The agile people leader: Smarter decisions for the future of work
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Change is nothing new for HR leaders. What sets this year apart is the pace and impact of transformation, and the unique opportunity for scaling businesses to lead the way.
The acceleration of AI, decision science opportunities, and demographic shifts marks a pivotal moment: those who adapt to harness these forces will set the pace — while others risk being left behind.
Backed by insights from 3,000+ senior HR decision-makers and 6,000+ employees, this workforce trends report draws on the largest survey of HR leaders in Europe 1. The result is an unparalleled view into the priorities, challenges, and opportunities shaping the future of work.
Our workplace research reveals that while enterprise organisations pour millions into transformation, small and mid-sized businesses have a unique opportunity: to outpace their larger counterparts not through mass investment, but through agility, experimentation, and smarter people strategies. Those that thrive will do so by navigating three powerful, interconnected forces:
1
Decision Intelligence
Transforming people decisions from reactive to predictive, blending intuition with evidence to drive strategic advantage.
2
AI integration
Redefining roles and workflows, demanding new skills and frameworks for both leaders and teams.
3
Demographic shifts
Reshaping workforce composition and expectations, intensifying the urgency around knowledge transfer and future talent pipelines.
This report is more than a snapshot of the trends people teams face today — it's a playbook filled with actionable frameworks and cross-market benchmarks, designed to inform board-level conversations on growth, inclusion, and technology. For HR leaders ready to experiment with new ways of working, and to redefine the role of their function in the business, the path to measurable competitive advantage starts here.
Key findings at a glance
£235,107
Average cost per organisation from preventable turnover, mis-hires, skills gaps, bad learning investments, and poor workforce planning in the last year
2x
Employees who feel trusted to work remotely are more than twice as likely to be highly motivated and less likely to leave
21pt
The number of HR leaders expecting to make redundancies dropped 21 points year-on-year (from 60% to 39%)
51 %
of employees plan to look for a new job in the next year or have already found one
39 %
of HR leaders say employee engagement has deteriorated over the past year
36 %
of employees say they get adequate AI training; 44% want more support
35 %
Employees who want more support with AI in the workplace are 35% more likely to be job-hunting
7 %
of HR leaders are truly “advanced decision makers” — using people data strategically and documenting decisions
65 %
of HR leaders prioritise skills-based hiring; 66% say skills matter more than degrees
Foreword
If you work in HR, you're used to hearing that “everything is changing.” But this year, the scale of transformation truly stands out — not just in technology, but in the expectations, ambitions, and needs of people at work.
At Personio, we've always believed that 'scaling' businesses have a unique advantage: agility. This year's Workforce Pulse data underscores just how important that capability will be in the months and years ahead. While enterprise organisations may have bigger budgets, we see their smaller counterparts as well-positioned to move faster, test smarter, and adapt more boldly to the forces shaping the future of work.
The findings in this report make it clear: the convergence of Decision Intelligence, AI, and demographic shifts isn't just theory — it's playing out in real time for teams across Europe. Engagement is at risk, and the cost of preventable people problems is staggering. Yet, our research also shows that organisations that invest in their people, empower teams with data and technology, and focus on skills — not just CVs — are already seeing measurable gains in performance, engagement, and retention.
HR leaders today have an opportunity to set the pace for their organisations. By blending data with intuition, embracing new skills and mindsets, and building cultures where trust and flexibility aren't perks but expectations, people teams can help their organisations thrive. The path forward still carries uncertainties, but it will reward those who act with intention and agility.
I hope this year's Workforce Pulse gives you both a clear-eyed view of the challenges ahead and practical insights to help you embrace and overcome these challenges. The future belongs to those who are ready to shape it — one decision, one experiment, and one team at a time.
Lenke Taylor
Chief People Officer at Personio
1Based on publicly available methodology statements for surveys of European HR-leaders published since 2022.
