CHRO Survey: Hiring is back on the front burner — selectively

A year ago, the tide of layoffs that had flooded high-growth tech-driven startups seemed ready to ebb. Economic indicators were looking up. And just a small percentage of companies in last year’s CHRO survey said they were planning to have more layoffs. The reality turned out to be quite different: Layoffs continued, according to findings from our 2024 CHRO survey, albeit with some notable regional differences. 

This year, the mood is once again one of guarded optimism. The vast majority of startups we surveyed are actively hiring, and many are finding it easier to attract talent. More startups are also not just incorporating generative AI into their work — they’re seeing a positive impact. And finally, hybrid work is here to stay. (Really!)

You can explore the full survey results, and filter by region, sector, and stage via Sōzō Pulse.

The promised ease in layoffs didn’t materialize. While just 20% of 2023 survey respondents expected to have layoffs, in reality, 59% ended up with job cuts. There were regional differences. While the number of companies having layoffs decreased most significantly in the U.S. — and to a lesser extent in Europe and Asia — it increased markedly in Latin America. And while 51% of companies that reported layoffs in the 12 months preceding the 2023 survey cut 10% or less of their workforce, nearly 68% of those that had layoffs in the past 12 months cut more than 10% of their workforce. 

For Jennifer Dulski, founder and CEO of Rising Team, a startup focused on manager and team development, the mixed signals are a perfect encapsulation of this moment in time. “We know unemployment rates are low,” said Dulski, who also teaches management at Stanford’s Graduate School of Business. “So technically it should be an employee’s market.” But while that’s true in industries like hospitality, it’s not the case in knowledge-based industries like tech and finance. “They’ve gone through so many rounds of layoffs, focusing on efficiency,” Dulski said. “And so, we’re still in an environment where employers have more leverage than employees.”

The outlook for tech hiring in 2024 is somewhat brighter than a year ago. The vast majority of 2024 respondents are actively seeking talent, either for select roles (69%, compared with 66% last year) or broadly across the organization (19%, compared with 12% last year). The good news is that 46% of CHROs say it’s easier to find talent this year, while only 13% said it’s harder. 

Behavox, a leading provider of AI-powered archiving, compliance, and security solutions based in London, Montreal, and New York, is a case in point. “One hundred percent of our 2024 hiring activity is based on active business needs,” said Adam Hopewell, the company’s Global Head of HR & Talent. The company is hiring at a rate that’s 20% higher than last year. Behavox is also seeing more applicants: an average of 392 candidates per role in 2024 compared with 313 in 2023. Hopewell believes the increase is driven by both an improving labor market and a growing interest in applied AI. Regardless, the uptick is good news, because more candidates means “you’re likely to get more gems,” he says. 

Not surprisingly, in this uncertain environment, attrition rates have dropped, from 18% in 2022 to 13% in 2023, signaling that employees are more likely to stay in their posts. But that doesn’t mean employees are complacent or that everyone is staying put — far from it. “People are no longer coming in to work just for financial reward,” said Michelle Aylott, SoftBank Managing Partner and Chief Human Resources Officer. “They want an environment where they can be seen, heard, and recognized for what they’re doing, along with opportunities to grow their careers.”

Colin Christie, Vice President of Human Capital & Administration at Unifonic, a leading conversational AI platform and SaaS provider in the Middle East, is finding that while his company’s hiring outlook is improving, retention rates are still lower than he’d like, especially in engineering and sales. The 500-person company has successfully hired 51 people since January but is also not immune to attrition. “There’s still a fair bit of investment and startup funding money available in the Middle East, which means there’s lots of competition for talent in those two areas,” Christie said. 

That aligns with two important caveats Dulski sees within the current employer’s market. “The best talent will always have choices,” she said, which puts the onus on employers to attract and retain top talent within their organizations. What’s more, Dulski said, “markets shift all the time.” So while employers may have more leverage now, “it may not be long until that flips back the other way and we’re back in a Great Resignation.” Dulski encourages companies to build their policies and culture accordingly: “We should treat employees well even when they don’t have all the power.”

AI tools are becoming table stakes expectations for HR operations, with the majority of CHROs surveyed telling us that those who don’t incorporate AI into HR operations will lag. Thirty-one percent strongly agree and 44% agree. 

Dulski, who has worked in tech for decades, said that AI is “by far the biggest, most impactful innovation I’ve ever seen. And that’s compounded because everybody got access to it immediately.” There’s a tremendous amount of pressure to understand it quickly, she notes, coupled with some fear of change. “It’s understandable that people are divided on it because of how game changing this technology is,” she said. 

Forty-eight percent of surveyed CHROs said that generative AI has already had a positive impact on their department. Another 19% expect it to have a positive impact in 2024. Other CHROs are taking a longer-term perspective: 33% forecast AI to have an impact on their HR department in the next three or more years. 

At Unifonic, for example, everyone has been given access to ChatGPT, and employees are using it for analysis as well as presentation preparation. Christie’s team is also creating an HR chatbot for the company’s Slack channel that can answer simple questions about company policies. He believes the rates of adoption will vary by geography: “We operate in countries such as Pakistan and Egypt, where stamps on pieces of paper and physical documents are still very much part of the operating environment,” Christie said.

At Behavox, HR is actively amplifying and complementing firm-wide AI activities and strategies. During a recent day of learning, for example, Hopewell’s team provided group sessions on GPT-4, running multiple concurrent sessions with up to 50 attendees in each session. 

CHROs are divided on whether the pressure to leverage AI will add to the challenges faced by HR professionals: handling overwhelming workloads, navigating employee conflicts, and the perpetual challenge of finding and recruiting top talent. Thirty percent agree, while 29% neither agree nor disagree, and 42% disagree. 

As Hopewell looks ahead to AI in HR functions and across organizations, he believes that we are already seeing a merger of human and artificial intelligence, with many roles benefitting from a balance between the two. “Some will be 90/10, others 10/90, depending on what’s needed to create the most efficient and effective workflows,” he said. And while that won’t require entire organizational redesigns just yet, he does see the potential for HR functions to be rapidly reengineered into a more evolved concept such as Organization Capabilities (OC), which “optimizes for what organizations can achieve through the blurring and merging of these two intelligences.”

What hasn’t changed much — at least not in the past two years — is where people work. Hybrid work has become firmly established as the modality of choice, with 79% of CHROs saying they will be hybrid in 2024, up from 73% in 2023. Meanwhile, just 6% are fully in office, though Asia and Middle East companies are markedly higher than the average, with 22% fully in office in 2024. 

The pandemic was a light bulb moment for many people, said Barbara Matthew, Chief People Officer at global HR platform Remote. “It opened up people’s eyes and ears about opportunities” — including hybrid and remote work. As a result, many employees are pushing back against fully in-office mandates by seeking other positions where they have more flexibility. “People know they can be as successful at home,” Matthew said, “with all the flexibility and good things that being remote brings.” 

Hybrid and remote work are pushing companies to find new ways to support their workers’ needs. “Hybrid working structures are great for flexibility and work/life balance, but sometimes the interactions that make work meaningful can get lost,” said Aylott. “We need to ensure that we still create those social anchor moments, and nurture relationships between colleagues.”

Matthew said that this year, she’s focusing on highlighting flexibility, development, and growth opportunities for her employees. One initiative she’s especially proud of is centered on mental health. “We're providing not just mental health support, but training for our managers on how to deal with isolation and resilience, and tools to work well remotely,” Matthew said. “Managers aren’t therapists, but we want to enable managers with these types of skills.” Remote is also launching a mentorship program that focuses on top talent. “What are our plans for these people,” Matthew is asking her team. “And how can we retain them?”