What trends the HR world can expect in 2025
The year 2024 is entering its final spurt, but the future remains uncertain. The decline in economic output is making itself felt in companies in the DACH region: While Germany and Austria are suffering from a shrinking economy, only Switzerland can report small but below-average growth. In addition to the continued volatility in the working environment, budget cuts and new, Europe-wide regulations are putting a strain on HR departments.
Dr. Arne Sjöström, Regional Director, People Science EMEA at the employee experience platform Culture Amp, gives an outlook on the trends in the HR scene.
1. waiting is not an option
Some are waiting, others are hesitating - this sums up the current stagnation on both the employee and employer side. The consequences of this development will become apparent as soon as the economy recovers. There is currently a surplus of employees who actually want to leave the company. The uncertain economic situation is making them hesitate, but as soon as new career opportunities arise, they will seize them. Unfortunately, in many companies, a wait-and-see approach has also become the motto of employers: They invest too little in employee development and, above all, risk losing their top performers.
It is deceptive to equate employee perseverance with employee satisfaction. It is true that companies cannot currently afford to invest in all employees equally. However, companies that are aware of this will prioritize their top performers in 2025, offer attractive career opportunities and respond better to their needs. Procrastination is not good advice here - it only reveals that companies are ill-prepared for an economic recovery.
2. more performance and well-being through clear role definition
In many companies, employees feel uncertain about their exact role, the company processes and how their work contributes to achieving the company's goals. Forward-thinking companies will know how to seize the opportunity of the current upheaval and fill this vacuum with greater clarity. For the first time since the beginning of hybrid work, values and processes are being redefined. Companies are increasingly focusing on the performance factor and will set new priorities accordingly in the coming year. The aim is to improve the employee experience, which also includes a clearer definition of roles: each individual employee must better understand what specific expectations the company has of them and how they contribute to the company's performance.
As a result, HR managers and HR teams will face new challenges in 2025: The core tasks of employees must be communicated more clearly and transparently, ideally resulting in streamlined processes and the elimination of unnecessary expectations of employees. At the same time, role definitions need to be better aligned with corporate goals: Employee performance and well-being are prioritized, with clear rules established on how this performance is to be delivered. Companies that have recognized the key role that employee satisfaction plays will significantly reduce the grey areas of hybrid work. Nevertheless, discussions such as the "right to switch off", which is already regulated by law in some European countries, will not fall silent in this country either.
3. performance orientation is gaining in importance
Knowing what's going on and acting accordingly to improve company performance - this is how the task of HR departments can be summarized in the coming year. In 2025, HR managers will increasingly rely on people analytics to better understand employee engagement and motivation and to improve company performance in a targeted manner. In the face of increasing economic pressure, data-based insights into the workforce are essential to remain competitive and take effective action.
People analytics, combined with other business data, helps leaders make more informed decisions about which measures can be effective in optimizing performance management. Research has shown that organizations that implement active performance management strategies are 1.75 times more likely to achieve targeted business outcomes and 1.9 times more likely to achieve positive HR outcomes.
4th ESG Regulation requires a pragmatic approach
From next year, the group of companies that will have to prepare detailed reports on their efforts in the areas of environment, social affairs and compliance (environment, social, government) will be expanded to include numerous small and medium-sized enterprises. The new requirements oblige them to define long-term key figures and report on them annually. They must also disclose the key impacts, risks and opportunities of their business activities in their reporting. In order to achieve all of this, business data must be collected, linked and analyzed.
As many ESG issues directly affect human capital and the conditions in which employees perform, this creates an additional workload for HR teams. Companies will only overcome this with the consistent use of integrated information systems that also improve real-time insights into the organization and help management gain a deeper understanding of the employee experience. At the same time, routine tasks are automated and compliant reporting is made possible. With the ESG regulation, HR teams are entering new territory, which initially requires a pragmatic approach.
Source: www.cultureamp.com