Unlock the full report
Smarter strategies for the future of work. See how top HR teams are making better decisions with data, AI, and new approaches to talent.
Insights from 3,000+ HR leaders
Practical frameworks to guide your next people decision
Recommendations to improve engagement and retention
If last year was defined by tough decisions and stretched resources, this year's data tells a more nuanced — and in some ways, more hopeful — story.
In 2024, 56% of HR leaders surveyed reported high overall success for their business. That number has increased sharply to 69% in 20252, with only 9% reporting low performance.
Redundancy expectations have fallen sharply
In 2024, 60% of HR leaders said they planned to make redundancies in the coming 12 months. In 2025, that figure has dropped to just 39% — a 21 percentage point decrease3. This suggests that, while uncertainty remains, the worst may be behind us as businesses feel less pressure to make deep cuts than they did last year.
Positive signals across the board
This year's numbers suggest a pivot from the defensive measures of 2024 to a more balanced, forward-looking approach in 2025 — there's a marked drop in the proportion of HR leaders who expect profitability, recruitment, HR budgets, and compensation to decrease in the year ahead 4. While many organisations are still navigating uncertainty, there's a clear shift away from belt-tightening toward more strategic workforce planning.
The bottom line? The rules of workforce management are changing — fast. As decision intelligence, AI, and demographic shifts gather pace, organisations will need to rethink old assumptions and embrace new strategies. In the chapters ahead, we unpack how these workplace trends are transforming the way businesses attract, develop, and retain talent for the future.
How do you expect the following to change over the next 12 months?
Business profitability
Overall recruitment
HR budgets
Average pay / compensation
2Wording of question and some answers adjusted in 2025 for clarity and concision.
3Wording of question adjusted in 2025 for clarity and concision.
4Wording of question adjusted in 2025 for clarity and concision.
Theme 1
The science of better people decisions
>£0k
£51,739
Preventable turnover
£42,965
Ineffective learning investments
£49,499
Inadequate workforce planning
£44,339
Mis-hires
£46,565
Skills gaps and mismatches
£235,107. That's how much the average organisation in our survey lost in the past year from preventable turnover, mis-hires, ineffective learning investments, skills gaps, and poor workforce planning5. Costs that could be slashed with better decision frameworks.
5Calculated per criteria by multiplying midpoint of each cost band (using the low boundary for the £250,000+ band) by total count who selected that cost band, summing the totals, and dividing that sum by the total count of participants, excepting those who selected “don't know/can't estimate” for that question criteria.
19 %
of HR leaders use people data strategically across the organisation
13 %
of HR leaders have a formal process for reviewing if their people decisions worked
46 %
of HR leaders report difficulties leveraging people data
Despite this, only 19% of HR leaders say they use people data strategically across the organisation. Even fewer (13%) have a formal process for reviewing the accuracy of their people predictions. Tellingly, 46% of HR leaders report difficulties leveraging people data, citing either challenges in analysis and interpretation, or rare data usage in decision-making.
Great people decisions require more than just data or gut feeling alone. They demand frameworks that blend data with experience, and intuition with accountability. Without them, people teams risk making big calls on blind spots — and paying the price.
Where does your organisation stand?
Not all HR decision-making is created equal. Our data shows that HR leaders fall into a handful of distinct groups, depending on how they use data and document their choices.
Decision-making maturity matrix
Proportion of people decisions documented with data inputs & reasoning
76 - 100%
51 - 75%
26 - 50%
0 - 25%
Proportion of people decisions documented with data inputs & reasoning
28%
17%
Limited data access & usage
Difficulty analysing or interpreting data
24%
13%
Effective management & analysis of some data
7%
8%
Strategic use of data across organisation
Capability with people data
Advanced HR decision maker
Consistent, data-informed operators
Insight rich but not learning
Intuition-based decision makers
Process heavy but insights poor
Strategic but not fully systematic
Which type of decision-maker are you? Answer a few short questions to find out
Only 7% of HR leaders hit the sweet spot: using data strategically across the organisation and documenting both their decisions and the thinking behind them. This isn't just about tracking what happened — it's about building a “case law” of people decisions. When the next tough call comes up, these leaders can look back, see what worked, and move faster with confidence. In a field where complexity is inevitable, that's a powerful edge.
