Current Conditions: Employment Assessment Shifts to Historic Lows
HR executives rated current employment conditions in Q4 2025 considerably more negatively than in Q3 2025. In Q4 2025, only 30% of HR executives rated current employment conditions as good (29%) or excellent (1%), which is the lowest percentage since tracking began in Q4 2022. Meanwhile, less than half of HR executives (49%) rated employment conditions as fair and 22% said they perceive conditions as poor (18%) or very poor (4%), tied with Q4 2022 as the highest percentage since tracking began.
The proportion of HR executives rating employment conditions as excellent or good fell by 5 percentage points, while ratings of fair dropped 3 percentage points and poor or very poor ratings rose by an unprecedented 8 percentage points. These results suggest that evaluations of employment conditions have declined, although most HR executives still view conditions as fair.
Employment Forecast: Negative Expectations Return to Q2 2025 Levels
With a negative assessment of current conditions, we see modest negative shifts in expectations for the next six-month period. About one-fourth of HR executives (24%) now anticipate poor or very poor employment conditions — the second highest since tracking began — though this marks a 3-percentage-point decline from the Q2 2025 peak of 27%. Conversely, 27% foresee good or excellent conditions, a decrease of 5 percentage points since last quarter. However, nearly half (49%) still predict fair conditions.
HR executives’ comments illustrate the range of sentiments reflected in the data:
- Positive rating: “While others seem to be offloading positions, we are hoping to benefit from this by getting to full employment with quality hires and hopefully upgrade the talent in some positions.”
- Fair rating: “Still a lot of uncertainty in the economy. Wages would typically be acceptable but with everything being more expensive, hard to keep up.”
- Negative rating: “It’s a tight labor market. It has been for some time. The mass layoffs in Washington, D.C. have made it difficult for folks to obtain work. AI is also slowly making human talent dispensable. I imagine it will skyrocket within the next two years resulting in job losses and disastrous affects for older generations in the workforce.”
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Total Rewards Budget Growth Expectations Remain Stable, but Recruiting Budget Drops to Historic Lows
HR executives’ assessments of the employment environment and their forecasts for business performance align with lower-than-usual expectations for increases in recruiting budgets, although total rewards budget expectations have remained stable. In Q4 2025, 44% of HR executives said they anticipate an increase in their total rewards budget, the same percentage as in Q3 2025 and a 12-percentage-point decline from one year ago. About 2 in 5 said they expect their total rewards budget to remain unchanged (39%), while 17% anticipate a decrease. The last few quarters suggest some level of stability when it comes to total rewards, but HR executives’ expectations for increases have not yet returned to the levels seen in previous quarters.
Only 17% of HR executives said they expect growth in their recruiting budget, a 5-percentage-point decrease from last quarter, which is tied for the lowest since tracking began in Q1 2023. The majority (65%) foresee no changes, and 18% expect a decrease.
| Increase of over 20% | Increase of 10% to 20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10% to 20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Total Rewards Budget | 1% | 10% | 34% | 39% | 11% | 4% | 2% |
| Recruiting Budget | 0% | 5% | 13% | 65% | 10% | 6% | 2% |
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Takeaways/Implications
44%
of HR executives anticipate an increase in total rewards budgets over the next six months.
65%
foresee no change in recruiting budgets during the same period, while 17% expect an increase.
Compensation Trends: Salary and Wage Growth Expectations Show Continued Rebound
Over the next six months, higher percentages of HR executives anticipate increases in annual salaries and hourly wages than did budgets. In Q4 2025, 73% of HR executives said they anticipate a rise in annual salaries over the next six months — marking a 7-percentage-point increase from Q3 2025. Similarly, 66% expect hourly wages to increase during the same period, reflecting a 9-percentage-point increase from Q3 2025. This pattern appears to be cyclical because a similar rise was observed around the same time last year — likely reflecting typical timing for annual raises — though the increase is sharper and the overall share expecting pay raises is lower than in the prior year. Of those projecting increases, the majority are predicting increases of less than 10%. Many HR executives are expecting no changes.
