After investing in improving employee experience during pandemic-driven talent shortages, employers in general are pulling back, which could affect how their employees feel about work — and employers’ bottom lines.

In its “Predictions 2024: The Future of Work” report, Forrester found that employee experience will be taking a back seat in 2024, leading to what they call an “EX winter.”

Companies are “less interested in employee experience in general,” thus making it an easy target for cutting costs or cutting corners, said J.P. Gownder, vice president and principal analyst on Forrester’s Future of Work team. Strategies that improve engagement, productivity and ultimately growth, are being stepped back.

For example, Forrester noted that the number of employers who said they were funding an internal DEI function dropped from one third of those surveyed to 27% from 2022 to 2023; the firm predicts it will fall further to 20% by the end of 2024. Some companies will default to checking a box to say that they’ve met DEI goals, he said, instead of truly funding DEI initiatives that make a difference to employees.

One reason, Gownder said, is that the labor market isn’t as tight anymore. “Oftentimes employers will invest in employee experience when there’s a lot of attrition or things are going poorly on the employee front and they can’t keep talent,” he said, as was the case during the Great Resignation.

That’s not the case anymore. When companies “aren’t so desperate to keep people, often they take their foot off the accelerator” when it comes to talent.

They may spend, but may not spend in the right way, Forrester found: 66% of technology decision-makers who work in software say they’ll increase investment in EX/human capital management software in 2024, but those investments won’t be used to their full advantage. Forrester instead predicts that those investments will make HR functions efficient instead of improving EX outcomes.

An EX winter will continue to freeze out employees

Employee engagement already took a tumble between 2022 and 2023, and will continue to do so in 2024, Forrester said.

Between 2022 and 2023, employee engagement fell from 48% to 44%, and culture energy fell from 69% to 66% in the U.S. Forrester predicts that in 2024, those numbers will fall to 39% and 64%, respectively.

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