Inside SHRM’s CHRO Report: What’s Next for 2025?

Mo Fathelbab: Welcome to today's episode of People and Strategy. I'm your host, Mo Fathelbab, president of International Facilitators Organization, People and Strategy is a podcast from the SHRM Executive Network, the premier network of executives in the field of human resources. Each week we bring you in-depth conversations with the country's top HR executives and thought leaders.

For today's conversation, I'm excited to be joined by SHRM’s. 

Jim Link, CHRO, and James Atkinson, VP of Thought Leadership. Welcome, Jim and James.

James Atkinson: Hello.

Jim Link: Mo, thank you very much.

Mo Fathelbab: So today we'll be discussing some key insights from SHRM’s recent report, CHRO Priorities and Perspectives report. 

We're going to delve into this research in three sections, priorities for 2025 challenges, and then the anticipated trends. So, my first question for you guys is, what are the core priorities for HR leaders in 2025, and what does this signify for the year ahead?

Let's start with you, Jim.

Jim Link: There are so many things that are happening in the world around us right now, and the research that Dr. Atkinson and his team have conducted is, confirming what those of us who are in this practice already feel with all of these changes that are happening, skills are certainly important.

Leadership, identification and development is certainly important. There are so many things that are on the plates of human resources practitioners, many of whom are in our audience today. That those two alone, skilling and leadership management and leadership identification and development are certainly taking up a lot of time.

And Dr. A, I think that's exactly what we saw in, uh, some of the research among other things. Right.

James Atkinson: Yes, absolutely. Uh, you hit the nail on the head. When we talk about the, the key priorities for 2025, actually leadership and manager development really rises up to the top more than half of CHROs. Tell us that that is one of their top three priorities for 2025. And as, as Jim was saying, you know, there's so much change about, uh, there's a, a lot of kind of transformations that's happening in many organizations.

So, you wanna make sure that you have, uh, the right leaders and that they are prepared to lead through all of that change. Uh, which gets me to that second big priority, which is. Both organization design and change management. That's, uh, kind of that number two priority of ensuring that one, you are prepared for that change, you're communicating to your employees about that change, um, and that you're setting yourselves up in terms of your structure to align with the business priorities for the year.

Uh, and then that third one that you mentioned as well really gets into employee experience and making sure that we are kind of engaging our employees in the right way, ensuring that we can, uh,  retain, uh, that top talent at our organization and, and kind of setting that strategy up so that, uh, we providing that good employee experience overall.

So, so absolutely we're seeing, we're seeing some, some top priorities for 2025 across those different topics.

Mo Fathelbab: And James, uh, AKA, doctor a uh, is there anything that surprised you about this data?

James Atkinson: Well, you know, I don't know if surprising as much as we do see some changes in some of the prioritization from, uh, at least the last couple of years. So, one of the areas that, you know, we asked about in terms of prioritization was recruiting. And whereas in the last. of years that really was one of those top priorities of trying to get talent into the organization.

We've seen a little bit of a shift as we think about 2025 to focusing on the talent that's already there. Um, and really trying to, like I said, engage and retain that talent. Um, and, and, and really building up from, from within.

Mo Fathelbab: What about you, Jim?

Jim Link: I think what Dr. A just said about that change in focus for HR practitioners is incredibly clear and relevant and something that we're experiencing even here within our internal workforce at SHRM, yes, we are still trying to attract the most qualified talent into our organization. No doubt about that. As the skills dearth out there in our workplaces continue to haunt us all, focusing more time and energy on ensuring both the employee experience and upskilling of our current workforce, particularly in those areas. Uh, that we identified around leadership development is occurring and it's just not happening here at SHRM.

When I speak to Chief Human Resources officers and leaders of talent and, and leaders of learning and development and respective organizations, big and small, across the 340,000 members of SHRM, I hear this again and again. As a matter of fact, people pick up the phone and call me and they say, hey, what are you seeing?

And the things that. They are seeing, and that we're seeing are very, very much aligned with a focus as you, as you heard Dr. A, explain a focus now on and that internal view. And I don't see that changing, uh, anytime soon. We, we understand what's going on out there in the world around us right now with, with layoffs and, and other changes. And that idea that there's perhaps going to be more talent in the marketplace or may not come true. Um, we can talk more about that a little bit later, but we certainly need to keep our eyes on the employee experience and particularly those people we deemed to be potential leaders in our respective organization.

Mo Fathelbab: Well, thank you both. 

