Lattice’s 2027 State of People Strategy report found that European HR leaders are feeling confident about the road ahead.
Engagement among HR professionals remains high across Europe. 68% of HR leaders plan to grow headcount over the coming 6 to 12 months, and 71% are expecting budget increases.
But while European HR teams continue to pull ahead of their US counterparts on the human aspects of HR, teams still find themselves under pressure to defend their people programs.
Here, we’ll explore the findings of the State of People Strategy Report and reveal:
- How European HR priorities have shifted for 2027
- Why enthusiasm for artificial intelligence in HR is outpacing trust
- Why European HR teams have to defend the programs that give it an advantage
- The risks of complacency (hint: falling behind)
Cautiously Optimistic: The State of HR in Europe
Asked if they feel engaged and energised, the vast majority (84%) of European HR leaders said yes.
However, that optimism comes with a caveat. The number of European leaders who have considered leaving HR in the last 12 months has shot up from 31% to 44% since last year. A third of those (33%) say it’s because they feel undervalued. A quarter (25%) are concerned about being replaced by AI.
“Working in HR has not been for the faint hearted these past few years,” commented Missy Strong, the senior lead of people experience at Pigment. “With COVID, all the big tech layoffs, DEIB setbacks, the Great Resignation, return-to-office mandates, and now AI, it feels a little bit like whiplash.”
Admittedly, the mood in European HR is still more positive than in the US, where a clear majority (58%) of HR leaders have considered leaving the field. But we can see the impact of this anxiety in the priorities HR leaders are setting for the next year.
The Biggest Priorities: Tech, Learning, and People
Last year, engagement and development were tied as the top priorities for European HR teams. This year, HR tech is top of mind. Here are the key areas that leaders are prioritizing for 2027:
Updating HR Tech Stacks
The single most common concern is ensuring that teams have the workforce intelligence and HR technology tools they need to manage their people effectively. Updating HR tech stacks is the top priority for 41% for European HR teams — highest in France (45%) and Germany (42%) respectively.
Learning and Development (L&D)
L&D is still a top priority for 32% of European HR leaders. This makes sense, given that adopting new HR technology will naturally increase the need for training on those new systems, both for HR teams and for employees.
Fully 85% of HR leaders consider AI reskilling and upskilling as an important focus for L&D, closing the skills gap created by rapid AI adoption. That said, 70% still value training on soft skills just as much. This suggests these leaders see AI and automation as a complement, not a replacement, for human work.
Talent Acquisition
Given the expectations for increased headcount and larger budgets, it’s not surprising that leaders are focused on strategic workforce planning. Talent acquisition is a priority for 31%.
Strong explained, “We’re experiencing a huge boom in AI-native companies, and with that we are seeing a huge war for talent. So, our priorities right now are more on the talent supply, the capability of those individuals and the infrastructure to support it.”
Employee Engagement
While the importance of engagement is down six percentage points from last year, when it was the number one issue, 66% of HR leaders say engagement has improved in that time. Now, 84% of leaders say they are engaged themselves, and 81% say their employees are engaged, compared to 77% of employees last year. So it may simply be that employee sentiment needs less attention than it did in 2025.
Diversity, Equity, Inclusion, and Belonging (DEIB)
The deliberate deprioritization of DEIB programs in the US has caused it to fall from being a top priority for 11% of HR teams to just 7% — an all-time-low for this report since 2020. But it’s still increasing as a priority for European HR teams, up 3 points since last year to 27%.
In other words, European HR teams are now nearly 4 times as likely as their US counterparts to prioritize DEIB.
For Strong, the business case for DEIB programs is clear: “If your priorities are to expand into new markets, improve customer retention, or improve innovation, then you need diverse thinking to enable that.”
Tech and AI: Adoption Is Outpacing Trust
HR tech might not be the first thing you'd expect to top European leaders' priority list. But dig into the data, and three reasons for the shift become clear:
1. HR teams haven’t yet aligned their tech stack with their needs.
Almost half of European HR leaders (46%) admit that a recent HR tech purchase was a mistake: 41% had issues with the functionality, 41% said employees found the software hard to use, and 39% found it caused too much change to their existing processes.
2. HR teams are increasingly enthusiastic about AI.
Enthusiasm for AI’s potential to improve HR processes is growing:
- 88% of HR are excited about AI’s increasing role in HR, up from 81% in 2025.
