The 5 biggest challenges facing employers in 2025

Companies are recalling workers to the office left and right, and a majority of employees aren’t pleased about the policy changes. Korn Ferry found that most workers want to be able to work remote at least part of the time, citing desires for flexibility and improved mental health without the headache of commuting.

This dynamic has set up tensions between employers and employees about how their time is best spent — and is likely to worsen as more workers are forced to abandon their hybrid work schedules.

“With flexibility ranking among the top priorities for talent, ignoring these preferences risks losing valuable people to competitors willing to offer the choice,” Korn Ferry said.

Middle managers are often axed during rounds of layoffs. Among those employees surveyed, 44% reported cutbacks in manager levels at their organizations, which they said creating challenges.

“While leaner structures can boost agility, the absence of these key leaders is creating new challenges, with 40% of U.S. employees saying they feel a lack of direction at work,” Korn Ferry wrote.

Senior executives aren’t immune to the problem either. Korn Ferry found that 72% said “they’re stretched beyond their capabilities, compared to 47% of their global peers” thanks to the cuts.

Two-thirds of employees surveyed said they are paid fairly, Korn Ferry found, but that isn’t stopping them from being anxious about compensation. The survey showed that “72% are concerned about cost-of-living expenses outpacing their current salary.”

“Against the backdrop of broader economic fluctuations, employees across the board are prioritizing job security along with compensation when looking for new positions,” the firm said.

With renewed fears around inflation thanks to Trump’s tariffs, workers might be looking for raises that employers won’t want to give.

Still, cash isn’t everything. “Companies that can’t compete on salary aren’t out of the game,” Korn Ferry added. “If they can deliver on these other priorities, they still have powerful cards to play in attracting and keeping talent in an economy that’s squeezing everyone.”

Gen Z employees get a bad rap, and Korn Ferry found that the reputation might not be unfounded. That’s because 75% of Gen Z cited “challenges working with other generations due to different communications styles, technology gaps or values,” according to their results.

As the rate of older workers continues to grow, generational tensions might present difficult challenges for employers.

“Gen Z employees are calling for better communication and teamwork training, while only a fraction of baby boomers recognize the same need,” Korn Ferry said. “Technology skills show a similar pattern. Younger workers identify significant digital gaps that most boomers simply don’t see.”

Korn Ferry found that employees are divided about the effects AI will have on their job — but no matter what happens, it is sure to shake things up.

That said, it was often senior executives who expressed more confidence about their company’s AI strategies, with 70% of leaders saying they have an AI strategy, but only 39% of employees agreeing.

And those in the tech industry are particularly worried, with almost three in five fearing their jobs will be replaced by AI in just three years.