In our most recent article, we discussed some of the leading HR trends we expect to see in the coming year and beyond. We also acknowledged that our labor economy is in a period of dramatic transformation. The dynamics of hiring, employment, and productivity are changing in profound ways.
More professionals than ever before are working remotely. A younger generation of workers brings with it demands for greater work-life balance, equitable pay, and competitive benefits. Rapidly advancing technology is altering the labor landscape in ways that are only beginning to reveal themselves.
Needless to say, that kind of change is also creating some very real challenges for employers. Human Resources (HR) professionals must play a central role in helping their organizations navigate these challenges.
Top 10 Challenges for HR Departments in 2025
Below, we take a deeper look at what we see as the biggest challenges facing your HR department in 2025.
1. Cross-Generational Collaboration
Today’s workforce is a melting pot of generational cohorts–a combination of Baby Boomers, Gen Xers, Millennials, and Gen Zers–all with their own unique cultural experiences, work habits, and expectations. Achieving harmony, symbiosis, and collaboration between these generations can present some difficulties.
Organization’s may struggle to establish a cohesive culture that feels comfortable and inclusive for members of every cohort. This is especially true with the rise of hybrid (remote/onsite) working environments, our growing reliance on mobile channels of communication, and the emergence of potentially disruptive AI technology. An article from Netsuite suggests that HR professionals can help create greater cross-generational cohesion by structuring working teams “to include employees from various age groups to foster and encourage diversity in thinking and task execution.”
HR personnel will also bear direct responsibility for recruiting, onboarding, and training team members with the interpersonal skills, cooperative personality traits, and temperament to work harmoniously across generational divides.
2. Adaptation to the Hybrid Workplace
It isn’t just the cultural divide between generations that threatens organizational culture and workplace cohesion in 2025. The COVID-19 crisis may have pushed more companies to adopt remote working solutions. But it seems that for many workers and employers alike, remote work has become a more permanent reality.
Remote work offers cost savings for employers and employees alike while improving work-life balance. But this arrangement is not without its challenges. Many companies are still struggling to adjust to this new reality. The hybrid modern workplace blends remote and in-office work. For many companies, this can make it more difficult to create policies that apply consistently to all working arrangements, to foster an atmosphere of collaboration, and to ensure that all employees feel equally engaged regardless of their physical location.
In 2025, we anticipate that HR leaders will face related challenges like workplace isolation, digital fatigue, and a problematic blurring of the lines between work time and personal time.
3. Regulatory Compliance
The article from Netsuite points out that the challenges of regulatory compliance have become more complex in recent years. Advances in technology, an increasingly remote workforce, and the continuing erosion of barriers to international trade have created new areas of concern for both regulators and businesses.
Greater reliance on technology exposes us to new cybersecurity threats. Hybrid working teams have created new grey areas for employee conduct, workplace safety, and company liability. The rising tide of offshore outsourcing invites questions about how best to create regulatory consistency between vastly different legal cultures.
This to say nothing of the already layered and complex field of U.S. labor law. The Department of Labor offers a comprehensive Employment Law Guide for your consideration. However, it falls upon HR professionals to ensure their employers remain up to date on sometimes rapidly evolving regulatory requirements. We anticipate that achieving and maintaining regulatory compliance will be a major HR challenge in 2025.
4. Corporate Citizenship
It’s not just the administrative state that expects more from businesses. Workers are demanding improved ethical practices from their own employers. According to an article from SHRM, “Last year, for example, Amazon employees walked out over the company’s climate policies, while Wayfair workers left company facilities over sales of furniture to immigrant detention centers in the U.S.”
In fact, SHRM cites 25 major labor walkouts in 2024 including demonstrations for better working conditions from the employees of major brands like McDonald’s, Starbucks, and Target. These walkouts suggest that companies must do better by their employees, their communities, and their world.
Human Resources personnel must play a key role in communicating the expectations of workers, positively influencing the actions of company leadership, and preventing work stoppages by bringing both sides to the table.
5. Talent Acquisition
In recent articles, we’ve discussed the high cost of hiring and the even higher cost of hiring mistakes. For many businesses, the last several years have been marked by diminishing ROI on recruitment efforts, staffing shortages, and skills deficits. In the coming year, we anticipate that HR professionals will face heightened pressure to attract top talent while helping reduce the cost of hiring.
But there are some important considerations that HR professionals must bring to this challenge. To the point, the Gallup article reveals that there is more to attracting top talent and that building “an inspiring workforce” is about more than simply mitigating the conditions that make work unsatisfying.
Surveys suggest that employees are looking for more from prospective employers. Among the top features cited by Gallup, surveyed employees say they are attracted to roles and organizations that offer greater work-life balance and better personal wellbeing; provide increases in salary and benefits; allow workers to do what they do best; provide greater stability and job security; and have positive brand reputation.
A slightly lower percentage of respondents also said they were attracted to jobs that allowed them to get away from bad managers as well as roles that offered more personal autonomy. HR personnel have a responsibility to ensure that these values are reflected in brand marketing, digital outreach, recruitment strategies, and actual working conditions.
6. Flexible Compensation Modeling
The concept of a “workplace” has become increasingly abstract over recent years for a number of reasons. The emergence of the gig economy means that a greater share of any given organization’s labor may be provided by freelancers, independent contractors, and third-party vendors. The proliferation of remote working arrangements means that more businesses are adapting to hybrid operating environments. And the rules around who can qualify as a full-time worker with benefits are shifting at both the state and federal level.
