State of
People
Strategy
Strengthening the HR-Manager Relationship
For the last five years, HR has been caught in a turbulent storm, but we’re coming out stronger, more agile, and more focused than ever before. But HR cannot succeed alone.
At the heart of this year’s State of People Strategy Report is the relationship between HR and managers. This partnership isn’t new — it’s foundational. And our report found it’s crucial to solidifying HR as one of the most strategic and innovative functions shaping businesses today.
91% of high-performing HR teams (those exceeding their goals) are meeting most or all of managers’ needs. When HR is in lockstep with management, managers report feeling supported, empowered, and engaged.
68% of HR says learning and development (L&D) initiatives will be the foundation of engagement strategies in the coming 12 months. They’re depending on managers for implementation.
Technology alone won’t get us where we need to go. People will. Our task is to build workplaces where employees can thrive, engagement drives performance, and HR and managers work together to create lasting cultures.
This report explores how we can strengthen relationships, adopt innovations thoughtfully, and build resilient, future-ready teams.
HR is shifting gears from stability to strategy.
Over the last four years, HR has leapfrogged from crisis to crisis. And as teams finally get a moment to catch their breath, they find themselves at an inflection point: Hiring is still up in the air; diversity, equity, inclusion, and belonging (DEIB) has been put on the back burner; and the rise of AI in HR has sparked broader questions about the “human” component of human resources.
Despite these challenges, the fundamentals of building a high-performing organization still hold true, and this is reflected in our data. On a global scale, people strategies and initiatives have held steady between 2023 and 2024. Employee engagement, performance management, learning and development (L&D), and manager enablement are at the top of HR’s priority list for the next 12 months.
The relative stability is welcome, but there’s little time for rest if HR teams want to get ahead on shaping strategy. Perhaps this is why high-performing HR teams (those exceeding their goals) are focused on building the right foundations to help them achieve and amplify the long-term impact of these priorities.
A whopping 91% of high-performing HR teams are meeting most or all of their managers’ needs, compared to just 41% of teams falling short of their goals.
Most importantly, high-performing teams recognize the value of the HR-manager relationship. A whopping 91% of high-performing HR teams are meeting most or all of their managers’ needs, compared to just 41% of teams falling short of their goals. High-performing teams are also more likely to view performance reviews as critical and trust senior management.
Managers are focused on team connection.
Our 2025 State of People Strategy Report marked our first time polling functional managers about their workplace experiences. High on our agenda were questions about how managers feel when it comes to building relationships, managing processes, and critically, what they need from HR to succeed in supporting their teams better.
Among our findings, one shines brightly: Managers truly recognize the importance of staying connected with their teams. Most managers (78%) have daily or weekly check-ins with direct reports, and of those, 97% say they feel somewhat or very connected to direct reports. Managers who are meeting or exceeding their goals also report feeling very connected to their team.
Meeting frequency is also a great predictor of relationship strength. When managers check in with direct reports less than once a week, their level of connection drops significantly.
Most managers (78%) have daily or weekly check-ins with direct reports, and of those, 97% say they feel somewhat or very connected to direct reports. Managers who are meeting or exceeding their goals also report feeling very connected to their team.
Managers’ optimism about relationship-building is trickling into how they view their responsibilities, too. While managing people doesn’t appear to be a core component of managers’ job satisfaction, only 22% of the managers we surveyed actively want to drop the people management aspect of their role.
While manager-employee bonds are strong, 46% of managers report being asked to toughen up their approach to feedback and provide harder, more constructive criticism. And with only 28% of managers reporting HR has met all their training needs in this area, HR has an opportunity to step in with some clear guidance.
Rapid changes over the last few years have fundamentally reshaped how managers connect with their teams — and with HR. These trends reiterate the vital role this triad has to play in driving organizations’ success: When HR supports managers, managers can support their employees and help the whole organization achieve its strategic goals. But for this to work, HR needs to strengthen its relationship with managers to match the connection they have with their direct reports.
Culture and people strategy are a shared responsibility.