Turning now to the challenges, the two big challenges, that data, the two, let me do that over. Turning now to the challenges, the two big challenges that data points to. Are the economic and talent challenges, uh, what are we seeing here when it comes to the economic challenge and how will this impact HR leaders?

And what can h CHROs do, uh, to stay ahead of it? Uh, James, I'll start with you.

James Atkinson: Yeah, absolutely. So, when we asked about challenges, we looked at a couple of different levels. So, what's happening or what's a challenge as you think about the big economy? What's a challenge as you think about your organization? Or even your function. And we actually saw a bit of alignment across all of those different areas.

So, at the macroeconomic level, we see that, um, you know, inflation or rising cost of goods, uh, about half of those that. Um, answered our, our survey told us that that was a big challenge that they were facing. Uh, related to that, the top challenge kind of from a macroeconomic perspective was wage inflation.

Now we're not seeing the types of wage inflation that we certainly saw two, three years ago amidst, um, uh, that kind of great, great resignation period. Um, but it still is a concern of you're paying for more in terms of. The, the, the benefits that you might be providing or you're having to, to still pay higher salaries in order to both retain and attract that talent.

So, we see that from a macroeconomic perspective, and then that really flows into the organization level of those rising operational costs, uh, which are, which was flagged as the top organizational challenge and just that pressure to achieve financial goals. So, it's balancing. The need to continue to improve the revenue but keep those costs down. Uh, those are the things that are really, uh, kind of rising to the top in terms of the challenges or the, the, the headwinds that, um, heads of HR are seeing for 2025.

Jim Link: Yeah, Dr. A, there's

Mo Fathelbab: Okay.

Jim Link: about that. And whenever the, the storylines from our conferences, from our members, from our senior leaders, uh, out, when we hear those storylines, they're very much aligned with this idea that. As inflation goes, so do cost in their respective organizations. Now, what that means for human resources practitioners is that we spend a lot of time now thinking about effective cost management and effective cost management is being enhanced, I believe, by some other things that are going on out there in our world right now.

Particularly the. The rise of the use of artificial intelligence or maybe the anticipated rise of the use of artificial intelligence in our workplaces. I think most chief human resources officers believe that there's going to be a connection between technological advancement and whatever form that that takes in cost control.

Now, I think that's. I also think it's potentially realistic, but time will tell. So, so, Dr. A, as you're thinking about what your research studies are showing, and this is being reflected in, in the pain that human resources leaders are experiencing right now as they try to provide as good as or better services to their entire employee population. And still maintain some sense of cost control. I know we go back to our vendors and while, while we certainly talk with them about what we'll get for the, the cost involved, I know that they are also feeling the pressure on their own side to try and control those things. You know? And the final piece I'll add, you know, for years we thought that there was some type of a, a correlation and. I'm, I'm not a PhD researcher, so Dr. A, if I get that word wrong, bear with me.

James Atkinson: Yeah, no worries. No worries.

Jim Link: some type of a connection between what we would see in rising wages and then what we might actually see in inflation or perhaps the other way around. Now, it's true. We were in a wage suppressed environment, at least in the United States for many, many years, where that we were seeing things change all around us, but wages were stubbornly slow to increase. You're right, we did see that pick-up pace, uh, certainly as a result of the great resignation. I think what we're going to see though, is a better, what I think of is just normalized tracking between inflation and the, the cost of, of employees and employee services in our respective organizations. I don't know, I might be wrong.

I will let the research bear that out, but clearly that that idea that there is a, some type of a connection between. Inflation and the cost of wages and goods and services in the form of benefits and others, um, I think it's gonna be more connected in the future than what we've seen in the not so recent past.

Mo Fathelbab: James, I see you nodding. You have a comment.

James Atkinson: Well, no, I was just gonna say that that also makes me think of kind of one other key challenge at that broader level is just the economic uncertainty. So, it's one thing to know that you've got to control the costs. It's another thing to, uh, not know exactly how you're going to have to control the cost because there is uncertainty on whether it's inflation, whether it's, uh. Certainly the, the changes in the cost of, of, of talent and so it's, it's both the pressure to deliver your numbers, but it's also the pressure to do that in an environment where you're not sure how the things you change right now might affect those numbers.

