Predictions for HR in 2025: A year of change

There’s an old saying that reminds us, “Those who do not learn history are doomed to repeat it.” While HR can apply that lesson to many aspects of 2024, as we welcome the New Year, let’s use that quote to remind ourselves how hard it is to make predictions.

History is filled with notoriously bad predictions, particularly those that tried to make sense of new inventions. Here are some of my favorites:

• 1876: A Western Union internal memo stated, “The telephone has too many shortcomings to be seriously considered as a means of communication.”
• 1903: The president of the Michigan Savings Bank advised against investing in Ford Motor Company by warning that “The horse is here to stay, but the automobile is only a novelty—a fad.”
• 1920s: H.M. Warner of Warner Brothers reportedly uttered, “Who the hell wants to hear actors talk?”
• 1946: Darryl Zanuck, a 20th Century Fox executive, predicted that “Television won’t last because people will soon get tired of staring at a plywood box every night.”
• 1977: Ken Olsen, founder of Digital Equipment Corp., famously opined that “There is no reason anyone would want a computer in their home.”

The prediction-making game is perilous, but that didn’t deter my company from our annual exercise of publishing our Priorities & Predictions report. Time will be the best judge of how accurate these are, but we offer four predictions for HR for the coming year.

1. Top companies will extend their lead by operationalizing AI; low-performing organizations will sit on the sidelines.

Organizations differ vastly in how they’re approaching the era of AI, from researching and experimenting with it to flat-out ignoring it. A growing contingent, however, has fully embraced AI and is operationalizing and scaling its use across the enterprise.

Here’s what we found interesting about these early adopters: They are much more likely to have higher market performance, as defined by higher revenue growth, market share, profitability and customer satisfaction.

Courtesy: i4cp

Unsurprisingly, these early adopters are 20 times more likely (61% vs. 3%) than those who have yet to adopt gen AI to characterize their workforce as prepared to use the technology at work. They are also 52 times more likely to have provided gen AI training to most (if not all) of their employees. In short, AI leaders aren’t sitting on their success and continue to invest in an AI future.

2. Until companies shift their culture, efforts to scale skills-based marketplaces will stall.

There has been a great deal of attention and significant investment over the last five-plus years in creating a skills-based organization and, more specifically, internal talent marketplaces. While some have succeeded, most have stalled for a simple reason: The vast majority of companies are organized around a traditional job architecture. And most people leaders have a “job mindset” versus a “project mindset,” as well as a habit of notoriously hoarding top talent, instead of promoting the movement of employees internally. In fact, 43% of organizations report managers hoard talent and almost as many report it’s easier for existing employees to find a job externally than internally.

To truly leverage a skills-based approach, organizations need to focus first on creating a culture that is poised to take advantage of a talent marketplace. This shift likely means some restructuring to the current hierarchy, as well as a change to performance measurement. Breaking the “job mentality” will also require incentives, such as rewards and recognition, to encourage internal movement and thwart talent hoarders.

3. Older workers will go from overlooked to overtly courted.

It’s no secret that birth rates are steadily declining in many developed nations while, at the same time, life expectancy is increasing. As older individuals remain healthy and capable for longer, they represent not only a valuable, experienced segment of the workforce but likely a necessary one.

By 2028, nearly one in four U.S. workers will be 55 or older. The European Union projects that workers aged 55-64 will increase significantly in the next decade; in Japan, about 12% of the workforce is already 65 or older. While talent shortages worldwide will likely force companies to reconsider the average age of their workforce, there are numerous benefits to leveraging older workers, such as the wealth of skills, experience and institutional knowledge they possess. And, contrary to stereotypes, research has shown that older workers can be as or more productive than their younger counterparts.

Unfortunately, 70% of older workers say they have experienced ageism. This is regrettable because age diversity can contribute to a more inclusive workplace culture. Regardless of the necessity and benefits, older workers may end up forcing the issue. The Federal Reserve reports that 40% of Americans approaching retirement age have not saved enough for retirement, with many older adults planning to work longer out of financial necessity. Based on these factors, companies need to examine their retirement policies as well as total rewards offerings provided to older workers to prepare for this inevitable shift.

4. DEI has been under fire for the last couple of years. In 2025, the pressure will intensify.

Over the last two years, external pressure has caused several companies to scale back their visible support for diversity, equity and inclusion programs. Fueled by activists such as Robby Starbuck, lawsuits from Stephen Miller and his company America First Legal, and criticism from Elon Musk and other high-profile voices, organizations are justifiably nervous.

This pushback is likely to intensify in 2025. Mass deportation of illegal immigrants is a promise President-elect Donald Trump has made once he takes office, and workplace raids—in which government officials arrive onsite with the intention of arresting undocumented workers—will likely be used again. With the announcement that Miller will be deputy chief of policy, it’s also likely the pressure his company put on companies for their DEI initiatives will only intensify and affect other DEI-related federal policies.

These changes will undoubtedly lead to an even deeper divide than we’ve already experienced. Additional companies will retreat from their DEI policies under increased pressure (such as Walmart recently), while others will double down and prominently stand up for what they previously committed to.

Most of the champions of DEI remain committed. DEI budgets for members of i4cp’s Chief Diversity Officer Board remain relatively stable; 57% report no change in budget for 2025, while 29% say their budgets will increase. However, it’s clear the pressure on DEI will heat up in 2025. If it hasn’t happened already, HR, the C-suite and the board need to scenario-plan and prepare if their DEI strategies are targeted by external activists and be clear on what their approach is to immigrants currently in the workforce.

So, there are four predictions for the coming year … do you have any? Feel free to share your predictions for HR for 2025, but fair warning: History can be a cruel judge.

Learn more about i4cp’s forecast for 2025 in a Dec. 10 webinar featuring CEO Kevin Oakes. Oakes will share predictions for HR, explore CHROs’ top priorities in the coming year and offer insights on navigating HR challenges in 2025. Click here to register.