People strategy and culture are a team effort between HR and managers. While the majority of managers (51%) consider themselves as having somewhat or significantly more impact in shaping people strategy and culture, about a third of HR leaders and managers say the balance of power is equal.
“The key to a successful, positive company culture is to treat culture not as the sole responsibility of any group or leader, but as a shared endeavor across the entire organization,” Driver said. “Laying blame or claiming ownership over culture can actually fuel unhealthy dynamics — so instead of pointing fingers, it’s critical that everyone within a company understands their role in contributing to, managing, and stewarding the culture.”
Managers also view themselves as custodians of organizational culture, with 39% feeling directly responsible for living and promoting it day-to-day.
“Managers do play a disproportionately impactful role in shaping company culture because they so directly influence the employee experience, with a unique power to shape the environment and attitudes,” Driver said. “HR’s role is equally important but different: defining the culture, helping everyone understand what is culturally appropriate, and ensuring that the organization’s values are lived out. HR provides the framework and guidance, but the responsibility is shared with employees at all levels.”
HR shapes culture by setting the vision and defining the values — managers bring them to life.
“HR shapes culture by setting the vision and defining the values — managers bring them to life,” said Natalie Breece, chief people and diversity officer at thredUP. “HR and managers must work closely together to ensure the vision is effectively implemented. HR provides the necessary tools, training, and resources, while managers apply these elements in their daily interactions with their teams.”
As equal torchbearers for culture and people strategy, HR and managers share much of the load of creating an environment where employees can thrive. But our data shows that they’re beginning to flag under this pressure: HR professionals and managers both cite feeling overwhelmed (43% and 30% respectively), with another handful starting to burn out (11% and 10%).
The top drivers of burnout are things HR can impact. Burned-out managers called out these key reasons why they’re not able to work at their optimum:
Shifting company priorities
Helping direct reports work through change
Change fatigue
All of these drivers boil down to one culprit: change. And while change is inevitable, it also must be managed. That takes significant, shared effort from HR and managers, if the business is to survive.
“Research highlights the importance of the manager's role in executing plans for implementing a change,” explained Regina Ross, chief people and culture officer at Opportunity Finance Network. “This is why collaboration between HR and managers is so critical. Having managers as co-creators and early testers of the change plans where possible can reduce friction and increase adoption of the changes.”
Engagement leads as HR’s top priority.
If engagement was a color, it would be evergreen — it’s led HR teams’ priorities for four years straight, and this year is no different. But performance is close behind for 40% of teams.
This rise to second place is no blip. Between 2023 and 2024, performance management jumped from a fifth-place priority to a joint first, sharing the top spot with engagement for the first time.
“Over the past few years, many organizations have gone through budget cuts and related reductions in force,” Driver said. “This has resulted in less focus on talent acquisition and a hyper-focus on talent retention. HR teams know engagement is critical to retention, so it's no surprise we see engagement as HR's top priority in this year's report.”
Organizations recognize that high performance can’t exist without engagement, and they see both as part of the same continuum contributing to a workplace where employees can thrive long-term.
Does HR’s renewed focus on engagement signal that performance is a lesser priority now? No — if anything, organizations recognize that high performance can’t exist without engagement, seeing both as part of the same continuum contributing to a workplace where employees can thrive long-term. Prioritizing engagement means organizations get the benefits of both, instead of the short-term gains of focusing on performance alone.
DEIB Takes a Downward Slide
While other priorities remained relatively steady, organizations are still straining to drive meaningful progress in their diversity, equity, inclusion, and belonging efforts. In this year’s survey, only 15% of respondents said DEIB programs are a priority — an all-time survey low, and a 2% decline from last year’s results.
That 15% is heavily skewed by a lack of prioritization in the US. European HR respondents were 2.8 times more likely to list DEIB programs as a priority than their US counterparts. While DEIB programs are the fourth-highest priority for Europe, they’re lowest on HR’s list for engagement strategies globally, with just 23% of teams seeing DEIB programs as a viable mechanism to boost engagement.
European HR respondents were 2.8 times more likely to list DEIB programs as a priority than their US counterparts.
