What are the biggest HR challenges for 2025 and beyond?

In recent years, HR, or the people function, has responded to major changes by taking on more responsibilities than ever before. What are the most pressing challenges on the HR agenda, according to top people leaders?

To better understand the evolving landscape, Zellis spoke to 10 high-powered HR leaders working at large organisations in the UK and Ireland.

One of the key questions we asked was about the industry’s most crucial challenges over the coming years. The resounding answer was twofold: talent and technology.

The full report, Technology, empathy, and growth: The new HR landscape, is available here, with insights from:

• Andy Doyle, Chief People Officer, Kantar Group
• Caroline Drake, Chief People Officer, Zellis
• Glenn G. Jones, Group Head of People Services, Inchcape plc
• Jacqui Summons, Chief People Officer, EMIS Health
• John Kennedy, Head of HR Organisational Development, Iarnród Éireann Irish Rail
• Karen James, People Director, Mencap
• Sam Westwood, Head of People, The White Company
• Samantha Brook, Group HR Director, Severfield plc
• Stuart Martin, Colleague Success Director & People Platform Lead, Lloyds Banking Group plc
• Tom Hoosen-Webber, Chief People and Procurement Officer, Bupa

With a foreword by Michael Edwards, Global Head of People, Apax Partners

Talent

Top HR challenges

The UK continues to experience both labour and skills shortages. Unsurprisingly then, HR directors consider talent issues to be the biggest challenge they will face over the years ahead. This means the focus will be on two key areas to try and maximise the value of the workforce by ensuring that:

• Employees have the right blend of expertise and knowledge. Demand is currently particularly high for digital, green, and manufacturing-related skills.
• Recruitment is focused on future-proofing the organisation’s talent requirements by hiring in employees with ‘future-ready’ skills.

“No business can survive without its people. And for me, the way that manifests itself through HR is talent: talent attraction, development, retention. Talent enablement really, so your business is running on the best fuel possible.”

Sam Westwood, Head of People, The White Company

How to tackle these challenges

To address these priorities, many HR directors are investing in strategic planning. The aim here is to understand the organisation’s skills requirements to ensure they either fill gaps or prevent them from developing. The better the organisation understands the skills it needs, the more focused and cost-effective its recruitment and development strategies can be.

A vital consideration in this context is providing employees with effective training and development, not least to compensate for rising levels of retirement. Research from technology company Multiverse reveals that 38% over the age of 50 expect to retire early. The risk is that they potentially take years of accumulated knowledge and experience with them.

One way to encourage older employees to stay for longer is to provide more flexible work options and tailor responsibilities to suit their needs. Doing so also opens up the possibility of them training, mentoring, and coaching younger colleagues to enable knowledge transfer. It also provides more time to undertake succession planning at all levels.

Engaging and retaining top talent

Other possible ways of engaging, motivating and retaining top talent of all ages include providing wellbeing programmes, which many employees value highly. Another is working to create a company culture in which people feel listened to and valued.

Similarly, HR directors also see value in helping to develop positive manager-employee relationships. But this is not just about offering line managers suitable training and development. It is also about advocating for them within the C-suite to ensure senior executives understand the pressures they are under.

In other words, HR leaders believe that to effectively attract, motivate, and retain talent, everything from an organisation’s employer brand to its rewards and benefits package must be consistently competitive.

“Without the right culture, without people being valued, without the right ways of analysing performance and planning for succession, you can’t help people achieve their potential.”

Samantha Brook, Group HR Director, Severfield plc 

Data and technology

Top HR challenges

HR leaders are clear their function has a pivotal part to play as the world of work experiences rapid technological change. This may see the function assume the role of technology gatekeeper. This is about exploring how data and technical tools can be best harnessed to boost employee productivity and engagement.

Another challenge involves taking responsibility for exploring the ethical concerns posed by advanced technologies, such as AI. This includes helping support the workforce in navigating the potential disruption and opportunities that it could bring. Support here includes providing advice and training, as well as tackling any wellbeing concerns.

How to tackle these challenges

Many of the HR leaders are keen on the potential of technologies including generative AI. However, some sounded a note of caution, noting that thought is required for organisations to deploy them most effectively. Key concerns centre on a current lack of governance and control.

“In terms of generative AI, these are early days and most of the work in this space is pioneering, but inescapable. Until we have more use cases to draw on, we have to move at a pace that balances risk and a clear understanding of the ethical and business challenges.” 

Stuart Martin, Colleague Success Director & People Platform Lead, Lloyds Banking Group

Leaders also expressed concerns about the potential risks of relying too heavily on such technology for finding, nurturing and retaining talent. Possible risks here include the impact on jobs and mental health. They also touched on the risk of ‘leaving some people behind’ within both the workplace and wider society.

People power in AI adoption

Unsurprisingly then, they believe it is vital that people considerations, including the impact on human interactions, are at the heart of any AI adoption. This means, for instance, that even if certain interactions are by necessity digital, there may often still need to be a human link in the chain. It could be a point for contextualising information, challenging feedback or simply building mutually beneficial relationships.

Overall though, these HR directors do welcome AI, albeit cautiously. Certainly, most believe it can help save time and boost efficiency by automating routine tasks. Some also see it as useful in providing tailored and personalised training programmes. Others anticipate using it to proactively analyse performance data in order to identify skills gaps and predict training requirements.

The general feeling is that HR teams must be ready and able to deal with both the positive and negative aspects of the technology.

“AI will be a disruptor – and while disruption breeds opportunity, it needs to be balanced with careful consideration. We’ll need pragmatism and compassion to find our way through it. HR is uniquely placed to lead on that.”

Technology, empathy, and growth: The new HR landscape

Technology, empathy, and growth: The new HR landscape

Discover senior HR executives’ insights on their relationship to the C-suite, navigating implementation of new technology, and how people professionals can deliver greater value to their organisations.