The year 2025 promises to be turbulent due to planned business tax cuts by the new Presidential Administration that will stimulate investment and growth.
The round up and deportation of illegal immigrants will cause further labor shortages in certain industries, such as hospitality, housing, healthcare, manufacturing and agriculture. And the rush to use Artificial Intelligence (AI) will require employees with solid digital skills and companies with effective plans to help employees better use digital information. HR needs to get in front of these business changes with seven essential HR strategies to co-lead the change.
1- Workforce planning and talent strategies that recruit, develop, motivate and retain talent
In today’s tight labor market and with digital technologies changing the skill sets employees require, every organization needs a talent strategy for its workforce to ensure profitable growth.
Organizations with a good talent management strategy can attract, align, motivate, develop, and retain, the best talent in the long term. Treating your employees like a cost to be eliminated — as opposed to an asset — leads to spiraling turnover cost, stressed-out workers, and a degradation of recruiting and HR practices.
The best talent strategies begin with a talent brand: the reasons employees should join your organization out of college or later in their careers. Is it to work on game-changing technologies? Develop treatment or cures for diseases?
Whatever talent brand fits your business brand needs to have legs and should have an impact on the following:
- A workforce plan that identifies the skills, behaviors and abilities your future workforce needs.
- Recruiting strategies and tactics to attract this talent and ways to clean the recruiting technology/applicant spamming mess. (More on this below.)
- Cultural onboarding for new hires, not just payroll and benefits onboarding
- HR strategies that promote your organization’s values, career development, compensation, and workforce flexibility strategies.
- Managers who build high-performing and agile teams that drive for excellence and trust each other – not management by strict compliance.
Learn more by reading: Talent Strategy is a must for today’s labor shortage.
2-Leading organizational change
Peter Drucker was famously quoted at lunch with Ford Executives in the 1960s saying, “culture eats strategy for lunch.” Sadly, key business strategy implementation fails to meet it goals 50 to 70 percent of the time, according to the Cambridge University Press. Not much has changed since Drucker’s lunch with Ford Executives. According to Gartner, 74 percent of HR leaders say managers are not equipped to lead change and 73 percent of employees suffer from change fatigue.
I have found that strategy implementation improves when leaders first use an organizational change strategy model, such as McKinsey’s 7-S model of corporate culture to identify how an organization’s seven key elements need to be aligned to achieve strategy goals. In addition, companies need a change implementation model, such as John Kotter’s Eight-Step Methodology to lead change. Many articles in the Harvard Business Review and other publications identify the key reasons for strategy failure. They include not understanding the problem, the organization’s capabilities, the immoveable pressures, and the cultural landscape. John Kotter’s model provides a process to work through each of these common areas of failure. Learn more here.
3-Enhancing culture development
Business strategies are more successful when organizations have an innovation culture. That is, cultures that are aligned to the organization’s strategies, are transparent, collaborative, have empowered teams, and readily align the organizations departments to make change. InnovationOne has found that these organizations have up to 22 percent better financial performance (let alone better innovations) than more top-down, strict cultures. Learn more here.
In addition to the advantages to businesses, employees prefer to work in a collaborative culture. MIT uncovered that toxic organizational cultures drive employee turnover ten times more than pay. Learn more here.
4-Using people-focused AI implementation
I am not going to bore you with another lecture on the importance of using digital technology to improve processes and make organizations more efficient.
However, statistics on the success of digital transformation are grim. According to Forbes, about 70 to 80 percent of digital transformation projects fail to meet their objectives. They don’t deliver the expected functionality — often, despite running over-budget and being behind schedule — or the new systems don’t work well, or in some cases, the project is a total loss.
HR leaders need to continually advocate for people-focused AI implementation to improve the organizations success and profitable growth.
There is an abundance of research that shows that when an organization’s employees are involved, digitization transformation significantly improves. According to a June 2024, Harvard Business Review article by David De Cremer, AI is intimidating employees. The problem is only getting worse. Eighty percent of organizations say their main technological goal is hyper-automation—or the complete end-to-end automation of as many business processes as possible. Executives often pursue that goal without feedback from employees—the people whose jobs, and lives, will feel the greatest impact from automation.
De Cramer asserts that most managers know that AI tools are computational systems that have autonomous learning ability. They understand that AI can learn from large datasets and engage in pattern recognition and problem-solving. But too many business leaders implicitly assume that AI can take over almost any position from humans. The reality is that AI cannot think like a human, and it isn’t all that creative. AI can alienate employees in three ways:
- Employees lose autonomy and become cynical
- Employees don’t understand AI and resist it
- AI creates business silos.
