From AI to DEI: How to Manage the HR Challenges of 2025

If you work in HR, then you know how fast the times are moving.

I’ve worked in HR for over two decades, including serving as a Chief Talent Officer, and I can tell you that the challenges we’re facing today are unlike anything I’ve seen before.

But in this article, I’ll share with you the biggest HR problems you should expect, and how to handle each of them skillfully. 

HR Challenge 1: Leveraging AI Without Losing the Human Touch

In 2025, AI is no longer a fun sci-fi daydream. It’s become a necessary technology for HR teams, and one of the biggest challenges of our time.

You can lean on AI for résumé screening, interviewing, performance tracking, and even career pathing.

But this brings up the question—how much should you lean on AI? And how can you embrace technological advancements without losing the “human” part of “human resources?” 

What are the risks of relying too much on AI?

AI and algorithms can shave off hours from your workload. But be careful.

If you over-rely on AI for hiring, you could perpetuate biases baked into the data the model was trained on.

Take Amazon’s example: a few years ago, they developed an AI recruiting tool. They trained its data on past résumés, most of which came from men. As a result, the algorithm learned to favor men and penalize women. Once they realized their tool had this bias, Amazon scrapped the project. Yikes.

In this case, Amazon built the tool, so they understood how the algorithm worked. But let this be a cautionary tale. Most HR professionals use third-party hiring platforms. So they have no idea what data or assumptions are driving the screening model.

That can be a huge problem. Even seemingly innocuous inputs like zip codes or colleges can correlate with race, gender, or socioeconomic status, leading to unintentional discrimination.

Further, performance feedback, job interviews, and people management require trust, empathy, and nuance. So if you overautomate, you might alienate your employees and dissolve the trust that holds your team together.

How to use AI skillfully

Here are three tips to keep in mind:

• Lead with transparency. Be open with candidates and employees when you’re using AI. Transparency builds trust. And if the candidate or employee learns that AI was used in the selection process and wasn't aware, you could damage the reputation of the entire company, not just the product used.
  

• Reinvest the time and cost savings from AI into strengthening your people. AI can accelerate tasks like coding, writing, and decision-making. But it can't replicate human connection (at least not yet 😵‍💫). That’s where your managers come in. Use the efficiencies gained from AI to train your leaders in EQ and coaching skills. As AI becomes widespread, your competitive advantage will be how to do the “human” side of things better. 
  

• Balance automation with connection. It’s great that AI saves time, and we should all capitalize on that. But don’t underestimate the value of a moment of connection. A personalized email, coffee chat, or 1-on-1 goes a very long way. 

A company we can learn from

Unilever is one company that’s done this well. It’s leveraged AI in its hiring process to save an extreme amount of time.

They receive 1.8 million applications a year for 800 job openings. So they use an AI “interviewer” that screens initial candidates using games and activities to test personality and intelligence, along with structured interviews to assess traits.  

The top 3,500 candidates are then invited to spend a day with real leaders and recruiters.

This system saves them 70,000 hours of work per year. And it gives every single applicant several pages of AI-generated personalized feedback. 

And the company still relies heavily on human interaction for the top applicants.

HR Challenge 2: How to Relate with DEI

Diversity, equity, and inclusion has become a hot-button issue, and one of today’s major challenges for HR teams.

Just a few years ago, if a company didn’t have a DEI initiative, they’d be seen as out of touch. But now, there’s a strong pushback against DEI. From Walmart to Meta to the FBI, companies are rolling back their DEI initiatives in droves.

But at the same time, there are companies, like Apple and Costco, that have held strong with their DEI policies to take a stand for inclusion.

DEI is now a political topic. And a charged one at that. So, how should your HR team manage this complex challenge?

What are the risks of getting DEI wrong?

If you strongly endorse DEI, you risk a backlash from conservatives and possible legal complications. You might get accused of “reverse discrimination” and lose face.