Unlocking performance: Where advanced decision makers stand out
Very high business performance
Leaders in the decision-making 'sweet spot' are more than two and a half times as likely to report top-tier business performance.
Very high employee engagement
Teams with advanced HR decision-making are almost two and a half times as likely to report very high employee engagement.
High confidence in turnover prediction
Advanced HR decision makers are one and a half times as likely to report high confidence in predicting which employees might leave.
Formal data review cycles
Nearly half of advanced HR decision makers have formal review cycles for their people predictions (eg. who will leave, who will succeed in new roles, training effectiveness) — over four times the rate of their peers.
HR perceived as valuable and trusted
Teams with advanced HR decision-making practices are 31% more likely to report that HR is trusted and valued in their organisation.
HR trusted by leadership
Teams with advanced HR decision-making practices are 31% more likely to report that leadership trusts their people-related decisions.
The data is clear: organisations that systematically use data in clear decision-making frameworks are setting the pace. These teams see higher business performance, stronger employee engagement, sharper predictive power, and greater trust from leadership and the wider business. By pairing rigorous documentation with strategic use of people data, they turn every decision into a learning opportunity — and build a compounding advantage that shows up across the board.
And what about those scary costs associated with preventable people problems? Advanced HR decision makers report 4% lower costs on average per organisation, and are more than twice as likely to report zero associated costs with preventable turnover, mis-hires, ineffective learning investments, skills gaps, or inadequate workforce planning.
Emerging Trend
The case for Decision Intelligence
Decision Intelligence blends data science, cognitive psychology, and management science to help organisations make smarter people decisions. It goes beyond traditional analytics by focusing not just on data collection and analysis, but on how humans actually make decisions using that data.
1
Data science:
Collect, analyse, and visualise information — spotting patterns before they become problems.
2
Cognitive psychology:
Understand how people process information, including biases, mental shortcuts, and blind spots that can cloud judgment.
3
Management science:
Build decision frameworks, accountability structures, and implementation strategies.
There are signals no dashboard will ever show, like the gut feeling that a manager isn't working out, or the quiet warning signs before someone becomes a flight risk. The people team's strength is reading those signals, then using a clear framework to back up their calls. Being data-driven doesn't mean ignoring your instincts. It means making decisions you can stand behind because you've got both the numbers and the story.
For SMBs and mid-sized organisations, the real opportunity is in building simple, practical decision frameworks that bridge experience and evidence, and point towards actionable outcomes. Leaders who strike that balance stand to unlock real business gains — like the ones you've seen in this report.
What's in it for HR?
What's in it for HR?
Better talent decisions:
Spot flight risks, predict skill gaps, and hire smarter.
Enhanced credibility:
Bring data-backed insights (plus human judgment) to the executive table.
Reduced bias:
Make hiring, promotion, and pay decisions fairer and more objective.
Resource optimisation:
Invest in what works for L&D, recruitment, and retention.
Clarity from complexity:
Cut through overwhelming people data and multi-stakeholder challenges to deliver clear, actionable insights.
AI-powered agility:
Harness AI insights to upskill teams and stay ahead of change.
Faster advantage:
Outpace the competition by making quicker, more accurate people decisions.
Evidence-based HR: How to get started
Evidence-based practice is an established approach to improve decision making. It deals with a problem that is rife in contemporary management: with so many differing views of what constitutes 'best practice', it's hard to know what to trust. It gives tools to cut through the noise and optimise your chances of getting the real-life organisational outcomes you want to see.
