Despite a cooler labor market and improved hiring outlook, HR leaders’ expectations continue to decline around two key areas — retention and employee engagement — according to a Dec. 12 report from The Conference Board.

Overall, The Conference Board CHRO Confidence Index dropped to 53 for the fourth quarter, down from 55 in the third quarter this year. Although a reading higher than 50 reflects more positive than negative responses, CHROs may still feel cautious going into the new year, Conference Board said.

“HR leaders’ optimism is waning as recession remains on the horizon to start 2024,” Diana Scott, leader of The Conference Board U.S. Human Capital Center, said in a statement.

Looking ahead to 2024, 75% of CHROs said their main human capital management priorities are employee experience and organizational culture. After that, 74% said they plan to develop leadership and workforce capabilities.

“With a third of CHROs expecting employee engagement to decline, it is reassuring that CHROs plan to strengthen employee experience and organizational culture in 2024,” Scott said. “And while the percentage of CHROs planning to hire workers ticked up after a steep drop last quarter, nearly a quarter expect to lose workers in the coming months. It follows that an overwhelming percentage of leaders say retaining existing workers will be a key part of their talent strategy next year.”

In the survey of 194 CHROs, hiring outlook increased since the third quarter. In fact, 44% expect to increase their hiring during the next six months, up from 38% during the previous quarter. Conversely, about 19% expect to decrease hiring, down from 26%.

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