At the time, we observed a steady improvement in the HR recruitment market, with organisations beginning to cautiously invest in leadership roles, as well as expanding their L&D and Talent Management functions. Beyond this, the role of HR business partners was becoming increasingly critical, and we had seen a growing emphasis on technology and automation in HR operations.
Our Q4 report released earlier this year found the emergence and use of generative AI was the main topic of conversation with both clients and candidates, and there was a clear demand for HR professionals skilled in AI and data analytics. The consensus seemed to be that the revolutionisation of outdated HR processes was primed to differentiate early adopters of AI and technology from their competition. The private equity portfolio market also began to see significant increase in activity, particularly businesses backed by mid-market funds where there was an increased focus on adding strategic HR leaders such as Heads of People, HR Directors, and CPOs to teams.
What’s underpinned a lot of the trends we have witnessed in the HR landscape over the past 24 months has been the wider cross-sector evolution of the HR function, from an administrative powerhouse to a key strategic pillar for growth and transformation. With this shift, the expectations placed on HR teams have evolved significantly. It is reflective of the growing recognition that effective talent management is crucial for organisations to achieve their goals, and this has been reflected in hiring patterns.
This building of activity in the market culminated in Q1 of this year, where we’ve seen a host of senior strategic HR hires as businesses increasingly focus on investing in talent who can demonstrably drive significant business growth and support the organisation’s long-term people goals for 2025 and beyond. In comparison to 2023 and 2024, we’ve seen a rise in newly created roles designed to meet the evolving needs of businesses, rather than simply backfilling existing positions. Additionally, we are seeing a trend in the size of overall HR teams seeming to shrink and consolidate, again focusing resources at the senior strategic level. Through investments into talent management and innovative workforce planning, it is becoming increasingly clear how much of a critical role HR is having in shaping the future of organisations.
When reviewing Catalyst Partners data, we have seen a broadly similar number of roles in Q1 2025 vs Q1 2024 with only a c.5% increase in volume. This was remarkable as the sentiment in our business, and the market generally, is significantly more positive this year. Taking a closer look at the data and the types/level of roles that we’re delivering, it becomes clearer why this is the case. The number of CPO/HR Director roles we’ve been mandated on are 2025 has increased by 160% and the number of roles at the –1 level has increased by 138%.
Although data is a useful starting place, it can often be flawed when looking at a relatively small set. What is significant is the general theme in the way our clients have been describing their rationale for making the hire. Occasionally, the reason is highly sensitive as the current incumbent hasn’t performed in their role as expected. More frequently, it is that they need a key figure in the role; to confidently communicate with the Ex-Co and wider business. As the demands placed upon HR teams grow, the requirement for credible, authoritative and articulate leaders becomes ever greater. As organisations look for process efficiencies using Gen-AI, the direction of travel seems to be leaner functions with a more commercial, business-aligned focus.
This message is consistent with the CHROs/CPOs we speak with, who are navigating an increasingly complex landscape influenced by a number of key trends. These include business leaders prioritising growth through transformation, ongoing AI and technological challenges and opportunities, shifting labour market pressures and subsequent strategic workforce planning, and employee expectations (including wellbeing/hybrid work), in addition to the increase in M&A across industry sectors.
These factors shape how organisations approach HR to achieve their business goals and according to Gartner (2), the top three focus areas for CHRO’s in 2025 are;
1. elevating HR’s impact on the organisation’s growth strategy
2. building a deep bench of change leaders
3. creating a future-ready workforce.
The HR leaders who will be successful will be ‘tech-savvy’, have the right agility and adaptability in these dynamic times and have the high emotional intelligence needed to create a supportive workplace culture.
When we look at the financial services landscape specifically, we have observed the much-anticipated Talent Acquisition (TA) market finally gaining momentum, particularly within SME financial services businesses. As deal flow begins to increase, our clients have found it necessary to bolster their teams by hiring senior and VP-level talent, with the general consensus that hiring strategic TA leaders who have the capability of partnering with business leaders will be game-changing for planned 2025/26 growth. This shift has generated significant interest among TA candidates who previously had limited opportunities to make career moves.
What has become clear from conversations with clients is that lessons have (mostly) been learned from the hiring spike of 2021/22. Organisations are being intentional in the design of the operating model for TA, utilising selected external partners and hybrid RPO solutions to reduce the fixed cost base and avoid the pendulum swing from extreme demand to mass redundancies again in the future.
The HR Business Partnering market has remained relatively stable during the first few months of 2025, which is as expected due to bonuses typically materialising in Q1. Macroeconomic factors certainly dampened candidates’ desire to make a move in 2024. However, so far, sentiment suggests that a large proportion of HRBPs are open to exploring new opportunities, especially those who have been in the same position since the pandemic. HR leaders are hyper-conscious of potential leavers and are anticipating post-bonus fallout, particularly if there is limited upward mobility for high-potential talent. Additionally, we have found that 2025 is the year HRBP candidates within the boutique arena have come to understand that if they wish to make a move, the expectation is to be in the office 4 or 5 days a week.
The focus on senior hiring is also true when we look at the Payroll and Benefits space, where we’ve seen a positive uptick in activity and increased investment in strategic roles, often requiring individuals who can work across a broad and varied landscape and who can bring a transformational mindset.