Jim Link: Now Mo, this is interesting because if you're a Chief human resources officer listening to what. Dr. A just said, that's a fascinating point and, and I think it's very salient and very relevant, that effective management of cost of, of all things related to the financial side of being a chief human resources officer, can I, either give you great energy or it can rob you of energy, right. And I think on any given day, we could find it to be one or the other. My best advice in in working with it is find that financial partner, find that research partner, find that person who understands the connectivity in such a way that they can help you manage through that. One of my closest compadres here at SHRM is our Chief Financial Officer because she can explain things to me and help set up a successful strategy in the effective management of human resources costs, just because she has a different lens, uh, than I do related to those things. So, hey, look around sometimes your, your best, your best colleague, uh, to help you has a, a strong command of those, uh, numerics we all in all things related to cost, inflation, and the broader economic cycles in general.

Mo Fathelbab: So to what extent are these items putting pressure on the prices of goods as it relates to the companies that are hiring these people that are more expensive? Should they not be raising their prices along the way in order to make room? For those, for those folks, Jim.

Jim Link: Well Mo it depends on which economist you choose to believe. I mean, in inherently, the answer to that question is yes. Right? It's a trickle-down effect, right? And that trickle-down effect means that the greater cost of services and goods to produce a good a product or an outcome is going to be paid for by somebody. Now who that is depends on which, you know, line of thought you believe related to the broader economic theory. Not my field of expertise. I know. Just enough to be scary there, but the idea here, when you think about this, is that strong human resources, managers and leaders should always be looking to find the best. Whether that's a benefit, whether that's an outcome, whether that's a learning and development program, I don't know what it is, but they should be striving to actually find the best, uh, link between what that good or service provider actually gets you in your organization, what that person provide or, or service provides for you and the cost of that. I know here at Sherman, even in my, my former lives and other human resources organizations. I didn't always choose the low-cost provider. I didn't always choose the high-cost provider. I chose the provider who could connect for me the outcomes that I was looking for in the form of an employee experience, or an employee learning or anything else, uh, that, that would help lift my organization and align that with the, the likelihood of a better outcome for the business.

Mo Fathelbab: James.

James Atkinson: and, and I was just going to say a couple of.there. One is that for most organizations, the cost of talent is the largest single cost that they are in incurring. So, there is a, a huge responsibility for heads of HR to, to understand what that is. But what Jim was saying really gets at um, not just the cost implications, but the ROI of any of these investments.

And when you look at some of the other. Challenges when it comes to talent that, uh, we uncovered things like maintaining employee morale and motivation. That's really in that employee experience side of things. What are the things that you are spending money on to produce higher performing employees? Again, it is, might be a higher cost, but if you're getting that higher return from that, um, that's what's important. So, whether it's engagement, whether it's trying to attract talent with, you know, this, uh, wonderful benefits package. If you're getting high performance talent in the door, then, then that's going to pay for itself. Um, even if you spend a little bit more on a, you know, not just the lowest cost provider.

Mo Fathelbab: So, let's talk about those talent challenges. Uh, you mentioned employee morale, motivation. Uh, we want to add upskilling, which is another one that came up. How are leaders currently approaching these issues and how do you think they'll need to adjust to meet the demands for 2025? Jim?

Jim Link: Well, the first thing is awareness, and that's one of the reasons why we're sitting on this podcast today with our, with our audience, is. Understanding what we're seeing from a research perspective and then confirming that from a practical or application-based approach, um, that's the most important thing, is to get your arms around those matters. I find this as a balance whenever I think about the things that I know our workforce needs. And then the, the monies, the dollars, the, the, the deliverables that we, in the human resources space can provide to ensure that outcome for our business. In every case, it's because I'm aware and my CEO's aware, and so is the rest of the senior leadership team in any organization I've ever worked in. Of what the true issue is that you're trying to solve. Perhaps it's leadership identification, meaning you have talented people out there today, perhaps on the manufacturing line, who tomorrow could be production leaders, who the next day could be shift leaders, who the next day could be area leaders or whatever else it is in your organization. That awareness and knowledge of what those people need to get from each point to the different point to accomplish the goods of your business. Is tantamount to the success of that organization. We inherently, as human resources practitioners think that we get that right. We, we think that we understand that. But I think the point that, that Dr. Atkinson is making so very, very clearly is perhaps there's more science there that we should apply in a, in ensure that that outcome, what we put in, actually delivers the outcome that we're after. 

