Five recruitment challenges to prepare for in 2025

Understanding hiring trends is essential as you plan your talent acquisition strategies and headcount forecasts. As we approach the new year, we ask: what’s around the corner for recruiting and hiring?

Talent shortages in key industries

As businesses embrace advanced tech like AI, ML, and cybersecurity, demand for skills surges. According to McKinsey, 87% of companies will experience skills gaps in key areas by 2025. It is no surprise that the tech sector is one of those facing the largest talent shortages. Learning and development (L&D) teams should develop upskilling programmes and create initiatives to help employees transition into new roles. When hiring for new roles, a blended approach will come into play.

Our tip: Combine reskilling and external hiring to build a balanced workforce. Passive candidates, remote working, and skills-based hiring could go some way to help the talent shortage.

Remote and hybrid work challenges

The shift to remote and hybrid work presents challenges in hiring, managing, and retaining a remote workforce. Companies must navigate issues including productivity, communication, and creating a cohesive team culture.

Times are changing, though, with companies from Salesforce and Barclays calling blanket bans to return-to-office (RTO). Starling Bank’s new CEO enforced a mandate in November requiring hybrid workers to clock in at least 10 days a month. Amazon admin staff will RTO full-time in January. Over three-quarters (76%) of UK financial services leaders plan to increase office attendance in the next 12 months, according to KPMG UK.

Our tip: Communicate to help employees understand expectations and the reasons some may need to be in the office more than their peers. In recruitment, flexibility is a benefit to attract candidates who thrive in a remote environment.

Passive candidates are game-changers

At the start of every new year, we will see a large ‘passive talent pool’ of professionals who take a wait-and-see approach to their jobs, at least in the short term. Passive candidates, those not actively looking for jobs, can be an untapped resource of good-quality potential employees. While it might be easier to attract active candidates than those out of work, a sourcing strategy that includes techniques for attracting passive candidates will be effective.

Employer branding is key to passive candidate attraction. Employers who want to make the most of this candidate pool should address needs around learning and development, career progression, and benefits packages. Not only will this be attractive to potential candidates, but it will also support employee retention.

Our tip: Search online review boards such as Glassdoor to see what current and past employees say about your organisation. Then, develop a strategy with HR to address negative online reviews and create a positive image. Showcasing your culture, values, and career opportunities will make your company attractive.

Skills-based hiring

Research from Korn Ferry suggests that organisations focused on skills are 57% more likely to anticipate and respond to changes. According to the State of Skills-Based Hiring 2024 report by Test Gorilla, 81% of companies use skills-based hiring. This compares to 73% in 2023.

In 2025, new career paths will emerge. Hiring managers need to focus on the human angle, on the person rather than their qualifications. The changing nature of work, the gap between skills, and the rise of online learning contribute to a skills-based approach. Next year, diversity and inclusion will be at the forefront of hiring. Skills-based hiring reduces bias, leading to more diverse and inclusive teams. It evaluates candidates on merit rather than traditional qualifications.

Our tip: Hiring managers must look at candidates’ potential to develop skills rather than their past achievements. Strategic hiring comes into play. Focus on candidates with transferable skills who can adapt.

Salary transparency

The word ‘competitive’ no longer cuts. Research shows that 85% of upcoming and recent graduates won’t apply for a role without salary information. As this cohort becomes a bigger proportion of the workforce, employers will adapt to meet their needs and expectations. And with the cost-of-living crisis, salary transparency is key to attracting candidates.

In the US, several states have pay transparency laws. The EU has passed the Pay Transparency Directive, which requires companies to be more transparent about pay from 2026. UK-only businesses are not within scope; inevitably, there will be pressure to be transparent on pay. Employers risk losing talent to EU competitors if they don’t follow suit.

Salary transparency implies companies share pay details in job adverts. For candidates, there are several arguments in favour of this. The EU Pay Transparency Directive forced all employers to disclose salaries and banned them from asking candidates about their pay history. The UK lags. While limited transparency could contribute to pay inequality, the paused pay transparency pilot only encouraged organisations to include salaries in job ads.

Our tip: Employers who fail to recognise transparent salary preferences will become unattractive to candidates. Moreover, for hiring managers, some interview time is often wasted when candidates are unfamiliar with the salary.

Smarter hiring is key to attracting and retaining talent in 2025. HR and TA teams must consider how workplace changes and the future world of work will shape recruitment to stay ahead in attracting and retaining top talent.