HR executives should anticipate ongoing trends related to AI, hybrid work models and mental health considerations in 2025. Additionally, they should prepare for substantial changes with the inauguration of a new presidential administration in January. However, with a thoughtful and deliberate approach, HR executives can prioritize employees’ well-being while building strategies that align workforce priorities with organizational objectives.

AI Will Continue to Expand Across the HR Function

The use of AI in HR has increased over the last three years as HR professionals become more comfortable with the technology and its application in the workforce. While large companies (5,000 or more employees) are among the earliest adopters of AI, we expect to see more small businesses embrace the technology as it becomes both accessible and affordable.

Experts expect a continued tight labor market in 2025, and, as such, talent acquisition will remain one of the employers’ greatest challenges. AI will help HR professionals reduce the time associated with the hiring process as managers use tools that help source, review and screen resumes, removing much of the subjectivity associated with human analysis.

AI can even be used to schedule candidate interviews, and, in some cases, present screening questions to a job candidate via text or video.

Generative AI will be used even more in the HR function as mainstream software companies like Microsoft, Google and Cisco add AI software enhancements to make the communication process easier, especially in the form of written documentation. These generative AI tools can help professionals write job descriptions, customize job postings and draft communications to candidates, saving hundreds of HR hours.

With minimal input, generative AI also offers suggestions for presentations, spreadsheets and other HR-related documents.

When combined with AI, predictive analytics will also play a role in the HR function.

Pre-employment assessments can help predict which candidates are the best match for an organization’s culture. Once employees are part of the company, managers can measure and evaluate employees’ skills, engagement and performance rates to map the best path for success. We expect HR professionals to continue to fine-tune their use of these tools in 2025, reducing repetitive non-value-added tasks so they can focus more on the human part of HR.

Hybrid Work Models on the Rise

In 2024, more than 50 percent of U.S. workers reported working in a hybrid manner. But with the pandemic approaching its fifth anniversary, many organizations are re-evaluating their work-from-home policies. Major companies like Disney, Apple, Amazon, and JP Morgan, are requiring their office employees to return to the office in 2025, but this does not mean the end to remote work for everyone.

Many organizations observed an increase in employee satisfaction correlated with remote work options during the pandemic. As a result, they are exploring options that benefit both the organization and employees.

However, fully remote employment that allows team members to work from anywhere may not be suitable for all organizations due to varying state legal and tax requirements, which can complicate compliance. Additionally, companies have concerns about the potential impact of remote work on workplace culture and employee connectedness.

For this reason, hybrid work models will continue to mature in the coming year with more formalized options allowing employees flexibility in staggered commutes, scheduled days in the office, and other flexibility while reducing office real estate costs with a smaller daily occupancy. Experts expect the “hot desk” model will continue to grow, where employees can “book” a desk on the days they work in the office, and many hybrid employees will have “assigned” days in the office.

No doubt, 2025 will continue to reflect the workforce’s affinity for flexibility, autonomy and work-life balance that remote and hybrid work offers.

High Priority in 2025: Mental Health

Mental health will once again be an HR priority in 2025, but now with even more emphasis. In the last decade, mental health initiatives in the workforce have been proven to reduce absenteeism and turnover rates, boost productivity and efficiency, and increase engagement, and employers have noticed.

The most common mental health issues among employees continue to be anxiety and depression, with the political climate amplifying these concerns for many individuals. An April 2024 survey by the Pew Research Center found that most Americans were already feeling worn out by the extensive campaign and candidate coverage leading up to the presidential election.

This pervasive fatigue, coupled with uncertainty about potential changes under the new administration, has left some employees feeling uneasy. Key areas of concern include diversity, equity, and inclusion initiatives, evolving labor policies, and changes to immigration-related work visas, such as H-1B and H-2A, which could impact various industries. HR professionals are increasingly observing signs of heightened stress among employees and are prioritizing mental health as a critical focus for 2025.

Employer emphasis on mental health may make a difference in employee recruitment and retention. Last year, the American Psychological Association’s Work in American Survey found that 92% of workers said it is important to them to work for an organization that values their emotional and psychological well-being, and 92% said it is important to them to work for an organization that provides support for employee mental health.

Fortunately, the availability of mental health benefits offered by U.S. employers to employees has never been greater. Many companies offer wellness benefits, Employee Assistance Programs (EAP), company-wide mental health days and employee resource groups. We expect to see these traditional mental health services to continue in 2025, along with significant growth of digital tools.

Organizations can now supplement their employee wellness programs with smartphone apps like Calm, Sanvello and Headspace. Post-pandemic, virtual mental health support continues to explode as health insurance companies team up with mental health apps and online therapy, revolutionizing access while bringing down costs.

Diminishing Federal Oversight's Effect on HR Compliance

A final 2025 trend for HR comes from a likely shift in federal policy. The new administration has pledged to decrease federal oversight with fewer regulatory restrictions, giving states more autonomy in setting labor laws, including legislation related to the Fair Labor Standards Act (FLSA), the American Disabilities Act (ADA) compliance, overtime regulations, paid and unpaid time off, medical leave and more.

This could lead to widely disparate interpretations of labor law at the state level and may make some employers think twice about where their employees reside, especially remote employees who would fall subject to local labor law. The larger the organizations and the more geographic regions they operate in, the more regulations they must comply with. Ironically, if more power is passed to the states, the burden on HR professionals will increase in an ever increasingly complex regulatory environment driven by state and local law.

A regulatory shift gives HR professionals more responsibility but also offers an opportunity to update HR work policies. Savvy HR professionals will continue to use sophisticated technology and specialized consultants to conduct internal audits and manage payroll and other activities for employees working from different states.

The year 2025 will undoubtedly focus on compliance and communication. However, one constant remains: HR professionals will continue to play a crucial role in fostering teamwork and collaboration. By maintaining transparent communication, staying agile, and preparing for cultural changes, HR will guide organizations through new challenges toward success.

Author Bio

Kim Wylam is the managing principal of Baker Tilly’s human capital (resources) consulting practice. Over her career, Kim has developed a breadth of experience in all aspects of human capital, including recruitment, retention, compensation, benefits, workforce planning, payroll, HR operations and compliance. Specializing in HR strategy and development, Kim works with clients representing all industries, including internationally.

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