Do you remember long family car trips as a kid—asking “Are we there yet?” a hundred times? Finally, the car would slow down and pull off the highway. You’d get excited thinking you’d arrived—only to realize we were just at a rest stop. That’s kind of what the job market feels like right now. The year-end jobs report shows some positive signs—around two-thirds of employers plan to add permanent headcount in the first half of 2025—but we’re not at the finish line. This cautious optimism adds to the uncertainty, and it’s not clear whether employers or employees will have the upper hand in the war for talent. So, let’s dig into some practical ways companies can prepare for their talent needs in 2025…
What We Know—and What it Means
January’s jobs report shows a steady increase in non-farm employment with 143,000 jobs added. At 4.0%, the unemployment rate decreased slightly from the prior month. In particular, healthcare and retail sectors saw solid employment growth, while construction, manufacturing, transportation and professional services “showed little change” over the prior month. In other words, the economy isn’t in recession, and job growth is strong in certain sectors.
A recent survey from Manpower Group shows that the U.S. anticipates seasonally adjusted growth in employment of 34% in Q1, which is 1 point lower than the same period last year. While it’s great that companies are hiring, it also means we could be headed into another talent tug-of-war. With labor shortages expected due to shifting immigration policies and evolving work patterns, employers will need to attract and retain top talent. For those that aren’t proactive with their talent strategy, the hiring process may soon feel more like the next season of Squid Game.
So, Employers—How Can You Prepare for a Potential Talent War in 2025?
Here are some practical ways to start taking action today.
Focus on Retention
Many companies pour lots of energy and resources into recruiting new talent—but retaining key players is just as important. In 2025, employers need to be serious about retention. First, figure out who’s critical to your success—often, that’s your top performers, but don’t overlook people with specialized skills or knowledge that would be tough (and expensive!) to replace. To keep your best people, you need to constantly “re-recruit” them. This means prioritizing employee engagement, celebrating their achievements, and providing solid career development opportunities. When your people feel valued, they’re less likely to start looking for their next job.
Offer Competitive Compensation Packages
Offering competitive compensation is key to attracting and retaining top talent. While base pay matters, it’s important to consider the whole total rewards package (i.e., salary, incentives, benefits, and perks). Keep your compensation packages up to date by regularly benchmarking against peers through salary surveys, competitor analysis, and expert advice from compensation consultants (like Radiant HR!). And don’t just focus on base salary—bonuses, stock options, and profit-sharing may make sense, too. Non-monetary perks like flexible work arrangements and wellness programs also help set you apart. By keeping your compensation structure fresh and aligned with market trends, you’ll not only be positioned to attract the best talent but also boost employee satisfaction and engagement in the long run.
Implement Robust Succession Planning
Effective succession planning is all about being proactive—identifying and developing internal talent so you’re not scrambling when leadership roles open up. By promoting from within, you save time and boost employee morale and retention. But here’s the catch: succession planning needs to be data-driven. Without that, it’s easy for the process to feel subjective and lack credibility. Regularly assessing performance and potential through tools like talent reviews and 360-degree feedback helps ensure you’re picking the right people for leadership roles. When you get it right, you’re not just building a strong leadership team for the future, you’re creating a culture of growth and opportunity.
Embrace Internal Mobility
Encouraging internal mobility and career fluidity is a powerful strategy for keeping talent engaged. When employees see a future with your company, they’re less likely to seek growth elsewhere, saving you the time and cost of backfilling positions. Allowing employees to explore different roles, teams, or departments helps retain talent within the organization by offering new challenges and growth opportunities. Creating continuous development opportunities—like mentorship programs, leadership training, and stretch assignments—can help high-potential employees prepare for greater responsibilities while reinforcing their long-term commitment to the organization.
Streamline Your Hiring Process
We’ve all had frustrating customer service experiences that make us hesitant to buy a product—and job seekers feel the same way about a bad recruitment process. A slow, disorganized, or frustrating hiring experience can turn away good candidates. Job seekers expect the process to be efficient, transparent, and respectful. When you make the recruitment experience smooth and positive, you not only attract high-quality candidates but also strengthen your employer brand. And having a strong employer brand means you don’t have to fight tooth and nail for talent.
Focus on Well-Being
Encouraging a healthy work-life balance isn’t just a nice perk, it’s essential. Companies that focus on their employees’ mental and physical health end up with a happier, more dedicated and effective workforce. Wellness programs and a focus on well-being help prevent burnout and boost job satisfaction, making employees less likely to look for new opportunities. Flexibility plays a big role here too. Offering hybrid work, flexible hours, or remote options doesn’t just show that you care about your team’s well-being—it gives you a competitive edge when it comes time to hire new talent.
Strengthen External Partnerships
In addition to focusing on candidates, look for ways to build stronger relationships with universities, training programs, and professional organizations. This helps you tap into a wider talent pool and stay ahead of the curve on emerging skills. While internship or early talent programs can take some effort to set up, they often pay off in the long run. helping to boost your employer brand and create a steady pipeline of talent for the future.
The bottom line
Despite the economic uncertainty, companies are feeling cautiously optimistic about hiring—at least for now. HR leaders need to approach the year with strategies that are planful and flexible. Planning ahead, investing in top talent, and focusing on retention will be crucial to avoiding a “talent war” in 2025. The labor market might be unpredictable, but proactive companies that focus on long-term strategies can set themselves up for success.
How is your organization preparing for 2025? Share your thoughts in the comments! And let us know how we can help.