Increasing layoffs and budget cuts have hit HR teams and their DEIB initiatives particularly hard over the past few years. This deprioritization shows that while the will is there to move the needle, the resources and internal support likely aren’t. HR teams are struggling show their organizations a return on their DEIB investment, which means they lack the investment to prioritize it. And in the current pace of business, other urgent, near-term priorities quickly rise to the top.
“DEIB work is hard work — it’s not for the fainthearted,” said Ross. “While some organizations may have had a genuine interest in advancing DEIB, they lacked the intention or understanding to play the long game. They may have embarked upon some initial efforts, such as requiring training on unconscious bias, setting diversity hiring targets, or other common tactics. But because they did not tie their DEIB work to enabling better business outcomes and have not seen a significant short-term return on investment, they’ve decided to deprioritize their DEIB efforts.”
DEIB work is hard work — it’s not for the fainthearted. While some organizations may have had a genuine interest in advancing DEIB, they lacked the intention or understanding to play the long game.
Yet the data speaks for itself: Studies repeatedly show that diverse, inclusive teams consistently outperform their less diverse counterparts. Just look at McKinsey & Company’s Diversity Matters Even More report, which found that teams in the top quartile of gender and ethnic representation have a 39% higher likelihood of financial outperformance than teams in the bottom quartile. In a tight macroeconomic environment, those numbers can’t be ignored — especially when HR budgets have been cut. Yet there often aren't resources available for stand-alone DEIB roles, leaving organizations quizzical about how to invest in it.
“The answer lies in integrating DEIB practices across multiple HR functions to ensure these values and practices remain top-of-mind,” Driver said. “This may be the more sustainable way forward and show true progress around DEIB anyway. Organizations who consciously work to create diverse, inclusive environments will be the ones thriving in the future.”
Thriving Through Growth
While employee engagement is top of mind, tighter purse strings mean HR teams have to get more innovative. Half of HR teams reported they ran some form of L&D initiative over the last 12 months. Aside from increasing compensation, HR teams think the following three strategies would increase employee engagement:
L&D opportunities
Accessible career paths
Clear performance expectations
Recognizing that growth is best supported in an environment where teams have greater autonomy and work-life balance, enhanced employee flexibility also rose up the agenda. Additional paid time off ranked as the second most commonly implemented engagement strategy, while flexible time off, remote work policies, and four-day work weeks proved especially popular initiatives among European survey respondents.
Joaquin Migliore, director of people experience at Superside, said those benefits are a result of a long history of policies and regulations around time off, notice periods, and workers’ rights, which create a certain expectation among European employees.
In my opinion, these benefits — especially when American companies open up offices in Europe and have to adapt to the local reality — tend to be more appreciated and more utilized. In comparison, implementing the same benefits in the US may fall flat because culturally (and even morally) folks will likely not utilize as heavily, as they might be perceived as impacting performance or chances of promotion.
Even with growth firmly on the agenda, current efforts might not be enough to address looming skills challenges: 77% of HR teams and 68% of managers said skills gaps are somewhat or significantly preventing them from promoting from within as often as they’d like.
This could be due to missed opportunities in how training is offered. The majority of HR teams highlighted internal training, paid training for approved programs, and conference attendance as key components of their strategy. But only 29% offer a no-strings-attached L&D stipend, and only 19% offer job rotation, which could provide employees with greater career ownership, skills discovery, and cross-functional opportunities in their growth journeys.
Greater partnership between HR and managers could help organizations maximize employee growth at a team level and offer more individualized routes to learning.
“HR may launch L&D initiatives, but managers identify team-specific growth opportunities,” said Breece. “They need to advocate for continuous learning [and] mentoring their team while pushing them toward HR’s broader programs.”
Disconnection at the Top
While growth and engagement are priorities for the majority of HR teams, there’s still a big disconnect between HR and senior leadership in how these engagement strategies are executed at an organizational level.
Over half (55%) of HR professionals said their organization views engagement as important but doesn’t always stump up the resources to support it. Creativity is not the issue here: Only 10% of HR professionals said they’re struggling to come up with ways to increase engagement.
