Six Workforce Truths CEOs Can No Longer Ignore in 2026

Over the past year, I've sat across from dozens of CEOs and executive teams grappling with workforce challenges that fundamentally shape their business outcomes. The questions they're asking have evolved. They're no longer satisfied with engagement scores or retention rates in isolation. They want to know: why isn't productivity keeping pace with investment? How do we build leadership depth? How do we implement AI responsibly? And increasingly, they're looking to HR to lead with answers, not just respond with programs.

Here are six workforce truths emerging from those conversations; truths that are reshaping how organisations think about HR leadership.

1. Productivity is flat despite rising investment

According to research from Rippling (2025), 57% of Australian HR leaders report that skills gaps are already impacting productivity, while one in five workers lacks proficiency in their current role. Labour productivity declined 1.2% year-on-year in the December 2024 quarter. But what I'm hearing goes beyond the data: headcount is up, tools are sophisticated, yet output isn't keeping pace. The HR leaders succeeding here have moved beyond engagement surveys and perks to identify where capability gaps actually limit performance. They're redesigning roles, learning programs, and career pathways to directly drive growth. For HR professionals, this means developing commercial acumen alongside people expertise, understanding not just how to engage employees, but how to build capabilities that move business metrics.

2. Leadership pipelines need strengthening

One of the most consistent themes in my conversations with executives is the fragility of leadership depth. Many organisations promoted leaders quickly during growth cycles, and those leaders – while technically competent – now struggle to manage AI-enabled, hybrid, change-fatigued, and multi-generational teams effectively. HR leaders must work with executive teams and hiring managers to establish succession and leadership readiness as an enterprise risk issue, not just a development exercise. For HR candidates considering their next role, look for organisations that invest genuinely in leadership development and give HR genuine influence in succession planning. For hiring managers, seek HR professionals who understand both talent development and business strategy.

3. Trust drives performance

The data from Gallup shows that 75% of employees across Australia and New Zealand don't feel engaged. But the executives I speak with see the business impact directly: stalled initiatives, missed deadlines, and disengagement that begins quietly but has widespread effects. Trust isn't built with platitudes or pizza parties, but earned through transparent workforce decisions, leaders equipped to communicate consistently, and initiatives that reinforce both wellbeing and performance. HR professionals who can embed transparency into organisational change, coach leaders through difficult communications, and design trust-building interventions are in high demand. These roles require emotional intelligence, change management expertise, and the courage to tell executives uncomfortable truths.

4. AI is transforming HR – and governance matters

Ninety percent of Australian CEOs say AI is key to driving business success over the next three to five years, yet less than one in 10 have moved AI out of pilots into everyday workflows. They know AI is transforming recruitment, workforce analytics, learning, and performance management, but they also recognise the importance of managing bias, ethical considerations, and accountability. What's needed is HR ownership of AI governance, ethics, and outcomes. This means ensuring leaders understand what AI can and cannot do, defining clearly where human judgment is essential, and building frameworks that enable innovation while protecting people. For HR professionals, AI literacy is becoming a core capability. For organisations hiring, seek candidates who can bridge technology and ethics, not just implement tools.

5. Your EVP needs to evolve with expectations

The employee value proposition is being quietly rewritten, whether organisations acknowledge it or not. Employees are less influenced by perks or broad promises of flexibility. They care about career relevance, leadership quality, and fairness—and they're making decisions based on whether their experience matches what was promised. What we’re seeing from HR leaders who get this right is a shift from attraction language to long-term capability and employability. They're creating experiences that ensure employees develop stronger skills, stronger networks, and stronger trust, while contributing real value. For HR professionals, this means developing skills in employee experience design, career architecture, and organisational culture, capabilities that go far beyond traditional recruitment and onboarding.

6. Change is constant and adoption needs to improve

Executives understand that transformation is no longer episodic. Technology, structures, and markets evolve constantly. Yet organisations often experience uneven adoption, change fatigue, and resistance that slows execution. The problem isn't really people resisting change, it's that we keep asking people to change without changing how we lead change. We need to redefine HR's role from supporting change to designing operating models that make change sustainable. For HR professionals, this means developing expertise in organisational design, systems thinking, and change leadership, skills that position you as a strategic architect, not just a facilitator.

What this means for HR leaders and professionals in 2026

HR has a strategic opportunity to shape enterprise outcomes. CEOs recognise both the opportunities and risks in today's workforce landscape and they're looking to HR to lead with speed, insight, and authority.

For HR leaders, 2026 is about evolving from enabler to strategic partner – embracing accountability for productivity, trust, leadership development, AI governance, EVP evolution, and change adoption. These aren't just HR initiatives, they're enterprise imperatives.

For HR professionals considering your next role, look for organisations where HR has genuine executive sponsorship, where you'll be challenged to grow beyond traditional HR management, and where your contributions directly influence business strategy.

The organisations that succeed will be those with HR leaders who can navigate complexity, drive outcomes, and build workforce capability at scale. But success requires the right capability in the right roles.



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