AI in Recruiting and the State of the Workplace in 2025: Key Trends & Strategies

As we step into 2025, the workplace continues to evolve rapidly, shaped by shifting labor markets, technological advancements, and changing employee expectations. One of the most insightful resources to understand these dynamics is SHRM’s latest State of the Workplace Report, a comprehensive, data-driven review of HR’s performance, priorities, and challenges over the past year. This report not only reflects on 2024 but also provides actionable insights to help organizations navigate the complexities of the coming year.

In this article, we delve deep into the key findings and strategies from the report, exploring how organizations can adapt to persistent labor shortages, harness AI in recruiting, enhance employee experience, develop leadership, and leverage HR technology effectively. Drawing from the expertise of James Atkinson, Vice President of Thought Leadership at SHRM, we uncover how HR professionals are recalibrating their priorities to build resilient, engaged, and future-ready workplaces.

Understanding the SHRM State of the Workplace Report

The SHRM State of the Workplace Report serves as an invaluable tool for HR professionals, especially during this era of intense change and uncertainty. It offers a retrospective look at how HR performed in 2024, highlighting successes and areas needing attention, while also projecting where the focus should lie in 2025.

James Atkinson’s team at SHRM combines expertise in human resources, industrial-organizational psychology, and rigorous quantitative research methodologies to produce this report. Their work involves surveying HR professionals and U.S. workers to capture a balanced perspective on workplace trends, challenges, and opportunities.

The report centers on four critical questions:

1. How did HR perform in 2024, and what were the key priorities and outcomes?
2. What challenges did HR face, particularly in labor shortages and rapid technological change?
3. What should HR prioritize in 2025 to address evolving workplace needs?
4. What actionable strategies can organizations adopt to thrive in this shifting landscape?

Labor Market Dynamics: From External Recruiting to Internal Growth

One of the most pressing challenges for organizations in recent years has been persistent labor shortages. In 2024, approximately 75% of organizations struggled to fill full-time roles, a staggering figure that underscores the complexity of recruiting in today’s market. This challenge is exacerbated by a mismatch between available skills and job requirements, fueled by rapid changes in technology and workplace expectations.

Interestingly, the labor market is showing signs of a slight cooling off as we move into 2025. This shift has prompted organizations to reconsider their talent strategies. Instead of focusing predominantly on external hiring, there’s a growing emphasis on developing and retaining talent internally.

This transition aligns with the increasing need for upskilling and reskilling employees to keep pace with technological advancements, especially around AI in recruiting and other HR processes. By investing in internal talent development, organizations can better meet their evolving needs while fostering employee engagement and loyalty.

AI in Recruiting: Unlocking New Talent Pools

Artificial intelligence is playing an increasingly pivotal role in recruiting, offering innovative solutions to some of the most stubborn labor market challenges. AI-powered tools can streamline candidate sourcing, screening, and matching, helping HR teams identify the best talent faster and more accurately.

However, the report also highlights the importance of broadening the talent pool beyond traditional channels. SHRM’s research on “untapped talent” emphasizes the value of including veterans, military spouses, older workers, and individuals with disabilities—groups often overlooked but proven to perform as well or better than other candidates.

To optimize AI in recruiting, organizations should:

• Remove unnecessary barriers in job descriptions, such as rigid requirements for years of experience or specific educational credentials, which may discourage qualified candidates from applying.
• Leverage AI tools to identify transferable skills and potential rather than just matching keywords, enabling a more inclusive approach to candidate evaluation.
• Use AI-driven analytics to continuously refine recruiting strategies based on data about candidate engagement and hiring outcomes.

By combining AI capabilities with an inclusive mindset, HR professionals can enhance recruiting effectiveness and address labor shortages more creatively and sustainably.

Enhancing Employee Experience: The New Frontier

Employee experience emerged as the second-highest priority for organizations in 2024, with a particular focus on improving team collaboration. The workplace is no longer just about tasks and outputs; it’s about creating an environment where employees feel valued, supported, and motivated.

Key drivers of a positive employee experience include:

• Team collaboration and effective communication
• Fairness and transparency in workplace policies
• Recognition and rewards for contributions and achievements

To enhance employee experience in 2025, organizations should adopt more agile and continuous feedback mechanisms rather than relying solely on annual engagement surveys. These might include:

• Pulse surveys to capture real-time employee sentiment
• Focus groups to explore specific issues in depth
• Culture councils that represent employee voices and surface concerns promptly

Engaging managers and leaders in this process is critical, as they are closest to employees and best positioned to identify and address local challenges. Leaders who actively listen and respond to employee needs can foster a culture of trust and continuous improvement.

Leadership and Manager Development: Leading Through Change with Empathy

The report reveals a concerning statistic: 35% of employees experienced poor or ineffective management in 2024. Given that workers with highly effective managers are twice as likely to feel satisfied and fulfilled, improving leadership quality is essential.

