If you’re like most owners of small to medium-sized enterprises (SMEs), you have a long list of responsibilities.
As autumn rolls around, planning for next year is high on your list. But you probably don’t have a large HR staff, so HR planning is likely to land on your plate. Developing a 2025 HR plan can seem overwhelming and time-consuming, especially if it’s not your core expertise, but it doesn’t have to be. Based on our deep experience working with SMEs in professional services and other industries, NorthstarPMO recommends keeping the following areas top of mind when proactively crafting a 2025 HR roadmap that ultimately saves you time and money.
1: Goals & Priorities
The most effective HR plans ladder up to the organization’s business goals and priorities. For example, if you have aggressive growth objectives, your HR plan should prioritize areas like workforce planning, recruitment, and reducing employee turnover. Be sure your HR objectives cover the entire employee lifecycle—from talent acquisition and onboarding to ongoing skill building and career development. To ensure the plan aligns with your business goals, solicit input from a broad set of stakeholders, including finance and the leadership team.
2: HR Compliance
Several HR-related regulatory changes will require extra attention in 2025, including the expanded overtime pay eligibility rules under the Fair Labor Standards Act (FLSA). You’ll need to plan for the new minimum salary threshold for overtime eligibility (which changed in July 2024 and will change again on January 1, 2025), as well as the new minimum salary threshold for highly compensated employees. Determine which employees are exempt from overtime under the new rules, classify every employee appropriately, create accurate job descriptions for each role, and develop and communicate the changes timely to anyone affected.
If you employ remote workers in multiple states or plan to expand into new regions in 2025, make sure you keep up with the ever-changing state-specific regulations and compliance requirements. It’s easy to lose sight if you have only one or two employees in a state. But these regulations often trigger a need for training or other actions, so you’ll need to plan and budget accordingly.
3: Compensation & Benefits
Attracting top talent requires a competitive compensation and benefits package. Use the 2025 planning process to assess compensation trends and benchmarks, then determine whether you need to adjust your pay bands and perks. Be sure to plan for the potential impact of compensation compression: If you increase new hire salaries to compete for talent, you’ll need to adjust tenured salaries to avoid large discrepancies.
Now is also a good time to assess your pay equity and create a plan for making necessary adjustments, in addition to planning for any regulatory changes that will impact wages and salaries. And if you operate in states where the minimum wage is set to increase effective January 1, 2025, you’ll need to factor that into your HR budget planning.
4: Performance Reviews
Sixty percent of companies that describe their performance management systems as effective outperformed their peers for a three-year period, per a McKinsey study. Many organizations are improving the performance management process by moving away from annual reviews in favor of quarterly reviews—providing more frequent feedback and coaching, improving employee engagement, and making goal setting and progress tracking dynamic. Quarterly reviews can be less time-consuming for managers to prepare for and less stressful for employees to participate in, especially since they separate the performance and compensation discussions. Consider shifting your reviews to more frequent intervals in 2025.
5: Technology
A robust HR information system (HRIS) and other technology solutions are critical to running an effective, efficient HR function—but only if you optimize their features and functionality. Consider adding a technology audit to your 2025 HR plan to identify missed opportunities to leverage technology for improved efficiency or more informed decision-making. Now is also a good time to review your software contracts, determine when they renew, plan for possible pricing increases, and decide which solutions you should keep vs which might be ripe for replacing.
6: HR Data Analytics
Knowing which HR efforts worked well this year and which need improvement is critical to building your 2025 HR plan, and that’s where data analytics can help. Work with an experienced partner to determine which data points are most important based on your business strategies and objectives. For example, if you’re in a high-growth mode then metrics like turnover rate and recruitment ROI might be especially vital. Your HRIS could house this data, but you might need support to analyze and glean insights from the information. And no matter what your business goals, it’s essential that your plan includes measuring more subjective aspects of your organization like culture, using tools such as employee surveys and skip interviews.
7: Employee Training and Development
Training and development are not the same, but the two go hand-in-hand toward improving employee performance and satisfaction. Your 2025 HR plan should include proactive measures for improving worker knowledge and skills (training) along with initiatives to ensure they’re growing and preparing to take on new roles and responsibilities (development). Avoid the pitfall of implementing training as a reaction to problems; instead, proactively plan to conduct training that fills skill gaps or improves your competitive position. Train-the-trainer programs can be very cost-effective, and the more interactive your training, the better. And keep in mind:
The right leadership training can have a critical trickle-down effect as leaders model important behaviors for their teams.
8: Budgeting
As you prepare a budget that aligns with your 2025 HR plan, be sure to cover all the bases to avoid surprises. Aside from basics like compensation, health insurance, retirement plan contributions, and payroll taxes, you’ll need to accurately estimate costs for recruitment marketing, background checks, onboarding, tenured staff training, HR software, and compliance or legal requirements, for example. Include contingency funds for unanticipated needs, like an unexpected workforce expansion or new training requirements.
Partner with NorthstarPMO for Expert HR Planning Help
When you’re juggling many responsibilities and trying to grow your business, you probably don’t have time to engage in strategic HR planning. We’re here to help!
Our Fractional HR service pairs your business with a trusted HR professional or team on a flexible, customized, part-time basis. They bring the knowledge and expertise to take on your HR function and apply a strategic, proactive approach to this important area of your business. Many small and medium-sized companies find the Fractional HR model is a highly effective and affordable way to gain access to all the skills and experience it takes to tackle HR challenges and keep your business competitive and in compliance.
Need help with HR planning or your overall HR function? Book a discovery call to learn how NorthstarPMO can help!