This tells us that engagement is a resource problem, not an ideas problem. By and large, HR teams know how to make their workforce thrive — but they’re not getting the support, leadership buy-in, or budget to make it happen. Team performance proves to be a double-edged sword here:
High-performing HR teams are more likely to trust senior leaders, prioritize engagement as a whole, and are better at translating their engagement survey insights into action plans.
A vicious cycle emerges for low-performing teams: They find it harder to implement their employee engagement programs, meaning they struggle to achieve their goals or gain trust with senior leaders. And in the end, this only leads to higher rates of burnout. Rinse, repeat.
There's a competition for resources right now in this resource-constrained environment. CHROs and CPOs who can tie engagement to dollars and demonstrate real ROI on engagement spend are those who get CEO, CFO, and other C-level support.
Getting More Out of Your Engagement Strategy With Data
HR teams may know the value of engagement, but they’re struggling to show it. Only 39% of HR teams reported that they’re actually able to execute action plans for engagement, leaving 61% of teams without the resources or support to make meaningful progress. And if these teams can’t gain trust from the C-suite, then they can’t launch initiatives that respond to the needs of their workforce or unlock high performance.
Fixing this disconnect between HR and executives is the key to moving engagement initiatives forward. But in an age where organizations are scrutinizing the balance sheet, senior leaders are unlikely to offer budget and buy-in if they don’t know what’s in it for the business.
“HR leaders can't afford to operate in a silo; they need to be business experts who not only have great HR instincts, but deeply understand the organization's industry, objectives, and operational realities,” said Breece. “By embedding themselves in the business, understanding key drivers, metrics, and pain points, HR leaders can offer more relevant, strategic solutions that resonate with leadership.”
HR teams have a wealth of data at their fingertips to connect their initiatives to business impact. But often, they lack the ability to frame this data in terms of the organization’s main challenges and priorities.
“The key is to clearly articulate the impact of employee engagement on business needs, and to do so in a language that reinforces your leadership team’s priorities,” said Melanie Naranjo, Chief People Officer at Ethena. “You need to connect the dots for your CEO. Just because HR leaders know that low employee engagement leads to lower productivity, missed business goals, and less revenue for the company, doesn’t mean your CEO understands it, too. Instead of just saying, ‘Employee engagement is down, and we need to fix it,’ explain the impact of low employee engagement on the core business priorities.”
Honing skills in data fluency and data-led storytelling will help HR leaders better quantify their impact on the business beyond just narrating survey results. This doesn’t necessarily mean a deep dive into a statistics course, but rather learning how to leverage people analytics platforms effectively, integrate data streams to build a coherent story, interpret data and trends, and translate that into next steps with effective reporting.
You need to connect the dots for your CEO. [...] Instead of just saying, ‘Employee engagement is down, and we need to fix it,’ explain the impact of low employee engagement on the core business priorities.
HR is spinning its wheels with AI, but it’s worth the grease.
The AI hype machine has finally rolled to a grinding halt as organizations now grapple with getting a return on their investment. For HR teams, the potential for AI is massive. But is it living up to its promises?
Well, it’s still mostly all talk — and no walk — according to our survey respondents. AI adoption from 2023 to 2024 has stagnated, with an even spread of 38% of HR professionals still discussing the technology’s potential use cases at an informal level year over year. Only 15% of teams have actually moved AI from idea to application — but the intent to implement is slowly growing, with more teams formally considering the technology as part of their existing processes in 2024 compared to 2023.
AI adoption from 2023 to 2024 has stagnated, with an even spread of 38% of HR professionals still discussing the technology’s potential use cases at an informal level year over year.
Unlocking AI’s Full Power
When we asked how HR teams are using AI, we found the most popular use cases are related to content generation, such as writing job descriptions (56%), performance reviews (46%), and employee handbooks (44%). And for the most part, teams say their application of AI met their expectations.
Far fewer organizations have implemented AI in a more advanced analytical capacity, with just 25% of HR teams using AI to identify biases in handbooks, reviews, or compensation decisions. An even smaller portion (20%) are using predictive insights to identify opportunities for a raise or promotion, mostly among larger companies. While these use cases represent a much smaller proportion of our survey respondents, the reported satisfaction level with the outcomes is much higher.
