of the Index rose slightly, while the retention and engagement components declined.

The survey also reveals that AI is already changing workforce planning, even as many organizations remain early in preparing for its impact. More than 8 in 10 CHROs (82%) say their organization has changed its workforce-planning process because of AI, although half describe the change as only slight. Just 19% say anticipated AI effects have been incorporated into workforce and financial planning across the enterprise.

And while 55% of CHROs consider their organizations at least somewhat prepared to manage AI-driven workforce change over the next two years, only 4% say they are very prepared. The biggest barriers are difficulty predicting AI’s workforce impact (41%), limited AI skills (39%), and an unclear AI strategy (31%).

“CHROs are still planning to hire, but the broader workforce picture is becoming more cautious,” said Diana Scott, US Human Capital Center Leader, The Conference Board. “Organizations are balancing the need for talent with slower workforce growth and mounting concerns about engagement and retention. At the same time, AI is forcing leaders to rethink what skills they will need in the future and how they plan their workforces.”

Hiring: Do HR leaders expect to hire more employees in the next six months?

The CHRO Confidence Index: Hiring component was 61 in Q3, up from 59 in Q2.

Hiring expectations remain positive.

• 53% expect hiring to increase over the next six months, compared with 17% who expect it to decrease.
• Those expectations were relatively stable from Q2, when 54% expected an increase and 17% expected a decrease.

Expectations for overall workforce size have cooled.

• 49% expect total workforce size to increase over the next six months, down from 55% in Q2.
• 28% expect workforce size to remain unchanged, up from 23%.
• 23% expect their workforce to decrease, essentially unchanged from 22% in Q2.

Retention: Do HR leaders expect employees to stay over the next six months?

The CHRO Confidence Index: Retention component declined slightly to 54 in Q3 from 55 in Q2.

Retention expectations softened.

• 33% of CHROs expect employee retention to increase, down from 36% in Q2.
• 22% expect retention to decrease, up from 19%.
• The gap between those expecting improvement and deterioration narrowed to 11 percentage points from 17 points in Q2.

Engagement: Were employees committed, motivated, and connected to their work and the organization over the past six months?

The CHRO Confidence Index: Engagement component fell to 55 in Q3 from 59 in Q2.

Employee engagement emerged as the clearest source of weakness this quarter.

• 44% report increased engagement, down slightly from 46% in Q2.
• 24% report decreased engagement, up notably from 16% in Q2.

AI and Workforce Planning: How is AI changing organizations’ workforce planning?

Most are changing workforce planning because of AI, but for many, the changes remain limited.

• 50% of CHROs say their organization has made only a slight change to workforce planning.
• 25% report a moderate change, while only 7% report a significant change.

Organizations are analyzing AI’s impact more often than changing how frequently they plan.

Among organizations that have changed their workforce planning process:

• 67% have analyzed AI’s potential impact on jobs, tasks, or workforce demand.
• 67% have brought AI technologies or AI leaders into workforce planning discussions.
• 45% have incorporated new AI-related workforce, skills, or labor-market data.
• Just 21% have changed workforce planning schedules; 20% have increased the frequency of planning.

Enterprise-wide integration of AI into workforce planning remains limited.

• Enterprise-wide incorporation is 19% for both global and non-global organizations.
• Among global organizations, 32% have incorporated anticipated AI effects into workforce and financial planning for selected functions, roles, business units, or geographies.
• Among non-global organizations, 30% have done the same.

The biggest barriers to successful AI workforce planning are:

• 41%: Difficulty predicting AI’s workforce impact.
• 39%: Limited AI skills among the current workforce.
• 31%: An unclear AI strategy.
• Financial resources, executive alignment, and workforce data are cited much less frequently as barriers.

Few organizations feel very prepared for AI-driven workforce change.

• 55% describe their organization as prepared to manage AI-driven workforce change over the next two years, but only 4% say they are very prepared.
• 27% say their organization is unprepared.

“AI is clearly becoming part of workforce planning, but most organizations are still working through what it means in practice,” said Robin Erickson, PhD, Head of Human Capital Research, The Conference Board. “The biggest obstacles aren’t simply budget or data. Organizations are uncertain about how AI will change work, the potential gaps in workforce skills, and, thus, the lack of a clear AI strategy. CHROs will need to connect the HR technology strategy much more closely with workforce and skills planning.”

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