Sector Update: HR Priorities in Australia for 2025

As 2025 approaches, the HR sector across Australia and New Zealand is experiencing a shift in priorities that places employee experience at the forefront. Seventy-three percent of HR leaders are now focused on enhancing how employees engage with and perceive their workplaces. This emphasis is closely tied to leadership development and strengthening learning and development initiatives. Job seekers continue to value flexibility, balanced leadership styles, and strong work-life balance.

Artificial intelligence (AI) is beginning to influence HR functions, particularly in recruitment and training. However, nearly half of HR teams report that AI has not yet significantly impacted their operations, despite 50% already investing in these tools. Recruitment efforts remain primarily driven by staff replacements, followed by business expansion needs. In response to a competitive talent market, 63% of organisations are raising salaries to fill roles. Interestingly, the use of counteroffers has declined, suggesting a more straightforward approach to hiring.

Encouragingly, staff turnover appears to be improving. Around 49% of HR teams say turnover is better or significantly better compared to the previous year. At the same time, well-being and flexibility are emerging as essential components of employee retention. Eighty-one percent of businesses now offer employee assistance programs (EAPs), and nearly half contribute to healthcare costs. Flexible working has become the norm, with many companies supporting both flexible hours and remote work options.

Despite these positive developments, HR teams themselves are under pressure. Half of HR professionals say they are under-resourced, highlighting the need for continued investment in human resources functions to maintain momentum and drive sustainable organisational growth.

"HR teams are still stretched thin"

According to Leanne Lazarus, Specialist Recruitment Manager at people2people, "HR teams are still stretched thin." This reflects a key challenge facing many businesses despite advances in well-being and flexibility. The HR function remains critical, yet often under-supported, even as expectations for performance and innovation grow.

Leanne points out that the main recruitment driver is still replacing outgoing staff. "That's the number one reason for hiring right now," she says, signalling that turnover, while improving, is still having a measurable impact. She adds that while business growth does play a role, most hiring is reactive rather than proactive. "Most organisations aren't offering counteroffers anymore, even as 63% are raising salaries," Leanne explains. This shows a shift toward securing new talent through upfront offers rather than negotiating to retain current staff.

The focus on improving the employee experience is gaining momentum. "Leadership, learning and development are top priorities," Leanne says. These areas are closely aligned with what job seekers value most: flexibility, positive leadership styles and work-life balance. HR leaders are recognising that meeting these expectations is essential for both attraction and retention.

Supportive measures such as EAPs and health care contributions are now widespread. Leanne notes, "Eighty-one percent of companies now offer EAPs, and almost half are assisting with health care costs." These benefits, once considered optional, are now fundamental to maintaining employee satisfaction. However, the persistent issue of limited HR resources cannot be ignored. "Half of HR professionals say they’re under-resourced," Leanne states, underlining the importance of reinforcing HR teams themselves.

To ensure long-term success, organisations will need to match their employee experience strategies with adequate internal support. As Leanne puts it, "While AI and leadership are key, it’s the investment in people and infrastructure that will define HR’s effectiveness going forward."

Tips for Strengthening HR Strategy in 2025

• Prioritise structured leadership development and L&D programs

• Review compensation frameworks to stay competitive without relying on counteroffers

• Expand well-being initiatives, including EAPs and healthcare support

• Standardise flexible working arrangements across roles

• Allocate sufficient resources and budget to support HR team growth and sustainability