AI can ingest and process vast amounts of data to provide informed recommendations on merit budget allocations, but it’s crucial that humans evaluate AI’s recommendations and make final decisions.
“Pay and promotions are among the most emotionally charged aspects of HR, and rightly so — they directly affect people's livelihoods and sense of value within the organization. The fear that AI could take over such sensitive decision-making is real and valid,” Driver said. “There’s a tremendous opportunity here if approached correctly. AI can ingest and process vast amounts of data to provide informed recommendations on merit budget allocations, but it’s crucial that humans evaluate AI’s recommendations and make final decisions.”
“With thoughtful implementation and clear communication, AI can be used to enhance, rather than replace, the critical human elements of pay and promotion decisions,” Driver added.
If HR teams do manage to reap AI’s analytical power, that’s where the magic happens — and where HR is likely to get more value from its investment.
Upskilling Teams to Experiment With AI — Safely
AI is still evolving rapidly, and we’re still exploring the limits of what it can do. Generative AI might have been HR teams’ springboard into initial AI adoption, but unlocking the technology’s full power and leveraging it to drive strategic impact means teams need to think about its use cases beyond a bit-part player in their processes. And while we may see the rise of specialist AI-HR hybrid roles in the future, HR teams shouldn’t need a degree in computer science to maximize its potential right now.
Part of the way forward lies in greater team enablement, both at an internal and systemic level. HR teams are looking to AI vendors to build user-friendly, out-of-the-box solutions that remove some of the barriers to effective implementation and integration with existing processes and tech.
But long-term, the success of AI’s implementation in HR hinges on moving from task-based thinking to systems-based thinking. Instead of thinking about isolated jobs that AI can take on (such as writing job descriptions), think more broadly in terms of the processes and systems it can augment and use cases that solve business-critical problems — such as building an algorithm to optimize workforce planning or speed up time-to-hire.
“Don’t look for AI tools and figure out what problems they can solve,” said Valentina Gissin, Chief People Officer at Garner Health. “If you already have a list of workflows you want to automate, or other activities you believe AI could do, look for a tool to solve that problem.”
Creating an environment for safe experimentation helps teams identify their most impactful use cases relative to business needs, test hypotheses, and scale thoughtful implementation of AI. Building policies around how AI can and can’t be used in HR processes provides guardrails for ethics and best practices while enabling responsible innovation. Defining key performance indicators (KPIs) and metrics helps teams identify which use cases are delivering the most impact and return on investment — both for department-level and strategic goals.
Don’t look for tools and figure out what problems they can solve. If you already have a list of workflows you want to automate, or other activities you believe AI could do, look for a tool to solve that problem.
HR and managers see the value in performance reviews, but are struggling to make them work.
Over the past four years, performance management has slowly risen on HR’s agenda. This year, it’s only in second place, but our data hints at why it’s been gaining traction in recent years.
First, the good news: Both HR professionals and managers see the value in the performance review process, with 74% of managers and 66% of HR respondents agreeing that performance reviews are very helpful or critical to getting the most out of their teams.
Both HR professionals and managers see the value in the performance review process —agreeing that performance reviews are very helpful or critical to getting the most out of their teams.
Larger firms of over 500 employees, and those with more than six members in the HR team, saw slightly more value in performance reviews than smaller teams did — perhaps due to better internal resourcing to build regular, structured processes. Meanwhile, European teams were more likely than their US counterparts to see performance reviews as a valuable exercise.
Process Overload
While both HR and managers are aligned on the importance of performance reviews, familiar problems with processes and evaluation criteria persist.
The majority of HR professionals (61%) and managers (50%) are finding it hard to quantify what counts as “good” performance compared to “excellent.” Organizations with fewer than 100 employees found this challenge a particular concern, possibly due to less structured processes and fewer people to share the load.
While “good” versus “excellent” might seem like splitting hairs, this uncertainty over performance evaluation criteria will introduce standardization issues, promoting greater subjectivity and bias. At the micro and macro levels, it’s cause for potentially impacting hiring budgets, performance calibrations, and employee equity with regard to promotions and raises.