But if you go invisible on DEI, you risk a backlash from liberals and may get accused of caving to corporate pressure, greed, or fear of controversy. And worse, you might further disempower marginalized groups.

When taking your stance, I’d encourage you to consider three things.

1. How do you want the organization to be perceived?

You have three main options.

You could go neutral (aka: go quiet on DEI and keep the function and call it something else). 

The organization could double down on DEI, like Costco boldly did. 

Or you could abandon DEI completely, dissolving it like Meta.

Making a stand could be worth your while. But if you go that route, be ready to potentially embrace the limelight of controversy.

2. What’s good for your bottom line?

Diversity isn’t just a values issue, it’s also a business one. Teams with racially diverse leaders are 36% more likely to financially outperform less diverse management teams. And gender-diverse leadership teams are 25% more likely to outperform less diverse management teams.

But there are other financial implications to consider as well. Could pulling back on DEI cost you federal funding? Spark consumer boycotts? Erode long-term trust in your brand?

So if you're evaluating what's good for your bottom line, DEI should be part of that conversation.

3. What values do you (really) stand for?

Flip-flopping back and forth to chase funding or favor has consequences. 

It is sad to watch companies with bold value statements do a complete 180 when the next popular stance comes around. 

If you continue to flop around, know that you are being judged by the very people who work for you (and touch your customers directly). 

Your company is a group of real people. Your culture impacts their lives and their livelihoods. Culture still matters, and it still eats strategy for breakfast.

And, speaking personally, even if DEI is no longer popular, I still want to build an inclusive culture—one that empowers everyone, including women, people of color, and other marginalized groups. Because I believe there is tremendous dignity in work, and everyone deserves a fair shot at it.

How to manage DEI in your organization

• Decide if you want an official DEI program or not. You can create an inclusive environment and practice fair hiring without the label DEI. You might want the label DEI to make a statement, or you might not want the label to avoid scrutiny. That’s up to you.
  

• Clarify your values. Do you value diversity, inclusion, and belonging? If so, get clear on what it’d actually look like to express those values in your organization. 
  

• Support employee-led efforts. Even if your company pulls back from formal DEI branding, you can still empower different voices in your company. One place to start is by encouraging employee resource groups (ERGs) and affinity groups.

HR Challenge 3: Addressing Burnout Before It Hurts Your Team

If your business operates on a burnout culture, you’re in for trouble. Your employees won’t enjoy working for you, and they won’t do good work.

Burnout is on the rise. Over half of all employees report feeling “used up” at the end of each workday. Work and personal life are blurring—employees can’t help but check their work email in their last moments before bed, and in their first moments after waking up. 

 Burnout is a big, tough problem. But there are steps you can take to help.

What are the risks of burnt-out employees?

Burnout is undoubtedly bad for your employees. If your employees get burnt out, they’ll be mentally and physically exhausted and may even get physically sick.

Burnout is also bad for your company. Burnt-out employees are more likely to take sick days, more likely to be actively searching for another job, and are less productive.

If you don’t address it, burnout can create an organizational culture of survival and obligation instead of growth and fulfilment. 

How to manage burnout in your organization

• Train managers to spot early signs. Burnout is easier to prevent than recover from. Teach your managers to spot the signs of withdrawal, cynicism, and declining performance. And teach them to have supportive, regular check-ins where they aim to help team members regain balance and manage their workload.
  

• Create belonging. When workers feel a strong sense of belonging at work, they are 2.5x less likely to feel burnt out. That’s the remarkable power of connection. You might start by bringing in some regular team-building initiatives.
  

• Normalize rest at the top. Burnout culture often mirrors leadership behavior. If executives and managers work weekends and never take vacations, employees will feel pressure to do the same. Here’s some pretty compelling evidence for shifting away from a hustle culture: in 2022, 61 UK companies (with around 2,900 employees in total) ran a trial of doing a 4-day work week for six months without reducing pay. What’d they find? 56 of the 61 companies kept up the 4-day work week. 71% of employees reported reduced burnout. Staff turnover dropped by 57%, and business revenue actually bumped up by 1.4%. This doesn’t mean you need to shift to a 4-day work week per se, but do consider how to make cultural norms that embrace the power of deep work and rest.