For, as a business or, or a leader, and I can't leave this discussion without talking about this change management piece. Uh, oh my goodness. When I think about where we need to spend some time as human resources professionals, this is it. don't know if y'all have noticed, but change is everywhere right now and it feels like it's coming down, not just, it's not sprinkling rain. It's a big old thunderstorm. Right? Right. Over our heads right now, so. Listen, the, the way to navigate ourselves through that is effective change management practices. You over communicate, you overshare, you set targets, you make sure people are bought into that identification, that process. And then you do that again the next day and the next day and the next day. You know, when I think about change management practices in general, sure.

I know all the theories, right? I got through grad school, I, I know what all those are. And listen, those, those are important research findings there. What I'm gonna say might be a little controversial, but listen, a lot of those change management practices that have been memorialized and idolized for years. Listen, and choose very carefully the ones that make sense for you. Don't adopt any one model. Grab the best things that are in each one of those models. Tweak it, twist it, absorb it, and do the things that are right for your organization in an effective change management process. Whether it's a big organization or a small one, there is and should be an approach that you own you as the human resources practitioner own to help lead your organization through change.

It's a core competency. Should be a core competency for those of us who sit in these chairs and being able to help our organizations with all of the things, and it's such a rapid pace as they're occurring right now. Listen, we need to know how to do that and we need to know how to do it well.

Mo Fathelbab: Beautiful, Dr. A.

James Atkinson: Yeah. You know, the only thing I’d add is, you know, we talked about that being one of those top three priorities is, is really that change management piece. And, and I think it's, there's really an opportunity for HR, for the heads of HR to be at the center of those processes across the organization where change is. Huge. Um, and, uh, you know, I know we, we talk a lot about technological change, but you know, there's, there's generational changes that are happening within the workforce. There's, there's kind of new and different ways that people are, are doing work, um, whether it's remote, et cetera. And so, I think it's just, it's. Important to make sure that HR is in the center of, of all of that, and driving the change management as it's happening across the organization and certainly the communication side of it and bringing employees along that journey is, uh, is really key and, and key to being. Successful at not just a change management initiative, but a change management.

You know, really culture, um, because you have to be doing that over and over and over again. It's not a one and done type thing.

Jim Link: Yep. It's a change management mindset.

Jim Link:  Absolutely, for sure. And organizations who have that as a core competency. I think today should be a good research topic. Dr. A I think organizations who have that as a, as a core competency today likely are outperforming or certainly have the, the potential to outperform those for whom it's not such a strength.

Mo Fathelbab: Yeah, I think it was Einstein that said the only constant is change and uh, that seems to be truer than ever right now. Huh?

James Atkinson: absolutely.

Mo Fathelbab: Moving on. Lastly, uh, we want to discuss the anticipated trends, the data points to AI integration and HR processes, rapid skill development, and increasing focus on employee experience.

Uh, what does the data reveal here, James?

James Atkinson: Well, we, we can't have a conversation without talking a little bit about ai and unsurprisingly, when we asked our heads of HR what. are the big trends that you see for 2025? Uh, we asked on a lot of different topics and over and over, anything related to AI was, uh, kind of rising to the top. So, you know, nine in 10 tell us that they really think that there will be a much more prevalent integration of AI into the workplace.

Uh, more than eight in 10 say that it's going to be a much bigger part of the HR function moving forward. I think this goes back to. What we were just talking about in terms of change, uh, but also just thinking about how you are preparing your workforce for all of this that is coming. Um, even some of the newer types of AI thinking about, you know, autonomous agents, um, whereas that didn't rise to the top of some of the other things we still saw almost seven and 10 saying they think that's going to be a bigger deal in 2025 than, than before.

And so. I said, it's about preparing your workforce, your leadership for these things to come and, and making sure that your, your, your HR function is ready to, to lead in that change. I.

Jim Link: this year alone, the

Mo Fathelbab: Hmm.

Jim Link: is showing up in job descriptions at a rate three times what? It was just a short amount of. Of time ago, three times. So obviously this is very, very important. I agree with Dr. A. We absolutely as human resources practitioners need to own this. Just like we were talking about owning and developing and, and, and taking command of change management for your respective organizations. I believe and SHRM believes that AI should be a practice and a competency of human resources leaders. As a matter of fact, we should carry our organizations forward in the proper usage of adoption, of and deployment of AI in our respective organizations. Now. easy for me to sit here and say that, but that requires a change plan.

And whether you have a transformation team or a project management team, you have others who are interested in understanding how to drive this type of mindset. That's why I pointed in my head a little bit earlier. What we're describing here is a mindset shift in where, why, and how work gets done with a focus on the how part. So, I know I spend significantly less time doing task that used to take hours I can now do in minutes because of the deployment of ai. And I'm by far no AI expert, but I am learning prompt engineering in new and exciting ways to get what I'm looking for out, out of AI. So, and with more learning to come, I think the most effective organizations here are establishing what they want from AI integration within their workplaces, and then they're building a project management plan to get there.

