BambooHR State of HR Report 2024

HR is a challenge even during the best of times, but 2023 featured a line-up of harrowing events that disrupted lives, homes, and workplaces around the world. Not to mention the many rounds of tech layoffs that began in late 2022, and the ongoing labor shortages across a number of industries.

Employee happiness in 2023 plunged at a rate 10x faster than the previous three years. But will the Great Gloom extend into 2024, or can HR successfully turn the tide?

Some companies took exceptional initiative on this front last year, like surprising employees with unprecedented end-of-year bonuses. But not every HR department or company wields the same resources.

We surveyed 1,200 HR professionals to understand what they’re up against in the coming year, and what we learned can help you paint a realistic picture of the state of HR today, and what changes may be possible in the year to come.

This report includes:

• A breakdown of what challenges HR faces in the coming year
• How HR ranks the difficulty of those challenges
• What technology and process limitations are holding them back
• Advice to HR on what they can do to drive business impact in 2024

2024 HR trends to watch

• Hiring: Talent acquisition is the most common (44%) and most difficult (22%) challenge facing HR in 2024, taking the place of 2023’s biggest concern—retention.
• Labor shortages: As labor shortages continue, 48% say a big part of their talent acquisition struggle involves finding and attracting qualified people to fill open roles.
• Skills gaps: Likely in response to a lack of qualified workers, onboarding and training and development are the next most common and difficult challenges (32% and 31% respectively) as HR works to prepare or upskill available workers.
• Employee experience and turnover: As talent becomes harder to find and replace, retention remains a priority, but 30% of companies aren’t sure how to improve the employee experience and reduce turnover.
• HR data and reporting: Though the answer to improving employee and business outcomes is hidden in the data, over half (52%) of HR teams struggle to manage, analyze, and leverage HR data and reporting to their advantage.
• One system for benefits, time tracking, and payroll: On the compensation front, 1 in 3 HR pros (33%) say managing benefits, time tracking, and payroll in different systems is taking up too much time and leading to errors.

What are the biggest challenges facing HR pros in 2024?

The top—and most difficult—challenges facing HR as we charge (or trudge) into the new year revolve around finding, securing, and preparing the best candidates for the roles employers desperately need filled.

Here’s how key challenges rank next to their level of difficulty.

Advice to HR: Streamline solutions with all-in-one HR software

HR functions often interact and overlap with each other, especially those as interrelated as managing employee data and generating reports, for example. This is why robust, comprehensive HR software is the most straightforward solution for all of HR’s most pressing challenges.

For companies wanting to turn things around holistically and methodically in the coming year, complete HR software can make all of these challenges feel that much more approachable—and surmountable.

48% of HR teams say it's becoming harder to fill open roles with qualified talent

Talent acquisition (TA) leads as the single most common (44%) and difficult (22%) challenge facing HR teams today.

Specifically, almost half (48%) say finding and attracting the right people to fill open roles has recently become increasingly challenging. Respondents mainly reported challenges around the lack of qualified and skilled labor but also mentioned the inability to offer competitive salaries or provide the flexibility most candidates want.

Interestingly, some respondents said their main challenge with talent acquisition was “not enough applicants” (Healthcare) while others cited “too many applicants” (Finance and Insurance). But the consensus remains that finding the right people is a serious concern for many companies going into 2024.

Widespread staff shortages continue to affect major industries, including construction, restaurants and food and beverage, hospitality, and healthcare, and solving this dilemma is top of mind for HR teams, recruiters, and CEOs alike.

Other notable reasons for talent acquisition challenges?

• 26% say inefficient hiring has slowed the company down and caused them to miss out on the best talent.
• 22% say recruiters are unsure of which of their recruiting sources are working and which are not.

Advice to HR: Broaden your applicant pools and add attractive benefits

As Baby Boomers retire, labor market challenges aren’t predicted to ease up any time soon, but there are a number of strategies you can pursue that will help you strengthen your workforce now and in the future.

• Apprenticeships turn entry-level and high-churn jobs into a unique value proposition for new employees, providing them an opportunity to grow while helping you upskill existing workers into vacant roles.
• Second-chance hiring (also called fair chance hiring) expands your talent pool while addressing the estimated $78 to $87 billion loss in GDP attributed to excluding formerly incarcerated job seekers from the workforce.
• Expanding childcare access and rethinking benefit offerings further widens your hiring pool while helping your company stand out from the crowd in a highly competitive market.

Nearly 1 in 5 HR pros say onboarding and training are their most difficult challenges

After learning how hard many companies are fighting to find and recruit talent, it’s easy to understand why onboarding ranks second on the list of most common HR challenges. About three in five (63%) HR pros say onboarding, offboarding, and training are the most common obstacles they face in their work, and one in five (18%) say these are the most difficult HR functions they tackle.

