In 2025, will HR lead the charge on change or just react to it?
By Fallan Mitchell
The forces of change are all around, from legislative and political shifts and rapid advancements in AI to changing employee needs and the evolving role of leaders. Amid this whirlwind of change, one thing remains clear: the heart of every organization is its people.
HR is increasingly tasked with driving organizational success through a human-centric approach that puts people first in the adoption of new technologies, developing leaders, and supporting employee well-being. HR’s priorities underwent a dramatic shift this year, emphasizing the critical need for human-centricity. As indicated in McLean & Company’s HR Trends Report 2025, recruiting dropped from the number one priority year after year to the fifth priority in 2025, while developing leaders, retaining employees, and controlling labor costs jumped to the top of the list. These changes underscore the need for HR to lead the organization with a focus on listening to and supporting employees, building a pipeline of leaders who prioritize people, and balancing these goals with strategic cost management — all within an increasingly digital and diverse world of work.
But how can HR leaders rise to the challenge, drive positive change, and deliver on their top priorities this year? It starts with strengthening HR’s strategic leadership.
Demonstrating the Value of HR in 2025
Over the years, HR has played a progressively strategic role in driving organizational success. This year, HR is more strategic than ever, with the percentage of HR organizations reporting they have a formal HR strategy increasing by 11 percentage points year-over-year. Being more strategic comes with many benefits, including increased performance on some of HR’s top priorities—developing leaders, controlling labor costs, and recruiting.
Yet HR’s increasing strategic value doesn’t seem to be translating to the rest of the organization. In 2025, HR’s strategic partnership with the organization did not increase for the first time in several years, signaling a potential risk for HR’s strategic leadership. To strengthen HR’s strategic partnership with the organization, HR must quickly adapt and deliver on its top priorities this year.
It’s one thing to be more strategic and meet top priorities, and another to ensure HR is effectively measuring and marketing its impact to the broader organization. McLean & Company’s research findings in the HR Trends Report 2025 highlight that when HR measures the return on investment (ROI) of HR programs, it is almost twice as likely to be a partner in planning and executing organizational strategy. Unfortunately, very few HR organizations are measuring the ROI of HR programs in 2025.
To move the needle forward and strengthen HR’s strategic leadership, HR must address this gap through not only measuring ROI, but also through improving its data literacy skills, where HR currently falls short. Increasing HR’s data literacy skills will enable HR to tell compelling stories with their data and draw connections between HR’s work and key organizational objectives, like profitability. By building strong narratives, HR can demonstrate their value and drive strategic decision-making, elevating their partnership with the organization.
Developing leaders, retaining employees, and controlling labor costs are the top priorities for HR in 2024.
Developing Effective Leaders Starts Before They Enter Leadership Roles
The leadership role is evolving and has become increasingly complex as leaders today are tasked with caring for employees’ well-being, growth, purpose, and fulfillment all while managing their teams, their own tasks, and their own well-being. With leadership plates so full, it’s no wonder leaders’ effectiveness across key skills and competencies is low.
Only 10% of first-time leaders are highly proficient in human-centric competencies—the skills needed to lead the organization in the future, according to McLean & Company’s Future of Work Report.
This is a huge concern, as first-time leaders have a significant impact on overall organizational success. When first-time leaders are highly proficient in human-centric competencies, organizations are 2.2 times more likely to be high performing at workforce productivity and 1.9 times more likely to be high performing at cost optimization. Today’s organizations have an opportunity to create a strong pipeline of future leaders by developing individual contributors before they enter leadership roles. However, organizations must first identify high-performing individual contributors who have both the potential and interest in leading people.
Organizations need robust internal talent mobility programs, like succession planning and high-potential programs, to identify high-performing employees’ potential and interest in leadership early on in their career and start preparing them for their first foray into leadership. According to McLean & Company’s research findings, organizations with a formal succession planning program are 2.3 times more likely, and those with a formal high-potential program 1.7 times more likely to have first-time leaders who are highly proficient in human-centric competencies. This not only supports the retention of top talent, but builds a strong pipeline of leaders who truly want to lead people, ensuring the continued operational health and success of the organization.
When first-time leaders are highly proficient in human-centric competencies, organizations are 2.2 times more likely to be high performing at workforce productivity and 1.9 times more likely to be high performing at cost optimization.
Supporting Employee Well-being Amid Compounding External Pressures
Supporting employee well-being has never been an easy feat, but in today’s fast-paced and unpredictable environment, this task has become even more daunting. Employees are feeling the strain of external pressures and it’s taking a huge toll on their well-being.
As retaining employees and providing a great employee experience are among the top five HR priorities this year, finding ways to minimize experiences of stress, burnout, and loneliness amid the external chaos is critical. When employees feel their overall health and happiness is supported at work, they are more likely to be engaged and stay with their organization, resulting in improved performance and productivity. Yet many organizations still struggle to effectively support employee well-being.
Effectively caring for the well-being of the workforce requires continually listening to and acting on employee needs as they shift with changes in the external environment. It also demands addressing systemic barriers, which are obstacles in organizational structures and practices that may hinder well-being at work, such as high workloads or lack of leadership support. When organizations fully grasp their employees’ needs and the obstacles they face, they can craft a strategy that aligns well-being investments with what matters most to the workforce, ultimately resulting in strategic budgetary decisions and improved ROI. This enables organizations to be much more effective at supporting employee well-being and providing a great employee experience, which is key to delivering on HR’s top priorities in 2025.
However, today, only 31% of organizations report having a formal well-being strategy, and that number has remained stagnant year-over-year, up only 2% from 29% in 2023. In 2025, organizations must be strategic about well-being to create impactful and tailored wellbeing offerings that drive a happy, healthy, and engaged workforce.
Navigating a Path Forward in 2025
Making sense of the many converging forces of change and deciding where to start is undoubtedly challenging. Yet, HR leaders must step up to lead the charge on change by reassessing their strategic partnership with the organization, refining their approach to leadership development, and enhancing their support for employee well-being.
By embedding a human-centric focus into the organization, HR can cultivate effective leaders who want to lead people and strategically invest in well-being initiatives that have a positive impact on employees. This people-first approach is key to driving success in developing leaders and retaining talent and sustaining long-term organizational success.
Fallan Mitchell is senior analyst, HR research and advisory services at McLean & Company.
