The game has changed for attracting and keeping top talent. Korn Ferry’s Workforce 2025 report, surveying over 15,000 professionals, paints a clear picture: small businesses face unprecedented pressures from evolving employee expectations, the rise of AI, and widening generational divides. Ignoring these shifts is no longer an option.
Here are six key areas where small businesses must adapt to thrive in the year ahead.
Cutting Middle Managers? Think Twice
In an effort to flatten org charts and reduce costs, 41% of companies have cut management layers. But for many employees, this has created confusion and disconnection.
- 37% of workers say fewer managers have left them feeling directionless
- 43% say their leadership teams are out of sync
- 43% of senior executives now doubt their ability to fulfill their role
Takeaway for small businesses: Don’t underestimate the role of trusted managers. They’re not just people leaders—they’re retention tools. In fact, 80% of employees say they’d stay in a job because of a manager they trust.
The Salary Squeeze Is Real—But Pay Alone Won’t Keep People
It’s no surprise that pay remains the #1 reason people accept a new job. But with inflation outpacing raises, many employees are feeling financial strain.
- 70% say the cost of living is outpacing their salary
- 35% believe they’re underpaid relative to their skills
Still, money isn’t everything. When asked what matters most, employees ranked job security, meaningful work, flexible hours, and benefits right alongside compensation.
Takeaway for small businesses: If you can’t offer top-tier pay, focus on the full package. Build trust through consistency, provide flexibility, and offer benefits that reflect real-life needs.
The Hybrid Headache: One-Size-Fits-All Doesn’t Work
Even though 60% of employees are still working full-time in the office, only 19% actually want to be there.
- 48% of workers say hybrid is ideal
- 25% prefer fully remote
- In the U.S., 63.9% work full-time in-office, but only 20.5% want to
Takeaway for small businesses: Define a clear workplace policy—but make it human. Your team wants flexibility, not surveillance. Your employer brand can be a differentiator if you align your policies with your people.
AI Isn’t Coming—It’s Already Here
AI is already reshaping how work gets done, and companies in emerging markets like India and Brazil are leading the way.
- 85% of Indian workers report receiving solid AI training
- Only 39% of workers globally feel prepared to use AI at work
- Meanwhile, 78% of leaders think they already “have AI figured out”
Takeaway for small businesses: The AI gap between leadership and teams is growing. Start small with training, and look for ways AI can enhance—not replace—your people. Upskilling is the bridge between fear and opportunity.
Generational Gaps Are Getting Wider
For the first time in history, businesses may soon have six generations in the workforce. That’s a potential strength—but also a source of friction.
- 45% of Baby Boomers say generational differences aren’t an issue
- Only 17% of Gen Z agrees
- 40% of Gen Z see a major tech skills gap among older coworkers
- Nearly half of Boomers feel excluded from upskilling opportunities
Takeaway for small businesses: Provide communication and teamwork training across age groups. Ensure learning and development isn’t just for the digital natives. A multigenerational workforce can be your secret weapon—if you lead it well.
Boundaries Matter More Than Ever
One of the top five reasons employees leave? Lack of respect for personal priorities. People are fed up with “always-on” expectations—and some countries are even passing “right to disconnect” laws.
Takeaway for small businesses: Model and protect work-life balance. Simple steps like turning off after-hours notifications or setting clear availability can send a powerful message: you care about your team’s time.
Workforce trends once considered optional are now business-critical. Whether it’s hybrid flexibility, salary strategy, or culture-building, small businesses that invest in their people will win in 2025—and beyond.
Need help navigating these shifts? That’s what we do.
At Focus HR, we simplify the complex. From HR systems to culture strategy, our team helps small businesses thrive.
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