We’ve seen many CPO’s and CHRO’s hire their first Payroll and Benefits professional to create a global COE. Focus has been on key hires who have the experience and skillset to consolidate the payroll function, helping the business move away from a heavily outsourced model that has historically been managed by local people teams. Refreshingly, businesses seem to have a genuine appetite for forward thinking, experienced payroll professionals who want to drive process automisation and system integration, to support firms meet their long-term business objectives.
More specifically, this trend has been predominant within our small-mid size Alternative Investments clients, where there has been a proactive focus on hiring strategic payroll leaders at Head of and Director level, to help drive change from a global payroll and benefits perspective. With this shift, the expectation placed on payroll functions has evolved significantly, reinforcing the need for highly skilled and technical payroll professionals who are comfortable being “in the detail”, whilst delivering key change programmes and maintaining operational excellence. This is another example of where we have seen newly created mandates come to market, in comparison to simple backfills of previous roles.
The reward market has been active in the first few months of the year which is in line with the wider trend we’ve seen across HR, and most noticeable at the mid- to senior levels. Interestingly, within the Reward space we’ve observed a mix of replacement and new headcount mandates, along with several under NDA where leaders aim to upskill current talent.
Within financial services, boutique firms are increasingly recognising the need for enhanced governance in reward practices. They are looking to larger organisations for guidance on structuring processes and improving efficiencies. These firms typically seek individuals who have experienced “what good looks like” and can help automate year-end processes. Such individuals are expected to manage reward functions with minimal support, often working independently. The demand for professionals who are both hands-on and strategic remains high. Outside of financial services, several senior movements within the FTSE are also likely to create opportunities throughout 2025, as these leaders evaluate their teams and identify areas for change.
The future pipeline for hiring strong reward professionals is something which is top of mind, as the junior reward market remains competitive, with a growing need for specialist skills at the Associate level (regulatory, equity, compensation systems). Traditional reward mandates are scarce, and finding talent at this level is becoming increasingly challenging due to a shrinking pipeline of new entrants into the Reward field. With firms offshoring talent, creating Analyst pools, and leveraging AI and systems, the number of available Analysts is dwindling. We must explore alternative avenues to source suitable candidates.
UK-based interim roles have been more nationally spread, with senior interim experts travelling further and staying away from home during the week, demonstrating the need for flexibility and return to office. Mirroring the trend, European roles have also required more office presence and in particular PE-backed businesses, as investors want to build confidence and trust between their senior interim talent and their portfolio businesses.
There has been a revival in the private equity and venture capital sectors, leading to more interim opportunities. These roles often involve preparing businesses for growth, managing mergers and acquisitions, and integrating new systems and processes. Typical hires have been ‘Interim CPO’ along with a requirement for OD experts. To manage costs effectively, we’ve seen an increase in ‘fractional’ usage, often utilising experienced consultants for projects for up to a year in duration.
Overall, the Interim HR market is experiencing a steady increase in demand, driven by the need for specialist skills and the flexibility that interim roles offer. The trend of mid-market firms identifying the need for specialist HR leadership earlier in their growth journey has continued, with organisations taking the opportunity to hire specialist HR leaders quickly and convert them into permanent roles, providing they have the expected impact.
The trends we’ve highlighted in the UK have been broadly similar for our US team. A turbulent start to President Trump’s second term didn’t slow the HR market from continuing its upward trajectory from the close of 2024. Although the US economy fell slightly below consensus expectations of jobs added in the first quarter (1), big ticket hires were made in some of the leading boutique and advisory businesses.
Cultivated by growth aspirations, well known and globally established businesses added new footprint in the US for the first time, particularly across insurance, alternative assets, and investment backed organisations. Strategic CHRO appointments were made in hedge funds, private equity firms, brokerage businesses and tech scale-ups across the US, which came with the priority of assessing and upgrading outdated HR operating models, often resulting in leadership hiring in their People Teams. Key hires have been made by Catalyst across New York, Charlotte, Chicago and Boston, either running COE’s or global business lines. We have experienced a significant increase in demand for new recruits at senior levels, particularly in Reward and Talent Acquisition where candidates were required to have specialist functional or sector knowledge, being able to hit the ground running and create value from day one.
Where we have seen some discrepancy with the UK market has been a continued push to hire replacement talent, with a host of resignations being handed in following bonus pay outs. With the war on talent being intensified for junior hires, the market saw more cross-pollination from adjacent sectors, allowing wider talent pools to be accessed. HR Infrastructure and HR Operations hiring remained steady, with the majority of hires being replacement mandates due to lean teams losing SME or IC talent.
Given the uptick in the market that we saw at the end of 2024, we were cautiously optimistic in our outlook for 2025, and the high activity in Q1 did not disappoint. This has been a marked difference to the past few years, where the rapid expansion phase of 2021/22 from many companies over-hiring resulted in bloated HR functions. The subsequent challenging market conditions over the past 24 months led businesses to shrink their HR teams and adopt a more risk-averse approach to hiring. The noted activity shift for Q1 has been the increased focus on senior and strategic hires who are able to fully partner with the business in a meaningful way.
We’re excited to announce that Catalyst has been named a finalist in the UK StartUp Awards, which celebrates innovation and growth across the UK’s thriving startup ecosystem. This recognition highlights our commitment to transforming the HR recruitment space by building exceptional People and Talent functions that empower ambitious businesses.
This achievement is a testament to the hard work of our incredible team and the ongoing support from our clients and candidates. We’re delighted to be nominated for this prestigious award and look forward to the result in June!
If you are interested in scheduling a meeting to discuss any of the above trends in more depth with our market specialists, please do get in touch at catalyst@catalystpartners.com.
