Amid budget constraints, leaders face a choice: cut blindly or invest with precision in the programs that matter most.
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I’m noticing a quiet shift underway in the C-suite. In the face of economic uncertainty and accelerating disruption from AI, many leaders are pulling back budgets – and also reexamining long-held assumptions about people investment.
Budget conversations are becoming more demanding. Programs that once felt untouchable are now being paused, downsized, or reexamined through the lens of cost and contribution. Even foundational people programs are not immune from scrutiny.
Where growth and innovation once dominated the agenda, we’re now seeing a return to discipline, selectivity, and proof. Deloitte, PwC, and Conference Board have all pointed to a business landscape shaped by economic caution. Oliver Wyman and NYSE see over two-thirds of CEOs reallocating resources with precision, focusing on bets they can measure, and pulling back on the rest.
And nowhere is this shift more visible – or more painful – than in human resources. Very few HR teams say they are increasing spend this year. Gartner reports that 65% of HR leaders anticipate flat or declining budgets in 2025, and those who are spending are doing so on tech tools, not employee experience.
Executives are taking a closer look at whether their workforce strategies are still aligned to value, and whether the programs they’ve supported in the past are delivering what the business needs now.
I’ve led Workhuman through three eras of turbulence — the dot-com crash, the 2008 financial crisis, and COVID-19. Each time I learned the same lesson: cuts may be unavoidable, but you have to protect the core of culture and the employer deal. That’s what carries you through
What’s emerging is a new mandate: to justify every people investment with clearer signals of impact, and to make those decisions with greater speed, precision, and accountability.
The Risk of Getting It Wrong
In times like these, the instinct is often to freeze and eliminate programs. However, this is not a moment for blind cutting. It’s a moment for cutting with clarity – and for understanding what – and who – is quietly keeping your company alive.
The leaders I talk to certainly aren’t looking to slash indiscriminately. They want to prune carefully, removing what no longer serves the business while protecting the talent and programs that will drive its next chapter. This moment demands precision. To survive the cycle, yes, but also to know where – and who – to invest in, to create the conditions for future growth.
Scaling back on programs that aren’t working can be healthy, but it carries real risk if done without first getting clarity on what is working.
For example, RedThread Research recently flagged a trend of performance management programs being trimmed back. Support for managers is also thinning out, they note. Many employee experience efforts are narrowing in scope, or disappearing altogether, unless those programs and tools can be tied directly to business imperatives.
In isolation, these moves may seem pragmatic, and some may be. But taken together, they signal a shift worth watching. Because there’s no question that giving up on your employees’ well-being invites them to give up on yours.
We’ve seen this outside of tech, too. Costco kept an employee-first stance through the 2008–09 recession — avoiding layoffs while maintaining wages and benefits — and emerged with fierce employee and customer loyalty and stronger performance. And in 2020, Delta leaned on voluntary leaves and early retirements to avoid involuntary furloughs for key frontline groups, a deliberate choice to protect culture in the hardest moment. Both moves looked ‘expensive’ in the short term and paid dividends in the recovery.
In the research mentioned above, RedThread found that only 44% of employees are satisfied with their current performance management experience, and just 39% said they feel the process is fair. That’s a signal of eroding trust. And as Stacia Garr noted, the push for productivity hasn’t resulted in better outcomes. Instead, those companies may be trading their long-term health for short-term gains.
The trust gap is growing elsewhere, too. Qualtrics has found that while most employees believe their leaders are competent, only 56% believe those same leaders will prioritize well-being over short-term gains. That kind of perception shift can be hard to repair.
I don’t think most leaders are trying to undermine their own long-term people strategy. However, without a deeper understanding of contribution, influence, and burnout, it’s far too easy to overlook what’s quietly keeping the engine running.
The Signal Leaders Are Searching For
In every conversation I’ve had with leaders lately, this one theme keeps coming up: they want to protect what matters. They can’t fund everything. But they also know the cost of cutting programs that quietly hold the culture together.
The challenge is knowing where to focus.
Most traditional people strategies are designed to scale broadly, rolling out the same solution to everyone in the name of consistency or fairness. But in constrained environments, generalizing is expensive. It misses the mark. And it can inadvertently end up being unfair to your best performers.
Leaders don’t want to guess. They want to target. To retain the people who elevate those around them. To develop the ones with headroom to grow. And to solve for skills gaps by building, not just buying, by looking inward at where capabilities already exist but may be hidden, untapped, or underrecognized.
They want to know:
- Which managers are most in need of support, rather than just those who say they need it?
- Who’s quietly driving outcomes—and might disengage without intervention?
- Where high-potential talent is emerging—and what kind of support do they need to grow?
- How to align efforts in recognition, learning, and DEI with what’s truly happening on the ground?
This moment calls less for sharper scissors than sharper signals: clearer ways to understand who’s making the biggest impact, where collaboration is strongest, and where potential is being underutilized. And just as important, it calls for better ways to spot risk early, before a critical contributor burns out, or a high-potential team starts to drift.
The old metrics don’t help much. They’re lagging, fragmented, and often shaped by hierarchy more than behavior. What’s needed is a way to see the real patterns of work – who’s trusted, who’s stepping up, and who’s quietly keeping the whole thing moving.
This Isn’t Playing Favorites. It’s Seeing Clearly.
There’s understandable hesitation when it comes to targeting investments in people. Leaders worry about fairness, about optics, about creating two-tier systems. But the answer to that discomfort isn’t to flatten everything. It’s to raise the standard for what programs should do.
If a program is going to survive this moment, it needs to do more than sound good on paper. It needs to perform on two fronts.
- Does it calibrate investment to impact? The best people programs should disproportionately benefit the individuals who are driving the business forward—those who elevate others, deliver results, and embody what the organization is striving to become. That’s not favoritism. That’s precision.
- Does it bring insight back into the business? The strongest programs don’t just support employees. They deliver people intelligence. They help leaders understand where work is really happening, how aligned people are with values and priorities, what strengths exist across the organization and where energy is building or fading.
When we hold programs to this standard, the path forward gets clearer. Instead of just spending less, you’re also spending better and more discriminately.
From Human Data to Actionable Intelligence
In an uncertain environment where every choice carries more weight, leaders need more than instinct. They need insight that is grounded in behavior, connected to contribution, and current enough to act on.
That doesn’t mean building something entirely new. Often, the signals already exist inside your business: recognition, collaboration, and peer feedback. What may appear on the surface as culture initiatives are, in reality, some of the richest data sources you have. They reveal who’s driving momentum, who’s aligned with strategy, and where leadership is quietly emerging.
That’s why companies like Cisco continued to fund recognition at about 1% of payroll, even during a significant transformation—using a global, peer-to-peer program to strengthen connection and, crucially, generate the data leaders needed to better navigate change.
And yet, the irony is that these are often the very programs under threat. When budgets tighten, employee experience can be first on the list of cuts. But removing them means losing access to the signals that tell you where your people are creating value, where risk is rising, and where investment will return. In a world where technology levels the playing field, your people are the differentiator. And these programs hold the data that help you see that asset clearly.
The more closely I look at where organizations are thriving today, the more I’m convinced that this kind of real-time, people-centered understanding will become the essential operating system of future workforce management and smart leadership decisions. Not for monitoring, but for matching investment to value. For making people decisions that are not only efficient, but funnel finite budget resources to where they will have the most impact.
That’s how I’m thinking about the future of people investment. Not as a cost to manage, but as a portfolio to tune. After all, the goal isn’t to do more with less. It’s to do the right things with what you have.