The pressure is on to get this crucial piece of the employee experience right. The quality of companies’ onboarding and training will have the greatest impact on whether or not new hires will stay with them long-term, and companies only have a short window of time to convince new talent they’re worth it.

HR pros in their own words

Here’s what some of our respondents—employees with HR responsibilities at small and medium-sized organizations within the US—had to say about the onboarding and training challenges they’re currently facing at their companies.

Onboarding’s effect on employer brand, employee engagement, and HR burnout

17% of HR teams say bad first impressions for both candidates and new hires are impacting their employer brand, but caring specifically about employer brand may feel like a luxury when 30% of HR teams feel overwhelmed with stacks and stacks of new-hire paperwork (e.g., resumes, signed documents, etc.).

And each problem dominos into the next. HR teams aren’t the only ones stressed out by manual and unorganized onboarding processes—almost one in three (29%) HR teams say these manual hangups have led to a lot of tedious tasks that frustrate new hires, too.

Muddling through these processes comes at a cost to employee engagement, with 35% of HR saying they struggle to create an onboarding experience that helps employees feel engaged and acclimated to their new role as quickly as possible.

Roadblocks to successful onboarding

• Creating an onboarding process that helps employees feel engaged and quickly acclimated to their new role. (35%)
• My HR team often feels overwhelmed with stacks and stacks of paper (e.g., resumes, signed documents). (30%)
• Manual and unorganized onboarding processes have led to a lot of tedious tasks and frustrated new hires. (29%)
• Bad first impressions for both candidates and new hires are impacting our employer brand. (17%)

Advice to HR: Adopt a formal onboarding strategy

Without a formal onboarding strategy and process, your new hires are left to sink or swim, and the odds are stacked against them. Almost half (44%) of all new hires say they’ve had regrets or second thoughts about a new job—and about one in four (23%) say they’ve cried—within their first week.

Don’t leave the new-hire experience up to chance. Here are a few resources to help you articulate an onboarding strategy and philosophy at your company, and formalize a process:

• The Definitive Guide to Onboarding
• The BambooHR Pre-Onboarding Checklist
• The BambooHR Onboarding Roadmap

1 in 3 companies aren't sure how to improve employee experience and retention

With employee happiness in a nose-dive, union representation on the rise, and the popularization of nontraditional approaches to work (i.e., quiet quitting, “lazy girl jobs,” overemployment, and the anti-work movement), it’s especially important for HR teams to seize the reins on the employee experience.

Impacting the employee experience is the most common challenge for 24% of HR teams. But even though only 5.6% would call it their most difficult challenge—likely because other challenges, such as hiring, feel more pressing—30% don’t know where to begin improving it.

The second-most tracked KPI after employee productivity—retention—weighs heavily on a company’s ability to secure an ROI on their hiring investment.

As a result, the struggle to improve the new-hire and employee experience creates a unique opportunity for HR pros. When they effectively communicate the impact of employee experience on retention, HR teams can gain greater influence and benefit the company.

Remote work, company culture, and the struggle to keep employees engaged

34% of HR pros report their companies are concerned about employees becoming disengaged with their work, a state of mind that almost invariably leads to lower productivity and turnover.

And it’s a valid concern—one in three (30%) HR teams report that poor employee experience is actively leading to low retention rates and that they don’t have a gameplan to turn things around. Additionally, 27% say they don’t even have a way to measure employee experience.

Other concerns include the impact hybrid and remote work may have on performance, employee experience, and connection (27%), and creating a company culture that stands out from the crowd (23%).

What are the biggest onboarding challenges?

• Disengaged employees (34%)
• Low retention (30%)
• Hybrid and remote work (27%)
• Measuring employee experience (27%)
• Company culture (23%)

Advice to HR: Boost retention by refining performance management processes

Employee experience, and consequently retention, is largely affected by an employee’s ability to see themselves at a company long-term. If they can’t clearly see a reason they should stay, such as the opportunity for growth and development, they’re likely to envision their departure soon enough.

A formal and effective performance management process provides ongoing, structured touchpoints employees can rely on to get the direction and feedback they need to grow and develop at a company. If your process isn’t working, focus on refining based on feedback collected through anonymous surveys. Anonymization will help encourage honest, critical feedback you can use to improve.

