Small Business HR Trends for 2025

Small Business HR Trends for 2025 

Ensuring your best year in 2025 is all about being ahead of the trends. Today’s workforce is hugely diverse with 4 generations (Baby Boomers to Gen z) working alongside each other. HR needs to be creative, compliant and caring. With this in mind, we are sharing our thoughts on 2025’s HR trends for small business owners.  

1.) Low Unemployment drives need for Employee Engagement

With the low unemployment rate in Australia, businesses will need to ensure they retain top talent. SMEs will need to understand what their employees need to feel engaged and work to enhance employee satisfaction through regular feedback. 

There is a strong link between an engaged workforce and a psychologically safe workplace. When employees are engaged, they regularly go above and beyond what is required of them, creating improved business results, and a vibrant culture.  

We recommend prioritising initiatives which boost productivity including flexible work arrangements, wellness programs, and clear pathways for career development. 

2.) AI Utilisation for Increased Productivity

AI is here, and it is here to stay. For small businesses to stay ahead of the curve they need to leverage AI tools and transform the way they work. AI will continue to enhance efficiency by: 

• Automating repetitive tasks 

• Streamlining administrative processes 

• Supporting better decision-making with data-driven insights 

Finding ways to be more efficient is particularly important as in 2024 the Right to Disconnect legislation was introduced for businesses with 15 or more employees. In 2025 it will be introduced into small businesses.  

Getting your team involved in identifying the right AI to support them, training and providing feedback will enhance your team engagement, boost morale and help you meet targets without extra hours.  

3.)  Leadership Development for Navigating Change

Strong leadership is the cornerstone of any successful small business. In 2025 the need for leadership development will be more critical than ever. Effective leaders create engaged, high-performing teams and drive positive business outcomes, regardless of the changing environment. The focus for small businesses will include: 

• Building emotionally intelligent leaders who can support team wellness and engagement 

• Providing leadership training that emphasises respect, conflict resolution, communication, and adaptability 

• Deepening leadership skills to effectively manage hybrid or remote teams 

Investing in leadership skills will not only improve the employee experience but also help businesses navigate the challenges of an evolving workforce and changing compliance expectations. 

4.)  Enhancing Compliance to Protect You / Your Business

Wage Theft Criminalisation (effective January 1), Positive Duty of Care amendment and other legal changes place even greater responsibility on Employers. The consequences of not meeting employer obligations now include goal time and harsh financial penalties. In 2025, it will be critical for small businesses to remain compliant. 

Your key areas of focus need to be: 

• Proactively managing psychosocial risks, such as burnout, workplace stress, and harassment 

• Creating and maintaining clear policies that safeguard employee wellbeing 

• Ensuring compliance with evolving workplace laws, including fair work regulations  

• Paying people in accordance with their Awards and all the relevant penalties, allowances and benefits. 

• Implementing effective processes for performance management, grievances, and misconduct 

Meeting positive duty obligations requires a shift from reactive to proactive management. Small businesses must document their actions, train leaders, and foster a workplace culture that prioritizes employee wellbeing. 

There is a lot for SME owners and managers to navigate in 2025. But you don’t need to do it alone. Impact HR would love to help you have a successful 2025 by putting these strategies into action in a way that is just right for your business. If you have any questions, please feel free to contact us on info@impacthr.com.au, call us on 1300 474 672 or book a meeting TODAY.