If you want a manager to spend an hour writing each performance review, you should find ways to free up an equal amount of time.
Information overload is also a cause of strain. Almost half of HR respondents (47%) and managers (49%) find it difficult to review a year’s worth of information as part of the annual review process — let alone analyze it, summarize the insights, and replicate that process, fairly and consistently, for an entire team.
Streamlining Reviews With AI and Infrastructure
With performance, it’s clearly the process, not the principle, that’s causing friction. Managers often bear this burden alone, playing the role of the evaluator, career coach, and data analyst — and they already have a lot on their plates to begin with.
In a 2024 UK survey that Lattice ran with YouGov, 47% of managers said that they’ve felt too overwhelmed to carry out their role effectively. With additional pressure mounting on managers to deliver more constructive feedback, it’s easy to see how the performance review process becomes stressed at scale.
For Melanie Naranjo, it’s a balance of outputs: Time spent on performance reviews must be given back in equal measure.
“Performance reviews are a critical part of building successful companies, no question,” said Naranjo. “But meeting the needs of managers is equally important — and we need to find ways to make the process easier on managers while eating up less of their time. If you want a manager to spend an hour writing each performance review, you should find ways to free up an equal amount of time with a reduction in working meetings during that period.”
Structured, regular processes around feedback, such as one-on-ones and growth conversations are foundational, said Ross, noting that when performance is an always-on process, “the formal quarterly check-ins or biannual/annual performance reviews would simply serve as a consolidation and recap of these informal conversations.”
But partnering this approach with AI is where teams can unlock greater value.
“Intelligent data aggregation will become a GPS to navigate the overwhelming flow of information [in performance reviews], guiding managers to the most useful insights,” said Gissin. “Though it's important to remember it's not a substitute for strong managerial judgment.”
While AI implementation has stagnated for HR, more of them have indicated performance reviews as a use case. This means helping managers synthesize qualitative and quantitative feedback and summarize information, saving managers hours of time poring over individual data points.
When implemented effectively, AI can alleviate the analysis paralysis caused by facing an entire year’s worth of performance data. The result gives both HR and managers the best of both worlds: a streamlined, efficient, and consistent process that retains human decision-making at its core.
Intelligent data aggregation will become a GPS to navigate the overwhelming flow of information [in performance reviews], guiding managers to the most useful insights.
Pay transparency remains a challenge for managers and HR alike.
Though compensation transparency caused quite the uproar in previous years, new state-level legislation in the US requires companies in some states to disclose salary bands in job postings — much to job seekers’ delight. But that hasn’t kept organizations from finding workarounds (like remote-first tech companies claiming open roles are “not eligible to be performed” in such states).
The result has hampered progress, and this year’s survey results made that clear. Since 2022, the number of HR professionals who feel their company does a good job with compensation transparency has plummeted — only 8% of respondents rated their organization as doing an excellent job in 2024. Meanwhile, the number of respondents who say their company is doing a poor job has more than tripled.
When we look at organizations’ levels of compensation transparency for the same period, we begin to see why:
said their organization restricts pay band information to finance and HR only.
said employees know the pay band for their job level.
said employees can find out exactly how much everyone makes.
Last year, our report found that companies whose executives were committed to compensation transparency had significantly higher engagement (72% vs. 39%) — proving that even when you can’t increase the salaries themselves, transparency can positively impact the company’s bottom line.
HR teams in Europe are reporting much higher levels of compensation transparency, demonstrating a greater understanding and embrace of pay strategies that support business outcomes, employee growth, and performance.
“Transparency makes employees feel like you trust them and that you aren’t hiding things from them, which can lead to a heightened sense of ownership and ambassadorship — two key drivers of engagement,” said Migliore. “Performance conversations also become more fair and less compensation-oriented because we all know the implications of promotions and internal mobility, which allows managers to focus more on the actual performance trends instead.”
Driver said US-based HR teams are likely focusing on immediate operational needs rather than initiatives like pay transparency. “Educating employees on the nuances of compensation, such as understanding why not everyone is at the 90th percentile, requires time and resources that many companies just don't have right now,” she said.
