As 2024 approaches, a notable shift in organizational priorities is anticipated, according to a new report by Forrester. The focus is likely to shift away from employee experience (EX) investments, which encompass employee perks, training, workplace flexibility, and diversity, equity, and inclusion (DEI) initiatives.
J. P. Gownder, vice president and principal analyst on Forrester’s Future of Work team, highlights the economic turbulence expected next year, which may result in a more finance-centric approach from employers at the expense of EX-centric strategies. This shift termed the “EX Winter,” could lead to a decrease in employee engagement and a weakening of company culture. Forrester’s data suggests a decline in employee satisfaction from 41 percent in 2022 to 34 percent in 2024, with similar drops in positive perceptions of workplace culture and funding for DEI initiatives.
The de-investment in engagement and culture metrics is indirectly linked to interest rate hikes affecting venture capital funding, leading to budget cuts and layoffs, particularly in technology, finance, and media sectors. Once viewed as trendsetters for EX standards, these sectors are now scaling back, influencing other industries to reconsider their emphasis on aspects like empathy and leadership training, DEI initiatives, and workplace flexibility.
Despite these trends, according to a Fast Company report, Benjamin Granger, chief workplace psychologist at Qualtrics, observes that the anticipated cuts won’t be uniform across all sectors. Some areas, especially emerging markets and customer-facing roles, may see increased investment in EX to attract and retain talent. Granger stresses that even with limited budgets, there are effective ways to enhance the employee experience, such as focusing on soft skills, manager training, and career development.
KeyAnna Schmiedl, chief human experience officer at Workhuman, emphasizes the importance of using data to understand employee priorities and maximize the impact of available budgets. However, Schmiedl also warns against the potential dangers of reducing DEI spending, noting that such cuts could quickly reverse hard-won progress and affect organizational credibility.
Several organizations may resort to superficial DEI efforts, such as organizing cultural heritage events, while neglecting more substantive initiatives. However, top firms will likely continue integrating DEI principles into their recruitment processes, recognizing its business benefits. On the technology front, despite a notable percentage (66 percent) of tech leaders in software planning to invest in EX/human capital management software, the full potential of these investments may not be realized. Many companies are expected to favor investments to streamline HR functions rather than those enhancing EX outcomes. This scenario presents a unique opportunity for businesses that deliberately focus on enhancing EX, setting themselves apart in an environment where many move in the opposite direction.