Strategic HR Digest | Annual Reviews Are Dead—Here’s What Comes Next

With hybrid work here to stay and talent in short supply, performance management has become a strategic must—not a box-ticking exercise.

This week’s featured piece explores what effective performance management looks like in 2025: continuous, goal-aligned, and built to support both productivity and development. From boosting engagement to retaining top talent, it offers practical, evidence-based strategies for HR teams navigating the demands of a modern workforce.

If your approach to performance still hinges on annual reviews… it’s time for a rethink.

HEALTH POLICY REFORM

The House’s ‘One Big Beautiful’ tax bill includes 14 major provisions altering the use of HSAs and HRAs, such as expanding employer funding options, increasing contribution limits, and integrating coverage choices. These changes would provide individuals and employers with greater flexibility, tax advantages, and access to diverse healthcare spending arrangements. The reforms target improved financial efficiency and inclusivity in healthcare benefits for workers and retirees.

HR TRANSFORMATION

Kimberly Ryan is convening leading HR professionals for a virtual roundtable and a three-day leadership event focused on the digital transformation of human resource functions. Participants will gain practical strategies for adapting to data-driven change and building more resilient workforces. These initiatives directly address the urgent need for HR to drive meaningful organisational adaptation in a rapidly evolving landscape.

AI INTEGRATION

Checkout.com’s adoption of AI prioritises automation of administrative HR tasks, such as resume screening and performance management, to reduce bias, enhance fairness, and support employee development, all without job losses. For HR and tech leaders, this demonstrates that AI can boost efficiency and diversity without replacing human expertise.

WORKFORCE EXPANSION

March saw the Employees' State Insurance Corporation enroll 16.33 lakh new workers, with almost half aged 25 or younger and notable progress in female and transgender inclusion. The Employees' Provident Fund Organisation added 14.58 lakh net members, underlining job market dynamism and increased formal workforce participation. These comprehensive payroll expansions highlight both improved social security coverage and shifting workforce demographics—vital indicators for policymakers and businesses monitoring labour trends.

WORKFORCE BENEFITS

A growing body of research and workforce sentiment indicates a shift in how employees evaluate the value of their compensation packages. Increasingly, workers are expressing a clear preference for holistic, long-term benefits over higher base salaries. Health insurance, retirement savings plans, parental leave, and education reimbursement are not just “nice-to-haves”—they’re becoming decisive factors in talent retention and attraction strategies.

This shift reflects broader macroeconomic and generational changes. Gen Z and Millennials, now the dominant demographics in the workplace, are placing greater importance on financial security, wellbeing, and career development over purely monetary rewards. In parallel, cost-of-living pressures and economic uncertainty have reframed how employees perceive value. Flexibility—both in working hours and location—has evolved from a perk into an expectation, often cited as a key reason for accepting or declining job offers.

Performance-based incentives and personalised benefit portfolios are also gaining traction. Employees increasingly want to feel that their unique contributions are recognised, and that their compensation packages reflect not just their role, but their individual life stage and priorities.

For HR leaders, this presents both a challenge and an opportunity. Standardised compensation models may no longer suffice. Instead, progressive employers are investing in benefits programs that are modular, flexible, and aligned with employee life journeys. From financial coaching and fertility benefits to remote-first policies and tuition support, the future of compensation is less about how much—and more about how value is delivered.

The implication is clear: HR strategy must evolve to match these expectations. Investing in long-term, values-aligned benefits is no longer just a retention tactic—it’s a core component of employer brand equity and workforce resilience.