De Cramer advises that leaders need to help employees feel more in control of the adoption process, reduce aversion to AI, and increase trust in AI. He suggests the way to do this is to create the space and time for social connections while implementing AI and to make technology and non-tech teams collaborative.
De Cramer cites an example with the Fortune 500 company Land O’Lakes:
It began its AI transformation in 2017, when it sought to partially automate commodity forecasting and propensity modeling. Company leaders prioritized speaking with the rank and file about the expected challenges, helping establish a common understanding of the project’s possibilities and limits and assuring people that the company wasn’t pursuing tech for the sake of tech. Teams coordinated across departments, but company leaders also conducted weekly people-to-people check-ins with every business unit to address any challenges, emotional or procedural, that may have arisen. That approach was crucial to the success of Land O’Lakes’ AI transformation. Employees were given opportunities to voice concern, to question tactics, and to raise anything else that might be on their minds.
De Cramer concludes by saying, “If employees don’t feel valued and respected, your transformation attempt will certainly fail.”
5-Optimizing flexible workplace strategies
If I proposed a way to raise worker productivity by 20 percent, improve worker collaboration and innovation and significantly reduce employee turnover and real estate costs (for some organizations by millions per year), would you refuse my suggestion?
Many CEOs are, in fact, refusing my suggestion by calling for the return of remote and hybrid workers to the workplace, despite the mountain of evidence to suggests that back-to-the-office initiatives drives up employee turnover, stress and overall business costs and reduces employee morale and productivity. Learn more by reading, “Working fulltime in the office should not be the new normal,” and the more than 60 blogs that can be found on my website on flexible workplace, including a case study from a 2011 implementation.
6-Addressing the rising US employee benefits crisis
In August, I posted an article on how US companies are planning on using High-Performance Healthcare Networks as an overlay on Preferred Provider Networks to help control costs, as opposed to cost-shifting health care costs to employees. Companies were also planning to increase mental and behavioral health services.
But the assassination this December of United Healthcare Insurance (UHC) CEO Brian Thompson and the social media blowback over the anger with denied healthcare claims by UHC and other private healthcare insurance carriers has changed this narrative. According to research, UHC has a 32 percent healthcare benefit denial rate.
UHC is not alone. Anthem Blue Cross Blue Shield organizations (which is third in healthcare claim denials at 23 percent) were called out for proposing limited anesthesia coverage during surgeries and other procedures. After an outcry from doctors, Anthem said their proposal was misunderstood and they withdrew it.
Medicare Advantage programs were also called out for denying nursing care for patients who were recovering from falls and strokes.
Congress will begin bi-partisan investigations into these issues. However, state regulators who approve plans offered in their states and employers need to examine these issues more closely.
I can understand the concern employers have for rising health care costs and the need to try to reduce these cost increases. I have “been there.” But companies should investigate the denial rate and overall customer support insurance carriers provide their employees and measure it. It won’t be long before employee anger with insurance carriers boils over to anger with the employer.
The US leads the cost of healthcare by nearly double the costs of other western governments. This is unnecessary. Companies and business associations need to lobby the US government to cut health care costs by streamlining the administration of healthcare and improving customer service.
7-Stepping up the focus and success of HR technology
Gartner reports that HR technologies are often focused on improving processes and fall short of success. The failure means HR gets little support for more resources to upgrade technology.
The best areas for success are with employee-facing chatbots to answer employee questions, document generation on policies and benefit coverage and options, and job descriptions and employee skill databases. However, HR needs to take bold steps to use AI to evaluate the state of current and future employee skills and aptitudes and the effectiveness of HR policies.
And as reported above, get HR employees involved on any HR technology implementation.
HR should also focus on the mess in recruiting technologies, where job applicants using spammy job application apps clog up applicant tracking systems. Recruiters need to stay closely involved in the early phases of the recruiting process. Learn more here from my blog: The Mess in recruiting: bias, robo-bots, bot bobby traps, and how to fix it.
Next year will start off with a bang of growth once business tax cuts are approved and business regulations are lifted . . The rapid transition to digitized processes will continue and when the crackdowns on illegal immigrants begin the US labor shortage will intensify. HR needs to have strategies to help its businesses grow, avoid legal trouble, improve the implementation of digital technologies while better managing its own digital stack.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com