The HR team is under greater pressure than ever to find innovative, flexible solutions that will improve employee engagement and well-being. Talent competition is fierce as 2025 approaches. Employees are demanding greater support from their employers, from better financial wellness to improved work-life balance. Companies that are able to meet these needs will be at a competitive advantage by 2025.
In 2025, HR teams will face several trends. It’s important to prioritise the employee experience, which means adopting strategies and tools to improve employees’ well-being and engagement and reduce turnover. Second, HR teams need to use AI and automation in order to streamline tasks such as recruitment, onboarding and payroll. Data analytics will be used to inform decisions about talent acquisition, compensation and workforce planning. Third, HR teams are responsible for ensuring that the transition back to the office from remote or hybrid work is as seamless as possible.
HR teams will also continue to move away from benefits that are one size fits all and towards more flexible, portable benefits that cater to the unique needs and goals of employees. Benefits will also be more comprehensive and cover everything from the employees’ financial and physical health to their families. Benefits are essential to the overall health of employees and will become a key competitive advantage in coming years.
The employee experience will be of paramount importance
Many signs indicate that employee experience can be improved. Gallup states that less than a third of employees are engaged in their work. This can have a variety of negative effects, including increased absenteeism and decreased productivity. A Bank of America 2024 survey found that burnout was one of the main reasons why employees considered leaving their jobs. The top reason for staying is a good work-life balance.
Supporting employees holistically is a critical part of improving EX. For example, 57% of employees believe that finances are the main cause of stress. This can affect many aspects of well-being, from sleep to mental health and a feeling of belonging in the company. The perception of HR about employee financial health is often far from reality. HR leaders, for example, overestimate the financial health of employees. HR teams need to engage employees on a regular basis about their needs and how they can improve their experience.
This effort is heavily focused on financial health. Other issues must be addressed, such as the lack of flexible benefits and employee disengagement. There are also cultures of overwork, where employees feel uncomfortable taking time off from work or separating themselves completely. EX is more important than ever, and HR teams must find innovative ways to improve the EX.
AI, automation and data will transform the HR
Globalization is transforming the global economy. McKinsey estimates that 30% of the hours that are currently spent in the U.S. could be automated by 2030. Companies already face significant skill gaps and are struggling to fill them. AI’s emergence is driving these changes, but it also provides solutions to make them more manageable. AI is playing a greater role in recruitment tasks, as it helps HR professionals to identify and interact more effectively with qualified candidates.
Gartner reports this is just one of the many reasons HR leaders are concerned about falling behind their peers who have adopted AI in the next 12-24 months. Gartner found that 38% of HR leaders have already explored or implemented AI to improve process efficiency. AI-powered chatbots can be used by HR teams to screen candidates on a larger scale and collect basic information. AI can analyze much larger pool of candidates to identify those that meet certain criteria more efficiently than human recruiters. AI can be used to identify skill gaps.
AI is not just an effective tool for hiring and onboarding new staff. AI can help HR teams retain existing employees by predicting turnover, personalizing professional development and learning opportunities, and helping companies make data-driven decision around everything from compensation and workforce planning. It doesn’t matter how HR departments use AI in the future, the technology has already had a significant impact on their work.
The employees will continue to demand more flexibility
Employee benefits are no longer a one-size fits all proposition. Employees expect to be treated like individuals, with their own financial goals, professional challenges and priorities. HR teams can satisfy this demand by offering flexible benefits to help employees plan for the future, and achieve a better work-life balance that meets their needs. This could include anything from offering personalized financial advice to flexible benefits like convertible PTO, which allows employees to use their time off however they choose.
A recent Harris study found that over three quarters of Americans do not use the PTO they are entitled to. Employees are wasting money every year. This could be used for anything, from student loan payments to retirement contributions. No wonder 70 percent of employees are interested in customizing their benefits. The benefits are even more valuable at a moment when two thirds of CEOs anticipate a return to the office in full by 2026. 60% of employees who have remote-capable positions want a hybrid arrangement. HR teams need to provide flexibility for employees who are losing their flexibility on how and where they can work.
HR teams who focus on improving EX and leveraging new technology, such as AI, while giving employees the flexibility needed will be able to differentiate themselves from their competitors by 2025, and prepare their workforces for success in the future.