The approach is scientific in many respects. Critical thinking clarifies problems and potential solutions and informs researchable questions that lead to logical, clear-sighted enquiry. 'Evidence' is information that supports or refutes our hypothesis or claim: we need to carefully consider which evidence from academic literature and organisational data will be useful. Of that, we need to collect the best evidence that's reasonably available, use scientific principles to appraise its quality and prioritise the most trustworthy evidence.
But in some respects, evidence-based management is more craft than science.
Professional expertise and the views of stakeholders are also important sources of evidence, and we need to collate those in an objective way and weave them together with the scientific evidence.
Three things managers can do to get started are:
1. Take time to stop and think critically. Analyse the problem you're trying to solve. Ask yourself: what's the nature of the problem, what assumptions are you making, what are your gaps in knowledge, what evidence will give a really informed decision? More generally, read research summaries to prime the pump of your critical thinking.
2. Search for evidence. Actively look for information from scientific literature and organisational data, as well as your professionals expertise and stakeholder views.
3. Critically appraise the evidence. Remember that not all evidence is created equal. Assess the quality of the evidence you have and prioritise that which is most trustworthy.
Principle Research Fellow, Institute for Employment Studies
Get started today
Building a practice of Decision Intelligence takes time, but you can get started by using our decision journal template. This simple documentation habit will help your team record the data they used, assumptions made, intuitive factors considered, and predicted outcomes when making key people decisions. This creates accountability and helps identify patterns over time, so you can learn from every decision.
Leaders with advanced decision-making capabilities are making better decisions today, and they're building the AI muscle and predictive capabilities to stay ahead as the rules of work keep changing.
AI adoption
Advanced HR decision makers are 46% more likely to use AI tools for decision support and scenario modelling, putting them ahead of the curve as AI transforms the workplace.
They're also 40% more likely to have specifically assessed, or be assessing, how AI will impact their future skills and talent requirements.
This translates to increased bullishness on near-term, workforce-wide adoption: they’re 84% more likely to predict that more than half of their workforce will be using AI by 2026.
Predictive analytics
39% of this group use predictive analytics regularly in their people decisions, compared to 24% of their peers, making them more able to anticipate challenges or opportunities.
The most advanced HR leaders are already leaning into AI and predictive analytics, turning uncertainty into opportunity. As we move into a new era where technology and talent strategy are inseparable, the next frontier is clear: harnessing AI to plan, adapt, and lead with confidence.
Theme 2
AI-enabled workforce planning
Workforce planning is about building the right teams, with the right skills, exactly when and where you need them — but we're at a critical inflection point. AI is fundamentally changing how work gets done, who does it, and how people teams prepare for future needs.
43 %
43% of HR leaders already turning to AI to bring greater clarity and confidence to the process
64 %
of HR decision-makers are already examining how generative AI will reshape future skill needs
47 %
of HR decision-makers rank AI and automation tools among their top spending priorities for the year ahead.
In a landscape being reshaped by rapid technological change and shifting demographics, getting workforce planning right is critical. And that imperative seems to be resonating, with 43% of HR leaders already turning to AI to bring greater clarity and confidence to the process.
Our data shows real momentum: 64% of HR decision-makers are already examining how generative AI will reshape future skill needs, and nearly half (47%) rank AI and automation tools among their top spending priorities for the year ahead.
£49,499
The cost of getting it wrong
On average, businesses lost £49,499 last year due to preventable workforce planning missteps — and that's before you factor in skills gaps, mis-hires, and missed opportunities for growth. In today's market, those are losses no organisation can afford to ignore.
What does AI-powered workforce planning look like?
Turnover prediction
AI can analyse historical data and real-time signals (eg. engagement survey results, absenteeism) to flag employees at risk of leaving — enabling targeted retention efforts.
Succession planning
AI can help identify internal candidates ready for promotion or in need of development, ensuring critical roles are never left vacant.
Upskilling/reskilling recommendations
AI can recommend personalised learning paths based on emerging business needs and individual employee profiles.