In other works, the modern workplace is actually a patchwork of different compensation and benefits packages. Your HR department will need to take the lead in addressing challenges around creating flexible compensation models. This challenge will only be compounded in the coming year by an expanding set of employee expectations around benefits such as student loan repayment, wellness programs, and parental leave. Your ability to offer a flexible array of compensation and employment structures will have a direct bearing on your organization’s ability to attract and keep top talent.
7. Reskilling and Upskilling
Emergent technologies like AI, machine learning, and automation have an awesome potential to drive exponential improvements in our speed, productivity, and precision. But in order to achieve their maximum potential, these technologies depend on human inputs, oversight, and quality control.
This dependency is creating a growing demand for continuous on-the-job learning. As these technologies reshape the working landscape, they are also reshaping our roles in the workforce. An article from McKinsey & Company observes that “To survive and deliver on their strategic objectives, all organizations will need to reskill and upskill significant portions of their workforce over the next ten years.”
It will be incumbent upon HR departments to provide the proper training, guidance, and support for employees who must adapt to rapidly changing job requirements.
8. Remaining Human
Adapting to emergent technology isn’t just about training humans to use machines. It’s also about finding balance. The goal must be to leverage these technological solutions while still building an organizational culture around human ingenuity, creativity, and empathy. Finding that balance will be profoundly challenging in the years ahead.
Adopting AI and automation should not require us to sacrifice the features that make us distinctly human in favor of greater productivity. Quite to the contrary, this technology should allow humans to achieve greater heights of personal productivity. Automation offers us the opportunity to offload our most tedious and repetitive tasks so that we can focus on core business functions like personal engagement with clients. Machine learning can provide us with the fodder for more dynamic creative brainstorming. AI technology can help us yield deeper and more compelling insights in our research.
But this is only possible in workplace settings where the technology is leveraged to give human beings these opportunities. HR will play a critical role in offsetting the perceived threat of this technology, mollifying internal resistance to adoption, and ensuring that employees are truly given the chance to thrive in an increasingly automated and AI-powered environment.
9. Employee Retention
This one isn’t exactly a new problem, but it is certainly a front-and-center challenge for employers in 2025. It’s a well-traveled wisdom that it costs far more to hire a new employee than to keep an existing one. And today, the rising cost of recruitment and hiring only compounds this reality. So it goes without saying that employee retention is always a top priority for HR departments.
But in 2025, employers are facing a workforce with a greater willingness to change jobs, seek new opportunities, and even shift careers than previous generations. According to a recent Gallup poll, 51% of U.S. workers are actively seeking or watching out for a new job. Naturally, if 1 in every 2 employees has one foot out the door, this represents a serious practical challenge for HR departments.
It falls on HR professionals to help employers understand the types of benefits and opportunities employees are seeking. The same Gallup poll reveals that just 25% of surveyed employees would recommend their organization as a “great place to work.” This low figure magnifies just how acute this challenge is likely to be for HR departments and employers in the coming year and beyond.
10. Leadership Vacuum
The retention issue cited above is also contributing to a deficit of leadership skills. Today, many businesses are struggling to develop, nurture and elevate talent from within. Organizations report that one of their biggest personnel issues is a shortage of individuals who are qualified for leadership roles.
Netsuite cites a survey from U.S. News and The Harris Poll, which finds that 77% of Americans believe corporate America is currently experiencing a leadership crisis. 56% of respondents to the poll also said their managers are worse today than they were before the pandemic. This suggests something of a cyclical issue. Poor retention is making it difficult to cultivate effective leadership; poor leadership is making it difficult to improve retention.
The solution to both issues falls on the shoulders of HR professionals, who must find more effective ways to identify prospective leaders, place employees on meaningful leadership development tracks, and establish effective and up-to-date leadership training programs.
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Indeed, one of the best ways to build strong organizational leadership is to cultivate from within. This means identifying the members of your team who demonstrate leadership potential as well as effectively determining the best leadership role and path of development for each individual’s unique leadership traits.
Personality assessments may be useful in evaluating the leadership potential of your team members. For instance, The Success Portraits Personality Test (SPPT) identifies 19 distinct personality traits that may be correlated to leadership potential.
Moreover, the SPPT provides employers with resources that offer deeper individualized analysis based on personality scores. The Success Portraits Personality Test (SPPT) For Employers comes with a host of downloadable reports that can help you not only pinpoint the leadership traits in candidates but also offer strategies for making the most of these traits. For example, the downloadable Coaching Report provides personalized coaching advice and development plans based on each employee’s personality scores. This report offers practical and actionable strategies for helping to foster employee growth and performance, and can consequently help you place individuals on personally tailored pathways to leadership.
The same is true of resources like the downloadable Key Areas of Improvement report. The analysis included within can help you pinpoint specific areas of potential growth for a given candidate or employee based on individualized personality scores. By spotlighting opportunities for professional growth, this type of reporting can help you both identify and enhance the leadership potential of individual team members.
We always recommend incorporating your personality test findings and analysis with findings from other proven screening methods and assessment tools. Personality scores and reporting should be considered alongside additional materials such as performance reviews, internal interviews, and feedback from team members and supervisors. However, the right personality assessment tool can help your organization identify individuals with leadership potential; and the right analytical reporting can help you place them on the path to realize this potential.