“Leaders might be hesitant to fully embrace pay transparency without the necessary infrastructure and education in place, fearing it could lead to misunderstandings or dissatisfaction among employees,” Driver added. “Without the cycles and capacity to manage these complexities, the push for pay transparency has taken a backseat.”
Perspectives on Pay
While strides toward greater transparency have been widely varied across the globe, there are also some hints at additional internal challenges between HR and managers:
of HR professionals said that managers are unprepared to explain pay transparency, while 41% feel the same about pay equity.
Managers disagree with that assessment: Only 15% rated themselves unprepared to explain pay transparency, while 14% said the same about pay equity.
So are managers overconfident, or is HR too pessimistic? Probably both, said Gissin.
“I wager the disparity comes in how they perceive the goal. For managers, the goal is to handle the issue at hand reasonably well. And they’re probably right that they can do that. For HR, the goal is to handle the issue at hand both well and in the way HR would want, and therefore consistently with how all other managers in the company would do it. HR knows it has not equipped managers to achieve that goal.”
Giving Managers the Resources to Talk About Pay
Managers want their direct reports to be fairly paid. HR wants to ensure equity and fairness across the broader organization. Both are right — and meeting in the middle requires HR teams to give managers the right language so they can show up to compensation discussions fully briefed.
“Sharing compensation information invites a lot of conversation, so HR and managers have to be able to really stand behind the data and where it came from,” said Gissin. “In some cases, HR may not be confident in its answers, never mind in its ability to train managers on them.”
Solving this challenge relies on HR ensuring that compensation philosophy, processes, and policies are structured, fair, and easily explainable to all.
“Managers are perfectly capable of managing pay discussions, provided that HR provides clear and transparent guidelines on three key points: Company philosophy, pay bands by role, and how the company determines where employees fall within the salary band,” Naranjo said. “Hoarding pay discussions within the HR team is an ineffective strategy. It leads to feelings of divisiveness between employees and HR, limits manager accountability regarding having tough discussions, and puts far too much work on HR teams.”
While HR teams may be leery of giving managers too much access to compensation information, increasing some level of transparency will pay off down the line:
Formalize your goals and values around employee pay to prepare managers to better explain the “why” to their direct reports — especially in challenging discussions.
When managers understand how compensation, bonuses, and other salary factors are calculated, they can approach sensitive discussions with facts.
They know their team members' contributions and performance best, and their perspectives are invaluable in making fair and informed pay decisions.
In return, HR needs managers to take these training sessions seriously and show up prepared to learn and apply what they’ve been taught. Managers should proactively reach out to their HR business partners or total rewards teams whenever they need guidance on pay decisions or difficult conversations.
Staying aligned on one of the company’s most sensitive and significant investments is key to a transparent relationship between HR and managers.
Manager support makes all the difference.
Despite a few disagreements here and there, there’s one thing managers want HR to know: You’re doing just fine. In fact, you’re doing great.
Managers give HR higher efficacy scores than HR professionals give themselves across the board, with the most votes for performance management training, provision of useful tools and platforms, and information on how promotions work.
43% of managers view HR as an advocate — both for employees and themselves. There’s a virtuous cycle at play: 91% of high-performing HR teams are able to meet most or all of their managers’ needs.
There’s more good news on the horizon, too: 43% of managers view HR as an advocate — both for employees and themselves. The feeling is mutual: 91% of high-performing HR teams are able to meet most or all of their managers’ needs.
That additional support turns out to be really important when we look at manager attitudes about their day-to-day work. Managers who feel supported by HR and have all of their needs met are more likely to stay at their job, feel more connected to their direct reports, and view HR as an ally.
Most importantly, they’re more likely to be fully engaged and energized — which is likely to have a dual impact on both team engagement and performance.
Strengthening Manager-HR Feedback Loops to Drive Alignment
HR doesn't necessarily need a whole PR campaign to improve managers’ opinions. But if there’s one thing they can work on, it’s their positioning within the organization. Consider these findings:
More than a third of managers (38%) still view HR’s function as administrative — a process-led department, rather than a strategy-led one.
