As usual, a new administration brings attention to not only politics, but business practices and regulations. While big companies are known to chase new and sometimes ridiculous trends, small and mid-sized businesses push forward with strategies and tactics to accelerate growth, improve market positions, decrease wasteful spending, and explore new opportunities to help customers.
Here is a look at 5 common sense themes for mid-sized businesses in 2025:
DEIB: Where are we going? Merit-Based Hiring, Promotions, and Development
While the original purposes of DEIB (Diversity, Equity, Inclusion, and Belonging) initiatives were credible and smart, many organizations have allowed these initiatives to override not only common sense, but positive business practices. DEIB programs have evolved to alienate a majority of the workforce. How are most individuals motivated when DEIB practices lead to promotions and preferred assignments for co-workers due to skin color, sexual orientation, and disabilities rather than abilities? Furthermore, these practices do a disservice to everyone who is hired and promoted as others think “they only got the job because of DEIB”. I think the Equity part of DEIB was the downfall as the focus was on equal outcomes for all regardless of performance.
So what are smart companies doing?
- Recognize that diversity is not a strategy, but it’s smart business to have diverse workforces in every sense. Diversity is instrumental in solving problems, making better decisions, innovating, marketing, selling, working together, motivating, and so much more! Diversity is also hard work!
- Source, retain, engage, and develop a diverse workforce: it is not easy but pays off with better business outcomes.
- Create environments where everyone is respected, valued, can work together effectively, and bring their best each day!
- Return to smart performance management systems and processes: collaboratively set goals and objectives, regularly provide feedback, and assess results. Continuously raise the bar on company, department, and individual performance AND elevate each team member to new heights.
- Identify and develop key contributors: how can we create depth and prepare the organization for growth by developing internal talent?
Labor-Friendly Environment
The new federal executive administration may be surprisingly friendly to organized labor as the Trump campaign garnered support from union members across the country. The President has nominated Lori Chavez-DeRemer, a Republican from Oregon, to lead the Department of Labor. Although she lost her re-election bid to return to Congress, she is the daughter of a Teamster and has their support to lead the DOL. While in Congress last year, she was a co-sponsor of the PRO Act that was friendly to labor organizing. This is a significant change compared to Republican administrations of the past several decades.
What could this mean for business? The federal government will be more neutral in labor disputes and will advocate for higher wages for labor as a key political constituency. This neutrality, along with other factors, will embolden unions to more actively organize.
What does this mean for us?
- Revisit the key drivers of unionization and employee engagement to reduce your susceptibility to organized labor. It’s not only wages and benefits, but also respect/treatment by managers, safety, work rule fairness and consistency, and job security.
- The higher FLSA threshold for exemption was recently blocked by the U.S. District Court for the Eastern District of Texas, but it is expected that something higher than the current $684/week threshold will be supported and implemented by the new DOL. Continue to work with experts to determine exempt and non-exempt status of position and recognize that the duties test continues to be the driver of classification decisions.
- Expect enforcement resources and staff to be trimmed back, but we expect that EEOC, Wage and Hour, and OSHA will be aggressive and focused on deliberate violations.
Federal Contractors and Subcontractors
As we now know, the Trump administration made a big splash in their first week by rescinding Executive Order 11246. This EO established the requirement for annual Affirmative Action Plans (AAPs) for federal contractors and subcontractors. Although quotas associated with AAPs were determined to be illegal several years ago, the AAP requirement continued. With AAPs will no longer be required, we should expect that the Office of Federal Contractor Compliance Programs (OFCCP) will still demand that contractors have non-discriminatory hiring practices and a diverse workforce. It is also important to note that the VETS report and Disabilities reports have not been impacted by the revocation of EO 11246. Stay tuned for more developments!
Immigration Policies and Practices
With the daily active surge of deporting illegal immigrants, there is heightened focus on employment law compliance with I-9 documentation. For employers, that means more focus on attention on I-9 forms and proper completion. Our HR audits reveal that at least 40% of completed I-9 forms have errors and it’s actually much worse in most cases.
- Proactively audit your forms and get all errors resolved.
- Assess whether you are vulnerable to losing a part of your workforce. Update your workforce planning schedule to align with this assessment.
- Understand that even properly documented employees may be vulnerable or may have family that is not documented to stay in the United States. Any of these cases will not only be distracting but will put some employees at risk of leaving as well.
Economic Environment
The most significant unknown is the direction of the economy and the impact on business. Will inflation be controlled? Will “drill baby drill” mean lower fuel and transportation costs in 2025? Are we overdue for a recession? Are tariffs only a negotiating tactic or will some be enacted and reciprocated against us?
As business leaders, we should plan as follows:
- Build contingency plans specific to your industry, geography, and customer base.
- Do you have opportunities to adjust products, services, and pricing to meet changing customer demands?
- Assure that your compensation and benefit plans are adjusted to maintain your desired outcomes. Don’t assume that last year’s budgets and market pressures are the same for this year.
Conclusion
This year presents a few more unknowns than usual, so we’ll need to regularly adjust our plans and read market signals. We’ve been smart to focus on business processes and outcomes rather than chase fads. Let’s stay smart and be prepared for all that 2025 has in store for us!
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