An analysis of the most pressing concerns based on insights from 1,000 UK business leaders.
Author: Alistair Dornan
The year ahead presents a unique set of challenges stemming from the long-term impacts of the COVID-19 pandemic, the rapid rise of AI and ongoing workforce transformations.
These factors are reshaping how organisations operate, manage talent and navigate a complex operating environment.
Additionally, evolving regulation will continue to pose business challenges in 2025. Laws around employee privacy, AI usage and workplace safety will require businesses to stay ahead of compliance requirements.
The new world of work
In 2024, 41% of people in the UK worked from home at least some of the time1, compared to just 4.7% in 20192, transforming our traditional working models.
While hybrid work environments are now standard for many organisations, with workers largely in favour, such structures come with challenges. Managing remote teams, ensuring consistent productivity, and fostering a sense of company culture in a digital space requires ongoing adaptation by employers.
The approach to leadership has also changed. Pre-pandemic management styles are increasingly outdated, with today’s leaders adapting to new expectations of engagement and support for their teams.
The AI challenge requires reskilling and governance
AI presents a substantial digital transformation for the workforce and employers will continue to focus on preparing the workforce for these changes through 2025.
As the technology becomes more regularly used in everyday business operations, the complexity of how to govern the technology’s use and impacts is a key focus.
Many businesses are grappling with how to integrate AI responsibly and effectively. This means working to plug the digital literacy gap, identifying what new skills are needed, creating new roles and career paths and fostering a culture of continuous learning.
AI can undoubtedly improve efficiency, reduce costs, and enhance decision-making, but it also raises ethical questions.
How businesses govern AI usage will be crucial to ensuring they remain compliant with evolving regulations while safeguarding employee rights. One major challenge for HR directors is understanding the full scope of AI applications and their implications for organisational culture and workforce management.
HR directors tell us the pace of change in technology is their number one challenge. They’re saying they don’t understand AI or the consequential impact on their business.
We’re working with organisations to build the governance around the AI use case for their firm, and plan how they’re going to communicate and train their frontline teams for that.
Shifting approaches to HR and workforce engagement
In today’s workforce, there is more demand for flexibility, autonomy and meaningful work. The traditional 9-to-5 workday is becoming less relevant, and many employees now prioritise work-life balance, mental health, and job satisfaction over traditional career progression.
To adapt, businesses are rethinking their approach to employee engagement. Effective communication, empathetic leadership and fostering a sense of purpose are becoming more important than ever.
More firms are seeing the value in creating an employee value proposition to foster satisfaction and wellbeing and boost retention and productivity.
Building a supportive environment where employees feel heard, valued and engaged is crucial to retaining talent in an era of constant disruption.
Navigating the ‘perfect storm’ of healthcare
Premiums for employee healthcare continue to rise annually, with 2024 seeing increases, in some cases, of over 50% over the previous year3. These cost pressures, coupled with NHS capacity shortages spilling into the private sector and reducing capacity here, are creating a perfect storm for businesses striving to protect workforce health.
Whilst we contend with economic factors putting pressure on budgets, businesses are seeing an increased demand from employees for healthcare provision. As we enter 2025, we’re working with businesses to identify the potential to mitigate cost pressures and alternative healthcare mechanisms that can be put into effect.
Preparing for 2025 and beyond
The Great Resignation was a reminder of the need to be proactive in addressing workforce disruptions. AI governance, reskilling programs and leadership training will be critical areas of focus as businesses prepare for the challenges of 2025.
The tension between the automation of work and skills gaps in many industry sectors will present itself in several ways. Companies will need to balance the need for technological innovation with the wellbeing and engagement of their teams.
The next five years will likely bring further technological advances, but those companies that can balance innovation with a human-centric approach are best placed to thrive. And at the heart of a human-centric approach is the need to look after the health and wellbeing of your workforce. We're living in an incredibly volatile and uncertain time. As a leader in your organisation, you don't need to be a victim of that volatility. There are steps that you can take now that will help protect your organisation and enable you to thrive through that uncertainty.