Almost a fifth of managers (19%) see HR as an extension of senior leadership, carrying out orders from the top. It’s an image problem — but it’s a problem HR leaders and teams need to solve if they’re going to build a stronger partnership with their managers.
“Misalignment is often more a creative tension caused by a difference in perspective and communication,” said Breece. “HR often takes a broader perspective, focusing on long-term organizational health, change management, and culture enhancement and preservation, while managers are typically focused on immediate team needs, productivity, and operational goals.”
It's not always about blame — more often, it’s about finding common ground and reinforcing the understanding that HR and managers are, in fact, working toward the same objectives. HR and managers often find that, when they align their strategies more deliberately, their goals are complementary, not conflicting.”
Cementing HR’s role as strategic partner managers can rely on hinges on dispelling confusion around who does what.
“Managers and HR are aligned and want to be doing the right things — but the friction happens when there’s ambiguity around who makes decisions, who executes tasks, and who is accountable. It’s HR’s job to prevent that confusion,” Gissin explained.
“If HR is going to design the right things for the business, it can only be done with the help of the managers," she added. "HR needs managers to tell us where they need our help, how they can help us help them, and provide a constant feedback loop of what is and is not working.”
Part of this effort depends on HR creating stronger, more regular feedback loops with managers to identify their evolving pain points through surveys and other methods.
But to Gissin’s point on accountability, relationships are a two-way street — and managers must understand the business-critical importance of their role in providing feedback that improves the organization as a whole.
Now is the moment for HR teams to think strategically about what lies ahead. We have an opportunity to be trusted advisors and strategic thought leaders to executive teams and business leaders while continuing to advocate for the employee voice. While we can’t predict the future, we can prepare for it by leaning on what we know to be true:
Strengthening the HR-manager relationship is critical to creating a future where employees thrive and businesses succeed. Streamlining processes, strengthening feedback loops, adopting emerging technology, and quantifying HR’s business impact are all key to maximizing this relationship — because HR and managers are at their best when they’re working together.
They need — and deserve — to work in thriving, collaborative cultures where they can do their best work, make progress toward clearly defined goals, and be recognized and valued. This will require businesses to invest in their capabilities to learn, leverage AI, and work together more efficiently. And it will require HR to remain dedicated to building positive, inclusive workplace cultures.
It can help us scale our impact and solve real problems, but only if we embrace the fact that we don’t have all the answers and commit to learning and experimenting alongside our leaders, teams, and employees. AI has incredible potential to transform the workplace, but we have to be bold and imaginative about using it to solve systemic issues, not just automating daily tasks.
We hope this report instills optimism for the year ahead. HR has always been critical to our organizations’ success, and as we look to the future, let’s lean on our humanity to rise above challenges and learn from each other. The future requires building empathy, deepening our relationships, and leveraging our human-centered technologies to build an even better world of work.
Lattice’s people management platform provides interconnected and intuitive HR tools designed to drive high performance and build people-first cultures.
Combining an HRIS with continuous performance management, employee engagement surveys, compensation management, and career development tools, Lattice’s platform drives excellence and efficiency for HR teams by enabling them to invest in their people and accelerate business results.
With offices across North America, the UK, and Europe, Lattice serves more than 5,000 customers worldwide, including Discord, Gusto, Intercom, Ramp, Calm, NPR, Tide, and more. The company has ranked on the Inc. 5000 list of the fastest-growing private companies five years in a row and is rated as a Great Place to Work by 99% of its employees.
The 2025 State of People Strategy Report features survey responses from 1,252 HR professionals and functional (non-HR) managers collected between May 21 and July 28, 2024.
Respondents work across various industries and company sizes, with a variety of job levels, departments, and remits of control. They’re located in the US, Canada, England, Germany, France, and other global markets.
This year’s survey explored a range of topics relevant to HR professionals and managers, including employee engagement, performance reviews, AI usage, and the evolving relationship dynamics between the two.
We analyzed these responses and compared them to those of the last four years, with key trends and action points from multiple HR focus areas and priorities. Data points presented as percentages have been rounded to the nearest whole number.