The hiring landscape is constantly changing, and 2025 is shaping up to present a unique set of challenges for businesses. High turnover rates create immediate needs to fill positions, often catching companies off guard. This urgency can lead to significant pressure on financial resources, time, and energy. For small and midsize businesses especially, these challenges can feel overwhelming.
Let's explore the current realities of hiring and take a closer look at the challenges looming on the horizon for 2025.
The Immediate Impact of Turnover
When a position becomes unexpectedly vacant, the ripple effects are immediate and intense. The urgency to find a replacement can stretch business owners thin, impacting finances, energy, and overall resources.
What is leading to these higher-than-normal turnover rates? A few factors:
- Tight Labor Market: With unemployment remaining low and job openings exceeding available workers, competition for talent is fierce.
- Skills Gaps: Rapid technological advances in fields like AI, cybersecurity, and automation have left many industries struggling to find workers with the right skills.
- Shifting Employee Priorities: Workers are increasingly prioritizing flexibility, career growth, and work-life balance, leading to higher job-hopping rates.
- Aging Workforce: Many experienced professionals are retiring, and fewer younger workers are entering skilled trades and specialized industries.
- Regulatory Changes: New wage laws, pay transparency requirements, and immigration policies are reshaping hiring practices and labor availability.
- Remote Work Tensions: Companies enforcing return-to-office policies are seeing resistance, while those offering remote options must navigate logistical complexities.
- High Turnover in Key Industries: Sectors like healthcare, retail, and hospitality are experiencing persistent staffing shortages, making retention efforts even more critical.
The Costs of Hiring
According to the Society for Human Resource Management (SHRM), hiring a new full-time employee costs an average of $4,700. This includes costs for recruiting, onboarding, and training expenses. In addition to monetary costs, there is also time and energy invested in these processes, such as conducting interviews, that can take the focus away from business priorities. When resources are already stretched, this can lead to delays and burnout.
Tax Credit Opportunity
Thankfully, there’s a way to help. The Work Opportunity Tax Credit (WOTC) provides employers with up to $2,400 in federal tax credits per eligible individual, such as veterans. By applying this credit, businesses could recoup up to 50% of their new hire costs.
Learn more about NetTax’s WOTC Portal.
Preparing for Hiring Challenges in 2025
1. Integrate AI While Maintaining a Human Touch
AI and automation offer incredible efficiencies in hiring, but there’s a risk of losing the personal connection that candidates value. Use AI to handle repetitive tasks like screening applications but ensure human engagement throughout the hiring process. This, combined with clear, transparent communication at every step helps create a positive candidate experience.
2. Ensuring Diversity, Equity, and Inclusion (DEI)
Today’s workforce values workplaces that are fair, inclusive, and diverse, but fostering such an environment requires intentional effort. Use tools to mitigate unconscious bias during hiring, such as anonymized applications. Expand outreach to historically underrepresented groups and invest in company-wide DEI training programs.
3. Managing Remote Work Complexities
The rise of remote work has widened the net of new talent for businesses but also introduced logistical challenges. It’s important to establish strong communication systems and create detailed policies to remain cohesive and productive. To stay connected and engaged, host quarterly virtual team-building activities and professional development opportunities.
4. Talent Shortages
Key industries, like technology, healthcare, and manufacturing are expected to face continued labor shortages due to skill mismatches and increasing demand. Invest in reskilling and upskilling your current employees to meet future needs. Offering training programs and partnering with educational organizations can help cultivate a talent pipeline for your industry.
5. Finding Qualified Candidates
Beyond shortages, identifying candidates with the right qualifications is becoming increasingly difficult. Using technology like AI tools can help refine how you evaluate applicants. Plus, with targeted recruitment, you can attract candidates with the right skills and experience.
Whether you’re filling immediate openings or planning for 2025, the key is to be proactive. By leveraging the WOTC, investing in employee development, and adapting to emerging challenges, you can set your business up for success.
How NetTax Can Help
Navigating the challenges of hiring is complex, and we’re here to make it a little easier. NetTax specializes in WOTC services, helping employers maximize valuable tax credits, make more money, and pay less tax. Our online WOTC portal offers real-time tracking, detailed reporting, and quality customer service to get the most out of your tax credit. Get started with NetTax today.