Employee engagement and performance management are once again the highest priorities for HR going into 2025, according to the latest State of People Strategy Report from employee experience tech specialist, Lattice.

In a continuation of trends noted in the 2023 and 2024 editions of the report, employee engagement, performance management, learning and development, and manager enablement and training were found as the top priorities for HR.

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 in the 2025 report.

Lattice noted that an increased focus on engagement does not mean that the importance of performance is waning. In fact, it noted that organizations recognize that high performance cannot exist without engagement, with both factors working towards the same end goal.

However, DEIB (Diversity, Equity, Inclusion & Belonging) has fallen further down the priority list for HR in 2024 to an all time low in Lattice’s reports. 

Just 15% of respondents said DEIB programs are a priority this year, down 2% from last year, with European HR respondents 2.8 times more likely to list DEIB programs as a priority than their US counterparts. 

AI has also been top of mind for HR leaders for the past few years and although excitement for the technology’s potential to advance HR into the future is palpable, Lattice has found that AI hype is mostly just that.

According to the report, just 15% of HR teams have moved from AI evaluation into implementation in 2024, while 38% of respondents said they are still discussing the technology’s potential use cases at an informal level year over year. 

At present, the most popular HR use cases are focused on content creation, such as writing job descriptions (56%), performance reviews (46%), and employee handbooks (44%).

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 group (20%) are using predictive insights to identify opportunities for a raise or promotion, mostly among larger companies.

Fundamentals of people strategies are holding true

Speaking exclusively to UNLEASH, Lattice CPO Gianna Driver says the 2025 report finds HR professionals at “a pivotal moment”. 

“While we may not be managing crisis after crisis as we have in recent years, we’re facing new challenges and uncertainties, ranging from AI’s role in the workplace to DEIB’s future within organizations,” she explains.

However, Driver also highlights that the “fundamentals of strong people strategies hold true”, with employee engagement, performance management and manager enablement all featuring at the top of HR’s priority list year over year.

In addition to foundational elements of people strategies, Lattice found a “surprisingly strong opportunity for HR teams to amplify their impact: Strengthening the HR-manager relationship”, Driver tells UNLEASH.

Lattice found that 91% of high-performing HR teams – those that are exceeding their targets – are meeting most or all of their managers’ needs, compared to just 41% of teams falling short of their goals. 

While 43% of managers view HR as an advocate – both for employees and themselves – more than one third (38%) of managers still view HR’s function as administrative – a department led by process rather than strategy.

Encouragingly, managers appreciate HR’s efforts more than they know – across the board, managers give HR more credit for the value they provide than HR professionals give themselves,” Driver details.

“It is also clear that focusing on manager enablement amplifies business success: Managers who feel supported by HR report higher levels of satisfaction in their day-to-day, boosting broader team engagement and performance.”

Unlocking synergies between HR and managers

Despite the collaborative success between HR and managers, Lattice also found that HR still has an image problem among managers, with one fifth still viewing HR as an extension of senior leadership teams carrying out orders from the top.

In order to further develop the relationship between HR and managers, and “unlock the synergy” between the two, Driver recommends that HR must “address the challenges” currently facing managers.

For example, performance reviews and compensation – while they represent two of the most critical pieces of people management – continue to be points of friction for HR and managers,” she says. 

“HR must better equip managers with the resources and training they need to best handle these conversations with employees, while also introducing new technologies like AI to streamline processes and increase access to vital information.”

This, Driver concludes, means managers will be empowered to better support their direct reports and, ultimate, drive collective success.