As we approach 2025, the landscape of human resources continues to evolve, presenting both challenges and opportunities for organizations. Whether from AI, remote work, or the ongoing labor shortage, HR professionals are tasked with thinking outside the box when it comes to developing recruitment strategies, updating company policies, and reviewing benefit offerings.
Understanding HR challenges and developing strategic solutions proves crucial for staying ahead in a competitive market. Read on as we explore the top HR challenges expected in 2025 and provide actionable strategies to help businesses thrive.
HR Trends and Challenges
HR challenges and solutions include the following:
1. Talent Scarcity
Paycor recently surveyed 7,000+ HR, finance, and IT professionals for our annual human resources insights survey. We asked questions about the challenges of human resource management, workplace trends, and more.
91% of businesses surveyed were hiring, and 71% ranked finding quality workers as the No. 1 challenge related to recruitment. A number of factors contribute to the ongoing talent shortage, including:
- Baby Boomer retirement
- Skills gaps
- Low labor participation rates
Trend + Solution: Many employers are tapping into AI to give their recruitment strategies a boost. For example, Paycor Smart Sourcing enables you to spend 75% less on talent sourcing for more qualified candidates in 50% less time. It automatically posts your jobs on thousands of job sites to reach active candidates and taps into the world’s largest database of passive candidates.
The tool leverages AI to identify passive candidates and diverse candidates that may be ideal for a role but are often overlooked by traditional systems. Then, it curates a prioritized list of candidates for every role and contacts the best candidates, so you can focus on interviews.
2. Retention
Quiet quitting, loud quitting, and poor engagement continue to be a challenge for employers and their retention rates. Our survey found 20% of employees will actively search for a new job
in the next 12 months.
Further, Gallup’s recent State of the Global Workplace found only 23% of 120,000+ employees surveyed report being engaged at work. 62% say they’re not engaged, and 15% note they’re actively disengaged.
Trend + Solution: Paycor data finds that employees who have been in their roles for two years or less are the biggest flight risks. Less tenured employees are 38% more likely to search for a job in the next 12 months, according to survey results.
To engage employees, especially the greener ones, companies should invest in extended onboarding and regularly communicate and solicit feedback. This ultimately boosts retention.
3. Organizational Culture
Gartner survey respondents listed this as a top-five priority for 2024, and it will remain important going into 2025. Workplaces are forever changed by the pandemic. Whether you’re back onsite, embracing a hybrid work model, or have gone fully remote, you face unique challenges.
In the Gartner survey, only 26% of organizations report that their employees fully comply with onsite attendance requirements. 41% of HR leaders say employees’ connection to culture is compromised by hybrid work, and 46% don’t know how to drive change to achieve the
desired culture.
Trend + Solution: First, consider your work policies. Paycor data suggests employees who split their time between an office and a remote location are more engaged than their remote and onsite counterparts.
Further, flexibility is often cited as a top reason employees stay at a job. However, flexibility isn’t everything. Our survey found remote workers are less likely to receive productive feedback from managers and less likely to feel they’re paid fairly. It’s evident there’s a lack of trust and connection when it comes to the fully remote workplace.
Remote workers who are actively searching for a new job are 55% more likely to be motivated by the desire to have a better relationship with their manager than onsite workers and 50% more likely than hybrid workers.
The World Economic Forum predicts remote work will increase 25% by 2030. Still, 75% of managers don’t receive specialized training on leading remote teams. Effective leaders and managers help drive engagement, and leaders need more training and support to better serve remote employees. Now’s the time for companies to double down on leadership development.
4. Benefit Offerings
As the workforce evolves, offering a competitive benefits package is essential for both employee retention and attracting new talent. 40% of employers say workers leave their job to find a role that offers better employee benefits, according to Forbes Advisor. Only 54% of workers report being content with the benefits their current employer offers.
HR departments need to assess benefit offerings and ensure they remain competitive and comprehensive.
Trend + Solution: The Society for Human Resource Management (SHRM)’s 2024 annual employee benefits survey gives insight into the benefits employees value most. The percentage of respondents that rate these benefits as very or extremely important is as follows:
- Health care: 88%
- Leave: 81%
- Retirement savings and planning: 81%
- Flexible work: 70%
- Family care: 67%
- Professional and career development: 65%
Other notable findings from the report include:
- Telehealth and mental health care services are becoming more standard in benefits packages.
- Three new benefits were introduced to the survey this year. 17% of employers offer menopause benefits, like counseling or education. 12% or employers cover gender-affirming hormone care. 4% offer lifestyle savings accounts.
- 56% of employers provide at-home work equipment or subsidize the cost.
HR professionals should ensure they communicate current benefit offerings, survey employees on benefits they’d like to see, and strategize on new benefits to add to their roster.
5. Compliance
Compliance is a moving target. From marijuana legalization in several states affecting pre-employment drug testing laws to a few states adopting new paid family leave policies, HR teams must stay updated on a constantly shifting regulatory landscape. Compliance issues not only vary by state but also evolve quickly, leaving businesses vulnerable to penalties or legal challenges if they fall behind.
Trend + Solution: To stay compliant, HR leaders must implement dynamic compliance management tools that can track regulatory changes and automate policy updates. Whether related to healthcare, payroll taxes, or workforce benefits, Paycor’s compliance solutions help employers stay ahead.
6. Diversity, Equity, and Inclusion (DEI)
Building a diverse and inclusive workplace remains a challenge for HR leaders. As social awareness of DEI issues grows, companies seek to implement effective DEI strategies. Beyond compliance, businesses need to foster a culture of inclusivity where diverse talent can thrive.
Trend + Solution: Developing and implementing DEI initiatives that go beyond token efforts is essential. Paycor’s DEI tools help employers assess their current diversity levels, set measurable goals, and track progress. Providing DEI training for leadership and employees, setting up affinity groups, and continuously reviewing hiring and promotion practices to reduce bias are key steps to creating a more inclusive environment.
7. Operational Efficiency
With a rise in resignations, a challenging market for recruitment, and increasingly complex compliance requirements, HR professionals have more on their plates than ever before. They seek solutions to streamline processes, optimize their time, and find balance.
Trend + Solution: Paycor research shows 70% of HR teams’ time is spent on inefficient admin tasks, some of which are still paper based. Rather than look at that as a negative factor, consider it an opportunity to modernize and optimize.
HR software solutions empower businesses to manage employee information, ensure compliance with document tracking and storage, and catalog assets in a centralized secure location. Some offer tools for employees to manage benefits and schedules without needing to call HR.
The time savings from optimizing and automating key business practices enables HR pros to focus on more impactful endeavors, like employee engagement, benefits improvement, and leadership development.
How Paycor Helps
From recruitment and onboarding to career development and retention, Paycor modernizes every aspect of people management so your company can keep up with workforce trends and overcome challenges.
Our 2025 survey shows:
- 79% of Paycor customers are confident they’ll meet their recruiting goals in the next 12 months, compared to only 56% for companies that don’t use Paycor
- Employees of companies that use Paycor are 55% less likely to look for a new job in the next 12 months
- Paycor customers are 16% less likely to switch HR providers