Additionally, with a strong performance management process, you can directly address the following performance-related challenges highlighted in the report:

• My employees are receiving little to no feedback on their performance (27%)
• Running performance reviews and assessments is a difficult process with poor adoption (25%)
• My employees don't see or understand their career path at my company (19%)

52% of HR teams struggle to manage employee data and reports, limiting opportunities to drive impact

Managing employee data and generating usable reports is a struggle for 52% of HR pros, but only 14% would call it their most difficult challenge. However, being able to track and report on employee data remains an essential function for HR business partners and leaders.

Without access to accurate data, it's hard for HR teams to identify challenges, recommend measurable solutions to executives, and drive positive business impact. Unfortunately, at least 5% of our respondents don’t use any formal HR-related KPIs to track the success of their efforts.

That’s like training for a race without a stopwatch! How can HR plot strategies for improvement if they don’t know their personal best (and worst)?

How are HR pros measuring—or struggling to measure—HR KPIs?

Less than half (44%) track employee productivity, but that’s still the most tracked KPI of the bunch. Clearly, there’s room for improvement in 2024 when it comes to measuring and improving HR impact and success.

Here’s how other KPIs are tracked (or neglected).

But data-wrangling and analyzing isn’t easy. For many in HR, a host of challenges stand in the way of becoming the data wizards they’d like to be, ready to wow in every meeting with slide decks full of punchy, actionable insights.

33% say that because their HR data and documents live in multiple systems, they have to deal with time-consuming redundancies, and 30% still use spreadsheets to track employee data.

It’s no wonder then that one in four HR pros (25%) struggle to meet executive reporting demands. 28% also say they have a hard time detecting trends in their data, which could otherwise inform important strategic decisions.

Advice to HR: Tackle HR data and reporting hangups with an HRIS

An HRIS makes a significant difference in your ability to manage today’s top HR challenges, including HR data management and reporting. We recommend at least partially basing your choice of HRIS on how well it can help you wrangle data on the KPIs listed above and on the quality of its reporting.

Leveraging a reliable HRIS can also help you tackle common tech stack challenges, which include lack of customizations, siloed and parallel data processes, inflexibility, and high costs in both labor and maintenance of disparate systems.

Challenges before purchasing an HRIS

• Managing employee data and documents (36%)
• Company wasted too much time on manual work (33%)
• Company was spending too much time or effort on managing HR data (27%)
• Managing and administering benefits (26%)
• Managing onboarding tasks (25%)
• Managing performance evaluations and reviews (25%)
• Managing hiring tasks (25%)
• Improving the employee experience (25%)
• Managing onboarding and offboarding (24%)
• Generating workforce or HR-related reports (23%)
• Company had too many tools to manage (20%)
• Managing employee engagement programs (18%)
• Company didn't trust HR-related data (9%)

HR teams worry disconnected payroll, time tracking, and benefits systems can cause compensation errors

One in three HR professionals (33%) say managing benefits, time tracking, and payroll in different systems is time-consuming and error-prone.

Payroll and time tracking

Many are sinking hours and days into preparing and running payroll each pay period (28%) and chasing down employees for timesheets and managers for approvals (25%).

Tracking time and running payroll in separate systems creates roadblocks for 27% of teams, while almost one in four (24%) report that their current processes have created a negative experience for employees who have to sign into multiple places to make changes that affect pay.

Benefits administration

As for managing benefits, open enrollment, and communication with carriers, over one in three (32%) are still hampered by frustrating and error-prone manual processes. And 25% actively worry about benefit deduction discrepancies when pulling from third-party systems into payroll.

Advice to HR: Consolidate your time tracking, benefits, and payroll functions in one system

When it comes to compensating employees correctly, time tracking, benefits, and payroll rely on each other more than any other set of HR functions. Making sure each system speaks fluently to the others while pulling from a central system of record is a crucial step to curing the pains of manual and disparate processes.

As a complete HR platform, BambooHR provides the cohesion 33% of our respondents are missing, but implementing a new HRIS where time tracking, benefits, and payroll systems work together may not be in the cards for many HR teams this year. In the meantime, here are a few free resources to give your processes a little more structure:

• Open Enrollment Survival Kit
• Compensation Content Bundle
• Pay Stub Template
• Payroll Checklist

Methodology

The data analysis for this report was generated using Qualtrics software, Version July 2024 of Qualtrics. Copyright ^© 2024 Qualtrics. Qualtrics and all other Qualtrics product or service names are registered trademarks or trademarks of Qualtrics, Provo, UT, USA. https://www.qualtrics.com

All source data was retrieved between July 2023 and August 2023, and includes 1,200 respondents who have HR responsibilities at small and medium-sized organizations within the US.

Industries included are healthcare, finance, construction, travel and hospitality, restaurant and food and beverage, education, technology, and more.