If you want to learn more about burnout, check out this article.

HR Challenge 4: Helping Gen Z Thrive in Your Workplace

Let’s be honest, a lot of older generation workers are struggling with their Gen Z counterparts.

I’ve heard older employees say that Gen Z workers are overly sensitive to feedback, that they expect perks and pay before earning their due, and that they’re unwilling to work extra hours when needed.

Gen Z’s values, culture, and expectations are chafing against the way things have always been.

I actually think Gen Z is pushing corporate culture to evolve in the right direction. But that doesn’t mean it’s easy to manage them.

What are the risks of not learning how to manage Gen Z?

As of 2024, 20% of the workforce was made up of Gen Z (that’s more than Boomers). And time only moves forward. So Gen Z ain’t going anywhere.

If you never learn how to work with them, there’s a real cost, given nearly 60% of Gen Z-ers want to leave their jobs within the next year. 

If you want a cohesive workforce that sticks around, learning to adapt to Gen Z is mandatory.

How to help Gen Z thrive in your organization

• Connect their work to a sense of purpose. Gen Z wants their work to be an expression of their life purpose. So figure out how to tie their role to the bigger company picture and communicate that to them.
  

• Offer mental health benefits. Gen Z cares about mental health, and many of them struggle with it. If you include mental health benefits in your benefits, you are signalling that you care about them as people.
  

• Offer in-house coaching. This new generation wants to grow in their careers as fast as possible. If you hire in-house coaches, you can help them with their career development and excel within your company.
  

If you want to learn more about how to manage this upcoming generation, check out this article: Cracking the Gen Z Code: Learn Their 9 Key Motivations at Work.

HR Challenge 5: Closing the Skills Gap from Inside Your Company

Technology is evolving faster than many companies can keep up. 

AI. Automation. Data analysis. If you don’t stay on the ball, you might find that your current workforce doesn’t quite have the skills needed to stay competitive.

When this happens, most companies default to hiring externally to fill skill gaps—but I wouldn’t advise that as a first resort.

What are the risks of hiring externally?

Hiring externally costs time and money. In fact, on average, it’s about $50,000 more expensive to hire someone new than to reskill a current employee. 

But more than that, if you don’t put systems in place to upskill and reskill your team, then you’ll be caught in an infinite employee turnover loop where your workers lack the skills to stay with the times, and you continually replace them.

How to manage the skills gap

• Build reskilling and upskilling into your culture. It can’t just be a one-off training. There needs to be ongoing systems in place to encourage people to continually learn and chart their career paths within the company. Think mentorship program, course stipends, and training sessions.
  

• Create an internal job board. Education alone isn’t enough. Employees also need a way to professionally develop within the company. Once they’ve built new skills, make it easy for your talent pool to find work within the company.
  

• Measure your reskilling efforts. If you do implement a reskilling initiative, remember to measure things like internal promotion rates, employee retention rates, what percent of roles get filled by reskilled employees, and how those employees perform.

If you’d like to learn more, check out this article on The Secret to Doing Reskilling Right: What Most Companies Miss. 

Keep Your HR Team Top Notch

The importance of skill development also extends to your HR department!

I’ve found it can be extremely powerful to train your HR team in coaching skills.

In these wild times, having an HR team that has been trained how to coach, support, and empower their team is a massive advantage. 

If you want your HR team to do more than just manage processes, but truly develop people, consider certifying them through the Senior Professional Career Coach (SPCC)® program.

If you’re curious but uncertain, you can book a free 30-minute call with me in the link above, and I’ll help you clarify if this program feels like the right fit for your department or not.