HR teams are prioritizing performance management in the year ahead, new report finds

HR teams are reprioritizing performance management, according to a new report from Lattice, which happens to be a performance management and engagement platform.

Performance management displaced employee engagement as the top priority for the first time in six years, according to the 2026 State of People Strategy Report released Wednesday.

“If you do a look back, there’s been so much fluctuation between priorities and [the] state of business between, Covid: send everybody home, bring everybody back; be woke, don’t be woke. There’s been this whiplash effect, and what we’re seeing now is stabilization into the back-to-business basics,” Lattice CEO Sarah Franklin told HR Brew.

The report found that 40% of HR pros globally say performance management is their firm’s top priority heading into 2026.

“Performance management is the end state of all of the business basics, which start with plan setting, goal setting, regular performance check-ins, regular communication,” Franklin said, adding that it’s a return to those core business components and then measuring against those for success.

Twin stars. The report suggests engagement is not an opposing priority, but a “twin star” with performance. Employee engagement remains key, with 39% prioritizing it.

Engagement impacts performance, and retaining high performers is achieved through good employee engagement, everyday, not just twice a year during listening campaigns. The seemingly competing priorities actually complement one another for high performing teams.

“You want to know that your top performers are engaged, and you want to understand [your] risk of losing them,” Franklin said. “You want to make sure that they are engaged, that they are well managed and have great opportunity.”

Franklin told HR Brew that high performing organizations are looking to other signals to understand employee engagement, and leveraging platforms like Lattice to make actionable sense of those signals.

The 2,000-pound gorilla. People leaders are also looking to AI to help scale HR programs that level-up the workforce.

“I talk to people teams all the time, every day, and there’s definitely a comfort with it. It was more scary before now, and that’s the fluency,” she said of AI use in the department. “Then, also, the deeper understanding of how it can be helpful in scaling their function.”

The more people leaders leverage AI to scale their talent development strategy and to automate rote work, the more their organizations will reap the productivity gains high performing orgs are discovering, she said.