As 2011 winds down and we prepare to welcome 2012, here is a look at how the HR practices at Boston area employers evolved over the past year and what their expectations are for hiring, recruiting and HR expenditures in the year ahead.

The data on Boston employment trends and issues was taken from a quarterly survey of Boston-area employers conducted by my company, Professional Staffing Group. For the past two years we have surveyed our clients each quarter about their plans for staffing and hiring, salary and compensation, concern over retention and recruiting talent and budgets for HR spending.

When we surveyed our clients at this time last year, results revealed the most positive outlook on hiring and compensation since the recession began. At that time,

• Many more employers expected to add staff is 2011. The number of employers planning to add staff spiked in the fourth quarter of 2010. 54 percent of employers said they planned to add staff over the next 12 months.
• Uncertainty about employment was decreasing. In the third quarter of 2010 25 percent of respondents answered “unknown” when asked about headcount levels for the year ahead, but in the fourth quarter only 10 percent answered “unknown” when asked to predict headcount levels in the next 12 months.
• Compensation was increasing. More employers said they had increased compensation for their staff by the end of 2010 and 82 percent said they expected to increase compensation in the year ahead.
• Employers were holding the line on expenditures. The majority of respondents answered that they planned to keep budgets at the same level when it comes to tradeshows/conferences, seminar attendance, travel in general, internal training and development, professional certification, and reimbursement for continuing education.
• The number of respondents who said employee engagement is a significant problem doubled from those who were asked the same question the previous quarter (18% in Q4 vs 9% in Q3)
• Employers were starting to feel the strain when it comes to recruiting: The number of respondents who answered “not a problem” (29%) or “significant problem” (18%) remained essentially the same, but the number who said recruiting top talent is a minor problem jumped to 50% from 37% in the previous quarter.

Three months later, things were still looking good. Respondents to our Q1 2011 survey indicated that:

• Compensation increases were continuing and more employers were giving higher increases
• Employers were positive about hiring, but cautious
• HR budgets largely remained flat
• Although concern over retention hadn’t changed much, employers expressed more concern about recruiting and employee engagement

However, by the mid-point of 2011 many employers and HR managers were putting the brakes on. In our Q2 survey we found that:

• Planned employee headcounts had leveled off
• Compensation increases had also leveled off
• Employers continued to hold the line on expenditures
• Employee training and development was the one budget that employers said they planned to increase
• Recruiting continued to become more of a concern

Three months ago we posted the results from our Q3 survey, which found:

• Staffing level expectations had continued to moderate
• While less robust, hiring expectations were still positive
• Compensation increases slipped slightly
• Spending on HR-related items was expected to level off

It’s clear that 2011 didn’t produce the growth that employers were optimistically seeking back in Q4 2010. However, by most indications the worst we can say about the past year is that employers proceeded cautiously by tempering compensation increases and hiring and holding steady on HR expenditures.

A look at the November report from the state’s Executive Office of Labor and Workforce Development is encouraging. According to the report, Massachusetts’ unemployment rate in November fell to its lowest level in nearly three years as employers added jobs for the second consecutive month. Other signs that the state’s hiring levels may be picking up: more employers, both large and small sized, say they plan to hire; online job advertisements have increased; and fewer people are applying for unemployment benefits.

Aaron Green is founder and president of Boston-based Professional Staffing Group and PSG Global Solutions. He is also the chairman of the American Staffing Association’s Board of Directors. He can be reached at Aaron.Green@psgstaffing.com or (617) 250-1000.