When it comes to hiring costs, half of HR executives (50%) said they expect an uptick in cost-per-hire, a notable increase since Q3 2025. For reference, the median cost-per-hire for nonexecutive roles is $1,200, according to the 2025 SHRM Benchmarking Survey. Meanwhile, just under half (47%) said they expect costs to remain unchanged, a 5-percentage-point decrease from Q3 2025. These metrics have bounced back to roughly Q1 2025 levels.
| Increase of over 20% | Increase of 10% to 20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10% to 20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Annual Salaries* | <1% | 2% | 70% | 24% | 3% | 0% | 1% |
| Hourly Wages* | 0% | 2% | 64% | 32% | 1% | <1% | <1% |
| Cost Per Hire* | 2% | 8% | 40% | 47% | 4% | 0% | 0% |
*New in Q2 2024
HR Executives’ Expectations for eNPS Remain Slightly Lower than Usual
In Q4 2025, over 1 in 4 HR executives (28%) said they anticipate an increase in their Employee Net Promoter Score (eNPS) or employee engagement, marking a modest 3-percentage-point increase compared to Q3 2025 and tied for the second lowest since tracking began. Meanwhile, half (50%) said they predict no change, a 1-percentage-point increase from Q3 2025.
| Increase of over 20% | Increase of 10% to 20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10% to 20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| eNPS/Employee Engagement | <1% | 2% | 26% | 50% | 16% | 6% | 1% |
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HR Executives Have Stable Expectations for Productivity Increases
In Q4 2025, nearly 2 in 5 HR executives (39%) said they anticipate a slight rise in overall productivity — a 4-percentage-point increase from Q3 2025 — while less than half (44%) foresee no change. This suggests that even amid growing adoption of AI and its promised efficiency gains, HR leaders’ expectations for productivity improvements remain relatively restrained.
Expectations for revenue-per-employee have also softened. Just 37% of HR executives said they anticipate growth over the next six months — down 3 percentage points from Q3 2025 — while 44% predict no change and 19% expect a decline. Overall, despite modest changes in expectations, projections for productivity and revenue increases have remained relatively stable since Q3 2024.
| Increase of over 20% | Increase of 10% to 20% | Increase of less than 10% | No change | Decrease of less than 10% | Decrease of 10% to 20% | Decrease of over 20% | |
|---|---|---|---|---|---|---|---|
| Overall Productivity | <1% | 7% | 32% | 44% | 13% | 3% | 1% |
| Revenue Per Employee** | <1% | 3% | 33% | 44% | 14% | 4% | 2% |
**New in Q3 2024
Methodology
The CHRO 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 across multiple industries.
| Quarter | Sample Size (n) | Fielding Dates |
|---|---|---|
| Q4 2022 | n = 241 | Dec. 1-22, 2022 |
| Q1 2023 | n = 249 | March 6-21, 2023 |
| Q2 2023 | n = 199 | June 8-15, 2023 |
| Q3 2023 | n = 536 | Aug. 30-Sept. 11, 2023 |
| Q4 2023 | n = 376 | Nov. 17-22, 2023 |
| Q1 2024 | n = 391 | Jan. 3-10, 2024 |
| Q2 2024 | n = 352 | April 15-24, 2024 |
| Q3 2024 | n = 339 | July 17-25, 2024 |
| Q4 2024 | n = 320 | Oct. 16-25, 2024 |
| Q1 2025 | n = 323 | Jan. 13-21, 2025 |
| Q2 2025 | n = 353 | April 8-20, 2025 |
| Q3 2025 | n = 307 | July 9-21, 2025 |
| Q4 2025 | n = 262 | Oct. 14-24, 2025 |
Read the Q4 2025 series:
CHRO Employment Outlook | CHRO Economic Outlook | SHRM Hiring and Retention Difficulty Indexes