Flexible workforce models
AI supports the shift to project-based work by assembling teams with the right mix of skills for each initiative, regardless of department or location.
Before diving into AI-enabled workforce planning, organizations need fundamental clarity. First, distinguish between strategic workforce planning enabled by AI tools versus planning for AI talent acquisition versus workforce planning for AI transformed work. These are different challenges requiring different approaches.
When planning for AI-transformed work specifically, start by categorizing AI's impact on your roles: general users seeing productivity boosts (think assisted writing or data analysis), domain experts amplifying their expertise (like lawyers using AI for contract review), and technical specialists building the models themselves.
When it comes to planning enabled by AI tools, remember: GenAI capabilities remain early-stage, and the productivity gains may be overhyped. Instead, start with workforce planning fundamentals: understand business leaders' anticipated needs while educating them on AI realities. Capture employee voices — this AI-driven transformation is inherently bottom-up. Engage HR and managers to ground your plan in the realities of your organization.
Given the volatility of the current economic and geopolitical reality, scenario planning is essential. Build personas for existing and emerging roles and model growth trajectories with business partners. Then determine the strategic options for each persona:
Buy (hire)
Build (develop internally)
Borrow (contractors)
Bot (automate)
Bounce (reduce headcount)
Bind (retain critical talent)
Boomerang (rehire alumni)
Build specific programs and talent strategies as well as an ongoing feedback loop with the managers to keep the plan refreshed and current.
The key is methodical planning that acknowledges AI's potential while avoiding premature assumptions about its transformative power.
Many HR teams aren't just dabbling in AI — they're leapfrogging those using chatbots or basic automation, and unlocking greater productivity and strategic capabilities. A trend we're also starting to see is HR leaders using AI to enhance leadership impact, from communication assistance to performance insights to coaching support. Just a third (33%) are using AI for leadership augmentation today, but with the prospective benefit it brings to managers, we expect to see that increase in the future.
What does this look like in practice?
AI-powered sentiment analysis of qualitative surveys can help managers spot team issues before they escalate.
Personalised coaching recommendations support leaders in developing their people as well as their own communication style.
Scenario modelling lets leaders test-drive decisions and see the impact before rolling out changes.
The correlation between AI usage and business performance
When we look at how business performance relates to AI usage, a pattern emerges: high-performing organisations tend to report a slightly broader adoption of AI use-cases and a stronger appetite for future investment in these technologies.
Average number of AI use-cases selected
Planning AI/automation spend increase next 12 months
High performers are experimenting across multiple fronts — from workforce planning to leadership augmentation and predictive analytics. They're also more likely to be increasing their AI and automation budgets for the year ahead.
What does this mean? While we can't say for certain whether broader AI adoption drives business success — or if successful companies simply have more resources to invest — the association is worth noting. At the very least, the most successful organisations are treating AI as a toolkit, not a one-off solution.
Are businesses enabling employees to succeed with AI?
HR ambitions are high, and 43% of employees are currently using AI in their role (compared to 24% in last year's survey 6), but are they really ready for the coming advances in the technology? Our data suggests the answer is: not quite yet — but not because they don't want to be.
6Wording of question and some answers adjusted in 2025 for clarity and concision
Confidence
66 %
of employees believe their skills will remain relevant as AI advances
49 %
are actively upskilling to keep pace
There's optimism — but also a sense of personal responsibility not to fall behind.
Support gap
36 %
say their employer currently provides adequate AI training
39 %
say they know very little about how to use AI at work
44 %
want more help
That's a sizable disconnect: many workers are willing to learn, but aren't getting the support they need from their organisations.
This gap is a risk to productivity, morale, and retention. If employees don't feel equipped to work alongside AI, even the best tech investments could fall flat.
We're tracking a powerful correlation: employees who get adequate training in the use of AI report higher productivity, higher motivation, higher satisfaction with their career development, and greater trust in leadership. Notably, those who would like more support with AI tools are 35% more likely to be looking for — or to have already found — a new job.
