HR Review 2025: the Big Shift in Skills, AI, Talent and Technology
2025 wasn’t just another year for HR. It was a turning point. The demand for new skills exploded. AI accelerated both decision-making and administration related tasks. Retention became a board-level priority. And the employee journey transformed from a soft topic into a hard condition for success. HR stepped out of its traditional support role and took its place at the strategic table. In this article, we reflect on the year 2025 and explore the key shifts that changed HR for good.
2025 marked a fundamental shift in the HR landscape. We saw the rise of skill-based hiring, the rapid advance of AI, and growing pressure to retain talent. HR evolved from a support function into a strategic business partner: one that embraces data, focuses on the employee journey, and enables continuous learning. At the same time, many organisations discovered they don’t know their people well enough. Retention became more than a KPI; it turned into a very important strategic topic.
Today’s labour market demands a different approach to recruitment. It's no longer just about degrees or job titles. To attract a broader, more diverse pool of talent, the focus is shifting towards skills.
In 2025, skill-based hiring truly broke through. Of course, it isn’t suitable for every role. For regulated professions like doctors and lawyers, certifications remain essential. But in many other roles, focusing on skills leads to fairer, more future-proof, and inclusive hiring.
Our advice for 2026? Get familiar with skill-based hiring – if you haven’t already – and start putting it into practice in your organisation.
The rapid rise of AI calls for a new way of thinking about talent and technology. Organisations need to redefine their Employee Value Proposition (EVP): Why should someone choose to work for you if “AI can do everything”? The key lies in creating a meaningful partnership between people and technology. That’s the only way to attract, retain, and empower talent, while meeting employee and business goals.
A New Role for HR Technology
2025 showed us that choosing HR software isn’t just about functionality anymore. Today’s HR tech should not only automate processes but augment human potential. That means it’s time to build a business case that looks beyond costs and focuses on the real value: enabling people. As we move into 2026, HR leaders need a technology strategy that puts the synergy between humans and technology at the centre, both in your EVP and in your investment roadmap.
We often talk about skills and the employee journey, but research shows many organisations are still struggling to apply this in to practice. According to McKinsey, 20% of employees were dissatisfied with their employer in 2025, but only 7% had concrete plans to leave. That means a huge group is stuck in silent disengagement. Their true sentiments remain invisible, and unaddressed.
The Growing Skills Gap
Another urgent issue is the widening skills gap. This is no longer a future threat, it’s happening right now! McKinsey’s research shows that 32% of employees lack the skills to do their current job effectively. Despite this, many learning strategies remain fragmented. Learning must become a continuous, strategic process, not just a once-in-a-while initiative. That’s the only way to close the skills gap and stay competitive.
Want to learn more about building a continuous learning culture? Download our whitepaper: Creating a Learning Culture: From Occasional Learning to Continuous Development.
Retention is Critical and Complex
In 2025, employee retention became a top priority for HR. Not just because of talent shortages, but because of a growing mismatch between what employees offer and what people actually want. Organisations invest heavily in recruitment, but many still struggle to keep their talent. Today’s employees aren’t just looking for salary or perks. They want job security, meaningful work, and strong team relationships. If those aren’t in place, people disconnect, and eventually leave.
Why Retention Matters in the Age of AI
Retention is also key when navigating technological change. Your long-term employees hold critical institutional knowledge. That knowledge is essential for a smooth AI transformation. If your experienced staff leave, you don’t just lose people. You lose context, continuity and momentum. You need a stable core of people to drive digital transformation and ensure adaption.
The Lesson for 2026: Put Your People First!
In 2025, it became clear: the cost of turnover goes far beyond recruitment. Think productivity loss, stress on remaining teams (leading to even more exits), and weakened client relationships. Retention is no longer a “nice-to-have”. It’s a strategic, economic priority. Flexible Benefits can play an important role in supporting this.
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