Whether that's mandatory training, whether that's giving people permission to play around with AI or whatever it might be. I do think that organizations need to pay particular attention to the inherent risk that come along with, with artificial intelligence, false re um, I think they're called hallucinations. There are other things that can, can come and listen. Just because AI produces an outcome doesn't mean that it's right or that it's valid or any of those other kinds of things because it's relying on large language models to produce those outcomes. Who knows what's in those large language models. You might not get the right thing, but I can tell you just in practice, we in human resources need to own this for our respective organizations. Full stop.

Mo Fathelbab: All right, so many have said that, uh, we've returned to an employer market. Uh, this gets nuanced, but what are we seeing here, uh, when it comes to the employee experience? Jim, with that chuckle, I gotta start with you.

Jim Link: You know, it, it, I've watched this, these trends for years, right? You know, sometimes the employee's in charge, sometimes the employer's in charge. I mean, I have a, a, a thought here related to this. As long as our labor market continues to be what it is today, I think it's more employee centric than it is employer centric.

Now, I understand some of the current tide. Indicators, right? As it relates to layoffs and those types of things are occurring. I get that. I see that. But when you look at the broader macroeconomic environment, there are still millions of job openings out there, and those job openings are for people who have very specific. Skill sets. So that mismatch in my mind is between what employees are actually looking for and what's available in the general marketplace of employees those types of circumstances. Whenever that that exists, employee and the ones with great skills are still in charge in this space. In Jim Links, I'm a humble opinion.

Mo Fathelbab: Thank you, James.

James Atkinson: Well, I, I'm gonna say that, uh, Jim's humble opinion is backed by a lot of data, which is, which is great. He, he, he referenced just the fact that we are in a sustained period of labor shortages and have been in for several years, where we simply have more job openings than we do unemployed people, uh, in the US in particular, but this is the same. Um. is happening in many countries across the world as well. And I think that for those who have the right skill sets, um, they are in the driver's seat when it comes to what, you know, what types of jobs and what they're hoping to get from those types of jobs. So, it is not an employee or employer market across the board, but it is certainly one that for. Certain, uh, industries, certain occupations, uh, certainly certain skill sets. Um, the employee holds a lot of that power because, um, those are the things that are in high, high demand across, um, across our, our market.

Jim Link: And Mo, Dr. A is exactly right. What's interesting here is that as this relates to the employee experience, which is what I think you were really wanting us to talk about before we went off on this tangent,

Jim Link: when you think about how this relates to the employee experience, The employer who will win the battle for that scarcity of talent will be the one who offers the best employee experience.

They're hands down. So, these two things are connected in all kinds of ways. It's no wonder that employers are spending lots of time and energy today really talking about culture. About the opportunities that exist in their organizations, about trust, about transparency, about authenticity in their leadership teams. Those things create a great employee experience. And in a talent starved marketplace, the best employee the employer has the best employee experience wins. Full stop.

Mo Fathelbab: Love it. Love this conversation. 

One last question for you all. What advice do you have to HR leaders who want to meet these workplace demands? Uh, Jim. Start with you.

Jim Link: be aware. Know what's going on in the world around you. Know what you stand for, know what's you're good, uh, what you do well as an organization, and then talk to your employees. They're the best indicator of what's working well and not so well in your organization. Just start there and you're already ahead of the curve.

Mo Fathelbab: Thank you, James.

James Atkinson: I will jump on the AI side and say, understand AI better than anybody at your organization. you'll be able to have that, uh, you know, that proverbial seat at the table where you are driving that change. Uh, whether it's preparing the workforce, whether it's figuring out how that integrates into day-to-day work. But that would be my, my advice is kind of understand this up and down and don't be afraid to. To step into that role of driving that change at the organization.

Mo Fathelbab: Wonderful, and that's where we'll end it for this episode of People and Strategy. A huge thanks to Jim and James for your valuable insights. You can follow People and Strategy podcast wherever you get your podcast.  Also podcast reviews have a real impact on podcast visibility. So, if you enjoyed today's episode, leave a review to help others find the show.

Finally, you could find all our episodes on our website at SHRM dot org slash podcasts. Thank you for listening and thank you for watching and have a great day.