High productivity
High motivation
High satisfaction with career development
High trust in senior leadership
Of course, while these findings highlight a clear association, they don't necessarily reveal the direction of the relationship. It may be that providing more AI training boosts engagement and performance. But it's also possible that employees who are less motivated or less engaged are less likely to seek out or value training opportunities in the first place.
What's clear, however, is that investment in AI training consistently aligns with better outcomes — including higher productivity, greater engagement, stronger trust, and improved retention. For organisations navigating rapid change, closing the AI skills gap represents a tangible lever for supporting both people and performance.
PERFORMANCE & DEVELOPMENT
Build a culture of high performance
Grow performance every day on one intelligent platform.
Run reviews your way, from simple check-ins to 360s
Develop people with competency-based frameworks for measurable career growth
Get actionable insights to inform better talent decisions
Connect goals, performance and compensation to streamline workflows
Qualifications are out — skills are in. Our data shows a decisive shift:
65 %
of HR decision makers say they’re focusing more on skills-based hiring than they did a year ago
66 %
now believe skills and aptitude matter more than degrees and qualifications in hiring decisions
52 %
of employees feel university degrees are losing importance, and 64% want employers to focus more on transferable skills and aptitude over qualifications
What's driving the shift?
Skills shortages are top of mind
39 %
of HR leaders cite talent or skills shortages as a top barrier to success this year (up from 27% in 2024 7)
7Wording of question and some answers adjusted in 2025 for clarity and concision
Recruitment is evolving
52 %
expect overall recruitment needs to rise
58 %
are specifically prioritising skills-based hiring
48 %
are focusing on entry-level recruitment
AI is accelerating the trend
43 %
of HR leaders are already using AI for strategic workforce planning, including skills-gap analysis and forecasting
36 %
use AI to support recruitment, including candidate sourcing, screening, and skill matching
Skills-based strategies are reshaping how organisations view roles. Roles provide structure and legal clarity, but skills make your workforce dynamic. AI is the game-changer enabling this.
For scaling businesses, this dynamism creates a competitive edge. Every person's capability matters. Moving skills fluidly across teams unlocks value; one person with adjacent skills can cover multiple roles, reducing hiring costs and increasing agility.
Adopt a skills-blocks approach: 1. Break critical work into blocks of tasks. 2. Train and validate employees on those blocks.
That's the kind of operational agility that keeps smaller businesses resilient.
AI provides a real-time view of capability: where skills sit, adjacent skills, and untapped potential. You don't need to start from scratch. Build a capability dashboard from data you already hold (learning records, project assignments, performance outcomes, digital credentials), and layer in external market data to map redeployable skills and investment needs.
I'm working with a client who uses AI-driven skill insights to oscillate expertise across teams and projects, rather than locking it into one function. The results: faster problem solving, improved capacity, greater internal mobility, and measurable business impact.
AI will not wait for a perfectly crafted five-year plan
While it can be tempting to take a 'wait and see' approach to rapid developments in AI, waiting for the perfect plan means missing real opportunities today. Organisations that combine decision-intelligent practices with targeted AI initiatives stand to see measurable gains in performance and resilience.
As demographic shifts accelerate and experienced talent retires, the ability to anticipate needs, close skills gaps, and adapt quickly will define the success of people teams in attracting and retaining younger talent.
Organisations using AI for strategic planning — such as workforce forecasting and skills gap analysis — are 11% more likely than average to say that attracting under-30s to their organisation is easy.
Those exploring 5 or more use-cases for AI in their organisations are 23% more likely to say attracting younger talent is easy.
To build an adaptable and productive workforce as demographics evolve, HR teams must capitalise on the opportunities AI-enabled workforce planning brings.
