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. This year’s report offers deep insights into HR perspectives at a pivotal moment when the function faces numerous challenges: uncertain hiring, declining engagement efforts, deprioritized DEIB initiatives, and the rise of AI prompting critical questions about the human element of HR.
Key Insights from the Report
“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 often raises 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 are HR’s top priorities for 2025. This highlights the critical role of HR in empowering teams and employees to learn, lead, and grow.
Resilience and Strategy in HR
“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.”
Key Findings
1. The Importance of HR-Manager Relationships
The report underscores the critical nature of the HR-manager relationship, with 91% of high-performing HR teams meeting most or all of their managers’ needs. These teams experience greater manager engagement, increased company loyalty, and stronger connections with employees. Conversely, only 41% of low-performing teams could achieve similar outcomes, emphasizing the need for HR teams to empower managers with the right tools, resources, and training.
2. Slow AI Adoption in HR
Despite the ongoing AI revolution, only 15% of HR teams have successfully moved from evaluating AI to implementing it. While AI has significant potential to enhance HR processes—such as writing job descriptions and supporting performance reviews—uncertainty around the technology’s impact and a lack of suitable tools is slowing adoption. The report found that HR teams willing to experiment with ambitious AI use cases experienced greater satisfaction with the technology.
3. Decline in DEIB Prioritization
Diversity, equity, inclusion, and belonging (DEIB) initiatives are witnessing a significant decline in prioritization. Only 15% of HR teams cited DEIB as a key focus for 2025—an all-time low. U.S.-based companies lag behind, with European HR leaders 2.8 times more likely to prioritize DEIB initiatives, often due to resource limitations and challenges in demonstrating ROI.
4. Barriers to Engagement Efforts
While employee engagement remains a priority for the fourth consecutive year, many HR teams face substantial barriers. Although 92% of HR professionals agree that engagement is important, only 39% have the resources to implement engagement programs effectively, leaving 61% unable to turn priorities into action.
The Path Forward
As HR navigates complex challenges—from AI integration to strained DEIB efforts—the 2025 State of People Strategy Report highlights a forward path 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.