Reflections on the talent market in 2025

Mid-year reflections and shifting sentiment

Midway through the year I wrote an article about the state of the market in the first half of 2025. While there was a lot of apprehension and uncertainty at the start of the year, by the summer, the outlook was more positive. Clients were starting to commit to talent initiatives to improve capability and support growth.

Looking back now, that early shift in sentiment feels like a real turning point. Across a number of sectors we work with, there has been a gradual but consistent move away from “let’s wait and see” towards more proactive, strategic decisions about people, leadership and capability development.

I remember conversations with CEOs and HR Directors in Q1, cautious, hesitant, waiting for more clarity. By Q2, the tone had begun to change: those same leaders were asking, “How do we get ahead?”

I’m pleased to say that the trend continued through the second half of the year, with more and more organisations recognising the need to invest in hiring, selecting, and developing the right talent.

What’s been particularly encouraging is that more leaders are now thinking about the long-term health of their organisations: who they will need in the future, what capabilities will matter most, and how they will build depth and resilience in their teams.

Budgets under scrutiny, but investment continuing

While there are some promising signs of economic recovery, global factors such as rising operating costs and trade tensions mean that budgets for talent-related programmes are still under pressure. These costs are acutely felt. In the three months leading up to November 2025, 35% of UK businesses reported an increase in their overall staffing costs (ONS). This makes the need to build a strong internal business case for investment, with clearly stated anticipated outcomes and impact, more important than ever.

This is something we’re seeing every day in our work. Organisations that are moving forward confidently are the ones that can clearly articulate why they are investing in talent, what success looks like, and how the investment will improve business performance and drive growth. Talent decisions are no longer made on instinct alone. Instead, they are being backed by data, evidence and clear outcomes.

Preparing leaders for what comes next

As confidence has continued to build, we are seeing increased demand for talent initiatives with medium to long-term impact on business performance. including succession planning, management and leadership development, and coaching. This is reflected in the wider economy: the EY ITEM Club upgraded its forecast for UK business investment growth in 2025 to 3.7%, up from 1.2% predicted in July (November 2025), a strong sign that businesses are committed to the future.

Organisations recognise that improved performance and growth sit with their leaders, and that leadership capability cannot be left to chance. The focus is on building strong leadership pipelines and preparing people to step up when the business needs them most.

The new normal

It’s often said that change is the new normal, and many organisations are preparing their leaders to deal with this ambiguity, be agile and flexible in the face of shifting circumstances, and make considered decisions to capitalise on opportunities. This focus is necessary as recent data shows business concerns remain high. Over half (59%) of leaders cited global economic slowdown as their biggest risk in late 2025 (IoD).

On a personal note, I’ve found these conversations some of the most energising of my career. Despite uncertainty there’s a sense of optimism, dashed with a healthy dose of realism. Forward thinking businesses are committed to investing in their people, not only to overcome immediate challenges, but to build something lastingFor me, that’s been one of the most positive developments of the year. The best organisations are not trying to eliminate uncertainty. They are building leaders who are comfortable operating within it.

As we move into the new year, I expect this trend to continue as businesses move away from a reactive approach to building the resilient, future-ready leadership teams that 2026 and beyond will demand.