HR’s position as a strategic partner to employers failed to expand for the first time in four years, according to a new trends report from McLean & Company.
The Toronto-based global HR research and advisory firm’s 2025 report shows that although HR is becoming more strategic, with 48 per cent of respondents reporting a formal HR strategy compared to 37 per cent in 2024, its overall partnership with the organization did not grow. The report suggests HR should adapt to shifting priorities and show the return on investment for its initiatives to maintain and strengthen its role.
Developing leaders, retaining employees more critical than recruitment
The firm said 779 HR and business professionals across several industries worldwide contributed insights, which pointed to a shift in HR’s top focus areas. McLean & Company found that recruitment has dropped as a primary concern, replaced by developing leaders, retaining employees, controlling labour costs, improving employee experience, and then recruitment.
“From 2020 to 2024, HR’s strategic partnership surged as organizations navigated the pandemic, remote work, and shifting worker priorities,” said Will Howard, practice lead, HR Research & Advisory Services at McLean & Company. “In 2025, priorities are shifting, and HR must be quick to adapt to changes in strategic direction. HR has an opportunity to deliver value through internal talent development and retention and show, through data, how they deliver organizational priorities,” said Howard.
Economic uncertainty
Data from the report points to economic uncertainty, labour market competition, and new workforce expectations as major pressures on HR. McLean & Company said formal HR strategies were linked to better performance, especially when it comes to achieving strategic goals, cost optimisation, and revenue growth.
The research also highlights the rising role of AI in HR processes, including talent acquisition and learning and development, though the study found HR’s technology enablement skills to be lagging. The report said HR professionals should strengthen their ability to adopt new technology, noting that when HR uses AI effectively, organizations are more likely to fill vacant roles with quality talent, enable data-driven decisions, and support learning and development.
Wellbeing threats top of mind
Wellbeing threats to employees, such as economic instability and political issues, remain top of mind. McLean & Company said organizations with a formal wellbeing strategy are more likely to perform well in supporting employee wellness and providing a strong employee experience. “Wellbeing investments must be aligned with employee needs to ensure return on investment,” said Howard.
The study also outlines 10 emerging HR practices, led by redefining expectations for people managers and adopting skills-based hiring. McLean & Company said the ability to measure the ROI of HR programs will be particularly critical in reinforcing HR’s strategic role.
| Rank | Emerging HR Practice |
|---|---|
| 1 | Redefining expectations for the roles of people managers |
| 2 | Adopting skills-based hiring practices |
| 3 | Measuring the ROI of HR programs |
| 4 | Breaking jobs down into tasks to match individuals with work and projects based on skills and interests |
| 5 | Increasing transparency into pay and pay decisions |
| 6 | Implementing an AI-specific workforce upskilling strategy |
| 7 | Adopting trauma-informed practices to foster a safe workplace for all |
| 8 | Enabling the organization to practice neuroinclusive leadership |
| 9 | Providing reverse mentorship opportunities |
| 10 | Implementing returnships to access a larger talent pool |
The 2025 report concludes that amid economic pressures and shifting workforce demands, HR must continue to build on its strategic progress by showcasing the impact of its initiatives and staying involved in conversations about technology changes. According to the firm, this approach will position HR as a pivotal ally for C-suite leaders as they plan for the future of work.