- 74% believe some or most managers are using AI to write performance reviews, suggesting AI is past the trial phase and is now integral to HR processes.
And while nearly half (48%) of respondents feel under pressure from senior leadership to use AI to improve efficiency, almost three-quarters (72%) say it is already meeting those expectations: 75% say performance reviews are completed faster, and 69% agree that completion rates are higher.
3. AI still needs to earn trust.
While HR leaders see AI as efficient, they are less enthusiastic about its outputs. For instance, only two-thirds (66%) think that the quality of performance reviews is actually improved by AI.
Switzerland-based HR consultant Suzanne Lucas, a human resources consultant known as the Evil HR Lady, recommends that HR teams provide guardrails to make sure managers use AI appropriately:
“AI can be a great help in writing reviews as long as it’s done well and managers are getting the facts into the reviews. HR should embrace this and set up systems that help managers use AI to have better reviews. For instance, you can set up a project in Claude that will walk a manager through the steps of writing a review and give you a polished, accurate review at the end.”
In fact, Lattice MCP connects employees’ LLM of choice directly to their Lattice account, so they can draft, edit, and submit reviews in Lattice while using ChatGPT or Claude. And on the other end, HR teams can check review completion rates, summarize feedback, and get help with the whole review cycle, without ever leaving their AI chat.
And then there is the question of ethics. More than 6 out of 10 (62%) leaders personally hold ethical concerns about AI in HR, and 83% have directly raised those concerns with senior management.
It seems HR leaders may be acting as an institutional check on AI, to ensure that it is used effectively and appropriately.
Defending the Case for People Programs
Approximately half of European HR leaders say they are under pressure to justify spending on people programs such as L&D (55%), engagement (52%), manager enablement (51%), wellbeing (47%), and DEIB (47%).
Here's an argument they could present to leadership: Last year, engagement and performance were top priorities for European HR teams. Look at where things stand now, and that focus seems to be paying off: 81% say their employees are highly engaged, and 66% say engagement has improved since 2025.
Performance and Pay Still Matter
While 42% of European leaders say they’re under more pressure to drive engagement than performance, 13% say they feel the reverse. Notably, performance isn’t even in the top five priorities for European HR teams this year.
That may be because European HR leaders feel they're on top of it. HR teams are continuing to increase the cadence of performance reviews:
- 48% are running quarterly reviews, and 21% of HR teams are doing monthly reviews, up from just 6% in 2025.
- 44% are using performance improvement plans (PIPs), and another 45% plan to start.
On paper, that looks like a performance culture that's built and running on its own.
But there’s a risk of complacency here. In the eyes of 42% of HR leaders on both sides of the Atlantic, PIPs affect employee well-being and morale. HR teams need to be sure the tools they use to drive performance don’t inadvertently have the opposite effect on the company culture. Treating performance management as solved, rather than maintained, risks performance being overlooked, and waning as a result.
Compensation carries employee relations risks too. More than half (52%) of European HR leaders say employees are being asked to do more work for the same money.
And, while 69% of European leaders say managers are doing a good or excellent job explaining the lack of pay raises, that still leaves a large proportion of businesses where employees may feel short-changed, with all the implications for morale, engagement, and performance that can entail.
New regulation may make things easier for managers by obliging companies to be more transparent about compensation and benefits policies, says Strong.
“The EU Pay Transparency Directive is forcing a lot of European companies to build better systems, and that is very much needed. We already saw that there is inconsistency in pay and that it is poorly understood, so this holds up a mirror to it.”
Lattice Supports People + AI, Not People vs. AI
By nearly every metric, the mood in human resources management is more positive in Europe than in the US. But that success hasn't let European HR leaders off the hook. They're still expected to prove their programs are worth the money.
HR tech is a cautionary tale. It's this year's top priority largely because of last year's neglect. Teams didn't align their tech stack with what they actually needed, and nearly half admit a recent purchase was a mistake. The same could happen to engagement and performance. Both are being deprioritized this year, but if that means they get overlooked, they risk becoming next year's urgent, expensive fires to put out.
As HR teams plan for 2027, their goal is not to choose between people and technology. It's to show, with the data to back it up, that the two are reinforcing each other.
Get the Inside Scoop on 2027
2027 already? Lattice comes at you fast.
Watch our webinar on demand to get the scoop on the State of People Strategy Report and hear from real HR experts on how they’re planning for the year ahead.
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