Lattice, the leading HR platform for building a people-powered future, has released its annual State of People Strategy Report, surveying over 1,250 HR leaders and managers worldwide. The report reveals in-depth insights on HR perspectives in a moment when the function is at a critical juncture: Hiring remains uncertain, engagement efforts are faltering, DEIB has taken a back seat, and the rise of AI is prompting broader questions about the “human” element of HR.
“This year’s State of People Strategy Report reveals that HR is at an inflection point and demonstrates why, in the age of AI, this is HR’s moment to lead,” said Lattice CEO Sarah Franklin. “Employee engagement is down, skill gaps are growing, and people teams are being asked to do more with less – while innovation in AI technology, which has massive potential to help HR address these challenges, is often raising new questions instead of solving real problems. To build a future where AI serves the success of people, we must continue to empower HR to do what they do best: unlock potential, drive performance, and elevate every employee.”
Despite another year of change, the fundamentals of high-performing organizations remain the same: Employee engagement, performance management, learning and development (L&D), and manager enablement remain HR’s top priorities for 2025. This underscores the key role of HR in empowering teams and employees to learn, lead, and grow.
“HR teams have faced significant challenges in recent years, yet our State of People Strategy Report demonstrates their resilience – and offers a path forward,” said Gianna Driver, Chief People Officer at Lattice. “By partnering with managers, prioritizing engagement alongside performance, and leveraging technology to solve real problems, we can build resilient, future-ready teams.”
The HR-manager relationship is critical to a thriving business and culture
The 2025 State of People Strategy Report spotlights the importance of the HR-manager relationship, with 91% of high-performing HR teams meeting most or all of their managers’ needs. These teams see greater manager engagement, increased company loyalty, and stronger connections with employees.
Conversely, only 41% of low-performing teams could achieve the same outcomes – underscoring the need for HR teams to empower managers with tools, resources, and training to foster trust and alignment.
Slow AI adoption and innovation is holding HR teams back
Despite the ongoing AI revolution, only 15% of HR teams have successfully moved from evaluating AI to implementing it. While AI’s potential to enhance HR processes remains high, particularly for tasks like writing job descriptions and supporting performance reviews, uncertainty around the technology’s impact as well as a lack of tools that meet HR’s needs is slowing adoption.
The most popular use cases included using AI to write job descriptions and summarizing large amounts of information, but the report revealed the most satisfying use case among HR respondents was identifying opportunities for pay raises and promotions – indicating that HR teams that are more willing to experiment with more ambitious use cases found greater satisfaction with the technology.
Successful AI integration that truly unlocks the potential of employees will depend on user-friendly solutions that allow HR teams to make data-driven decisions without technical expertise, taking on more of the critical administrative tasks powering key people programs to enable HR leaders to focus on what matters most: their people.
With HR under pressure, DEIB efforts are taking a back seat
Diversity, equity, inclusion, and belonging (DEIB) are seeing a significant drop in prioritization. Only 15% of HR teams listed DEIB as a key focus for 2025 — an all-time low in the report’s history.
U.S.-based companies are particularly behind, with European HR leaders 2.8 times more likely to list DEIB initiatives as a priority. The report highlights that resource limitations and a struggle to demonstrate ROI have led many organizations to deprioritize DEIB efforts.
Critical engagement efforts lack resources and support
While employee engagement continues to lead HR’s priorities for the fourth consecutive year, many teams are facing significant barriers to improving it.
Almost all (92%) HR professionals agree that their organizations view engagement as important, but only 39% of HR teams have the resources and support to turn those priorities into action. This disconnect leaves 61% of HR teams unable to fully implement engagement programs.
The path forward
As HR continues to navigate complex challenges, from AI integration to strained DEIB efforts, the 2025 State of People Strategy Report highlights a path forward rooted in collaboration, innovation, and resilience. By prioritizing engagement, strengthening the HR-manager relationship, and embracing technologies that empower rather than replace the human element of HR, teams can build future-ready organizations. Now is the time for HR leaders to seize these opportunities, leveraging the tools and strategies outlined in the report to create thriving, people-powered businesses.
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