Leadership and manager development was ranked as the top priority by more than half of Chief Human Resources Officers (CHROs) for 2025. This focus goes beyond traditional skills to emphasize two critical competencies:

1. Leading Change: Managers must be adept at guiding their teams through rapid and often uncertain change, including technological transformations and evolving business models.
2. Empathy and Power Skills: Developing emotional intelligence and soft skills enables managers to understand and support their teams’ needs, removing barriers to productivity and engagement.

Effective leadership in today’s workplace requires balancing strength with empathy. Leaders who can have honest conversations, acknowledge challenges, and collaborate on solutions create a more resilient and motivated workforce.

Labor and Employee Relations: Maintaining Momentum Amid Change

Labor and employee relations have been a strong suit for HR professionals, rooted in compliance and understanding workplace dynamics. However, the landscape is shifting with new policy changes emerging in early 2025, making it imperative for HR to stay vigilant.

To maintain and build on this momentum, HR teams should:

• Regularly engage with legal and government affairs experts to stay abreast of regulatory changes.
• Analyze how policy shifts impact their specific organizations and adapt accordingly.
• Communicate clearly with employees about changes and their implications to build trust and reduce uncertainty.

In an era of fast-moving legislative and societal changes, a proactive approach to labor relations ensures compliance and fosters a stable workplace environment.

Employee Engagement and Total Rewards: Addressing Financial Pressures

Financial concerns remain paramount for U.S. workers, with 98% expressing the need for a cost-of-living adjustment (COLA) in 2025. Yet, only about one in four employees received such an adjustment in 2024, highlighting a significant gap between employee expectations and organizational capabilities.

HR professionals face the challenge of balancing limited resources with the urgent need to support employees’ financial well-being. Here are several strategies to address this tension:

• Prioritize salary increases for top performers to retain critical talent within budget constraints.
• Enhance communication about the total rewards package, ensuring employees understand the full value of benefits beyond base salary.
• Leverage benefits partners to provide education and training on programs like retirement planning, health savings accounts, and wellness initiatives.
• Implement ongoing communication strategies throughout the year rather than limiting benefits information to onboarding or open enrollment periods.

By helping employees recognize and utilize the full spectrum of their total rewards, organizations can improve engagement and perceived value, even when direct compensation increases are limited.

HR Technology: Overcoming Barriers to Adoption

Despite rapid technological progress, only 43% of professionals, executives, and workers rated their HR technology as effective. This gap indicates significant barriers to successful technology adoption in HR functions.

Common barriers include:

1. Misalignment of Solutions: Purchasing technology that does not address the actual needs of employees or HR teams.
2. Lack of Stakeholder Buy-In: Insufficient engagement from leadership, IT, managers, and end-users can derail adoption efforts.
3. Poor Communication and Training: Employees unaware of new tools or unsure how to use them effectively.
4. Poor User Experience: Technology that is difficult to use or not integrated into daily workflows discourages consistent use.

To overcome these challenges, organizations should:

• Conduct thorough needs assessments before selecting technology to ensure it solves real problems.
• Engage all relevant stakeholders early, including IT and managers, to foster collaboration and support.
• Develop comprehensive communication plans that explain the purpose, benefits, and use of new HR technology.
• Provide training, FAQs, and ongoing technical support to ease the transition.
• Ensure technology integrates seamlessly into existing workflows to encourage regular use.

By taking these thoughtful steps, organizations can unlock the full potential of AI and other HR technologies, improving efficiency and employee satisfaction.

Final Insights: Alignment and Future Priorities

One of the most striking findings from the SHRM report is the strong alignment between HR professionals and U.S. workers regarding priorities for 2025. Both groups emphasize the importance of:

• Leadership and manager development
• Employee experience
• Learning and development for the broader workforce

This consensus signals a shift from the heavy focus on external recruiting seen in 2024 toward internal growth and development. It underscores the necessity of equipping managers to lead change with empathy, engaging employees meaningfully, and fostering continuous learning.

In this new chapter, success will hinge on collaboration across all levels of the organization. HR leaders, managers, and employees must work together to create workplaces where people feel valued, supported, and empowered to contribute their best.

Conclusion

The workplace in 2025 is shaped by complexity and opportunity. Persistent labor shortages, rapid technological advancements—especially AI in recruiting—and evolving employee expectations require organizations to be agile, inclusive, and empathetic.

SHRM’s State of the Workplace Report offers a roadmap for navigating this terrain. By shifting focus from external hiring to internal talent development, enhancing employee experience, investing in leadership, maintaining strong labor relations, addressing financial well-being creatively, and adopting HR technology thoughtfully, organizations can build resilient and engaged teams ready for the future.

As we embrace these trends and strategies, the future of work promises not only to meet the challenges ahead but to unlock new possibilities for growth, innovation, and shared success.

For HR professionals and organizational leaders, the message is clear: prioritize people, lead with empathy, and leverage technology wisely to build the workplaces of tomorrow.