Current Conditions
The majority of HR executives expected annual salaries and hourly wages to increase over the next six months, according to SHRM’s quarterly CHRO Employment Outlook survey. Additionally, most HR executives expected recruiting budgets to remain the same in the first half of 2025, perhaps shifting their focus to retaining current employees through increasing total rewards. Overall, HR executives’ assessment of employment conditions was much more optimistic than during the height of the Great Resignation in Q4 2022.
In Q4 2024, 44% of HR executives rated current employment conditions as good or excellent (42% good; 2% excellent). Meanwhile, nearly half of HR executives (48%) rated employment conditions as fair, with only 8% perceiving conditions as poor or very poor (2% very poor; 7% poor). This marks the lowest level of poor/very poor responses since SHRM began tracking this data in Q4 2022.
Following a slight decline in Q3 2024, HR executives’ evaluations of employment conditions improved in Q4 with a 4-percentage-point increase in good or excellent ratings. Correspondingly, fewer HR executives rated conditions as fair (a 2-percentage-point decrease) or poor/very poor (a 2-percentage-point decrease). This reflects a positive shift and an encouraging trend in assessments of employment conditions.
Employment Forecast: Expectations for the Next 6 Months
Although the U.S. job market has slowed down significantly from its peak during the pandemic, there are still more job openings than available workers. In fact, aside from the early months of the pandemic (i.e., March 2020 - April 2021), job openings have outnumbered unemployed people every month since March 2018. While several factors play a role in this worker shortage, a major reason is that an aging population has greatly slowed the growth of the workforce in recent decades.
In Q4 2024, HR executives expressed stable optimism about future employment conditions, with expectations slightly higher than in the previous quarter. More than 4 in 10 (42%) predict good or excellent conditions over the next six months, marking a 4-percentage-point increase from Q3 2024. Meanwhile, the share of HR executives expecting fair conditions has dropped to 45%, down 7 percentage points since Q3 2024. However, the outlook for poor or very poor conditions has risen slightly, reaching 13%, up from 10% in Q3 2024.
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HR Execs Anticipate Growth in Rewards Budgets
Given the aging population of the workforce, recruiting will continue to be competitive. In Q4 2024, more than half (56%) of HR executives anticipate an increase in their total rewards budget, marking a 6-percentage-point rise compared to Q3 2024. Similarly, around 30% expect their recruiting budget to grow, reflecting a modest 1-percentage-point increase from the previous quarter. Interestingly, 60% of HR executives foresee no changes to their recruiting budget, a 4-point decline from Q3, while 35% expect their total rewards budget to remain unchanged, representing a 5-percentage-point decrease from the last quarter.
| Increase of over 20% | Increase of 10%-20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10%-20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Total rewards budget | 2% | 13% | 41% | 35% | 5% | 3% | 1% |
| Recruiting budget | 3% | 7% | 21% | 60% | 6% | 3% | 1% |
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Compensation Trends: Salaries and Hourly Wages to Increase
Compensation growth rates are expected to increase in the first half of 2025. Overall, considerably more HR executives are expecting pay raises than earlier in 2024. In Q4 2024, 80% of HR executives anticipate a rise in annual salaries over the next six months — marking a 9-percentage-point jump from Q3. Similarly, about 3 in 4 (76%) expect hourly wages to increase during the same period, reflecting a notable 16-percentage-point rise from Q3. The majority are predicting increases of less than 10%. Few HR executives foresee no changes in annual salaries (18%) or hourly wages (23%). This upward trend may reflect seasonal adjustments, as many organizations review and adjust compensation during this time of the year.
When it comes to hiring costs, about half (49%) of HR executives expect an uptick in cost per hire, a slight 3-percentage-point decline from Q3 2024. Meanwhile, 47% predict no change in hiring costs, up by 1 percentage point from Q3 2024.
| Increase of over 20% | Increase of 10%-20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10%-20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Annual salaries* | <1% | 4% | 76% | 18% | 1% | <1% | 0% |
| Hourly wages* | <1% | 5% | 71% | 23% | 1% | <1% | 0% |
| Cost per hire* | 2% | 7% | 41% | 47% | 3% | 1% | 0% |
* = New in Q2 2024
Takeaways/Implications
80%
of HR executives anticipate a rise in annual salaries over the next 6 months.
76%
expect hourly wages to increase during the same period.
49%
of HR executives expect an uptick in cost per hire.
Holding Steady: The Outlook on Employee Engagement
Nearly one-third (30%) of HR executives anticipate an increase in their employee net promoter score (eNPS) employee engagement, marking a slight 1-percentage-point drop compared to Q3. Meanwhile, over half (52%) predict no change, consistent with Q3 figures.
| Increase of over 20% | Increase of 10%-20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10%-20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| eNPS/employee engagement | <1% | 2% | 28% | 52% | 15% | 2% | 1% |
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Productivity Levels Out: Signs of Stability in Key Metrics
In Q4 2024, more than one-third (36%) of HR executives anticipate a rise in overall productivity — a slight 1-percentage-point increase from Q3 2024 — while just over half (51%) foresee no change, marking a 2-percentage-point decline from the previous quarter. Similarly, 38% of HR executives expect revenue per employee to grow in the next six months, reflecting another 1-percentage-point increase from Q3, whereas 51% predict no change, consistent with last quarter's figures.
| Increase of over 20% | Increase of 10%-20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10%-20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Overall productivity | 0% | 8% | 27% | 52% | 9% | 3% | 0% |
| Revenue per employee** | 0% | 5% | 33% | 51% | 10% | 0% | 1% |
** = New in Q3 2024
Methodology
The CHRO Business Outlook survey is a research study conducted quarterly. The survey was fielded electronically using the SHRM Voice of Work Research Panel to U.S.-based HR executives and senior HR executives (VP+). Respondents represented organizations of all sizes and across industries.
| Quarter, Year | Sample Size (n) | Fielding Dates |
|---|---|---|
| Q4 2022 | n = 241 | 12/01/22 - 12/22/22 |
| Q1 2023 | n = 249 | 03/06/23 - 03/21/23 |
| Q2 2023 | n = 199 | 06/08/23 - 06/16/23 |
| Q3 2023 | n = 536 | 08/30/23 - 09/11/23 |
| Q4 2023 | n = 376 | 11/17/23 - 11/22/23 |
| Q1 2024 | n = 391 | 01/03/24 - 01/10/24 |
| Q2 2024 | n = 352 | 04/15/24 - 04/24/24 |
| Q3 2024 | n = 339 | 07/17/24 - 07/25/24 |
| Q4 2024 | n = 320 | 10/16/24 - 10/25/24 |
Read the Q4 2024 series:
CHRO Employment Outlook | CHRO Economic Outlook | SHRM Hiring & Retention Difficulty Indexes