Theme 3
Adapting to an aging workforce
Europe's workforce is at a critical demographic juncture. The working-age population is shrinking, and the EU’s old-age dependency ratio is set to nearly double by 2070 8. An aging population reduces the pool of younger workers typically drawn to entry-level positions, intensifying hiring challenges while older workers retire, taking institutional knowledge and experience with them.
This is no longer a distant concern: 59% of HR decision makers say hiring has become more difficult than it was five years ago, and half (50%) are struggling to recruit people to fill vacancies today. Attracting younger talent stands out as the leading people-related challenge for the coming year, cited by 36% of HR leaders.
The talent shortage is especially acute among younger workers:
46 %
of HR leaders say attracting under-30s is a challenge
65 %
identify hiring and developing entry-level employees as a key part of their talent strategy
The impact is already hitting the bottom line — in the past year alone:
Knowledge loss
Difficulty attracting talent
As experienced employees retire, the risk of losing critical knowledge grows — and the costs are already showing up on the balance sheet. To avoid these losses, organisations should prioritise structured knowledge transfer:
Pair retiring workers with early-career talent
Document key processes
Create opportunities for cross-generational mentoring
By making knowledge-sharing a routine part of work, businesses can retain expertise, accelerate onboarding, and build resilience for the future.
Emerging Trend
Active nurturing of younger workers
The struggle to attract young talent is about talent scarcity — but it's also about culture. Over half (56%) of HR leaders believe different generations in the workforce have conflicting workplace expectations, and organisations struggling to attract under-30s are 24% more likely to report these generational gaps.
56 %
of HR leaders report conflicting expectations between generations
55 %
of HR leaders say entry-level talent is less prepared post-pandemic
62 %
of HR leaders note junior employees need more training/support post-pandemic
But, as the repercussions of our aging population continue to play out, the imperative to attract younger workers will only increase. Fortunately, the majority (62%) of HR leaders are changing their approach to better attract this group — for which they'll need a clear view of their needs and expectations.
What Gen Z actually wants
It's a cliché that Gen Z prioritises work-life balance — but our data bears that out, with work-life balance ranking third among factors that would encourage them to stay with their employer long-term. Yet, clear progression pathways (26%) and skills development (23%) are also high on their list of drivers, alongside competitive salary and flexibility.
What would most encourage Gen Z to stay with their current employer long-term?
34 %
Competitive salary and benefits
29 %
Flexible working arrangements
28 %
Work-life balance support
26 %
Clear progression pathways
23 %
Meaningful work that aligns with my values
23 %
Skills development and training
18 %
Opportunity to work on innovative projects
18 %
Strong company culture and belonging
16 %
Regular feedback and development conversations
15 %
Access to latest technology and tools
14 %
Mentoring from senior colleagues
2 %
Nothing would
While competitive salary comes out on top, there are many other levers in this list that present opportunities for scaling organisations to make themselves more attractive to younger workers. By developing skills-based career paths and offering personalised development opportunities, they can compete effectively with larger organisations for Gen Z talent while simultaneously building a loyal workforce aligned with organisational priorities and skill needs.
Attracting and retaining Gen Z doesn't need overthinking. At the heart of it, everyone wants connection, challenge and clarity at work. Scaling businesses are well placed to deliver this because they can be more personal and flexible than large corporates. Here's how:
Clarity: Go beyond vague perks like “great culture” or “competitive pay.” Write job descriptions that clearly explain the role, its impact and why someone would want to work for you. Once they join, don't assume they know the unwritten rules, be explicit about expectations, processes and what success looks like.
Connection: Prioritise time for genuine relationships. Harvard Business Review (2024) found 75% of Gen Z employees value managers who support their well-being and emotional health. Regular weekly check-ins and honest conversations about workload, career goals and challenges make a real difference.
Challenge: Show the “why” behind tasks and how their work contributes to the wider business. Give them meaningful projects and opportunities to grow, not just repetitive tasks, and recognise progress along the way.
If they don't experience clarity, connection and challenge, Gen Z won't hesitate to leave. They know their worth and, with plenty of options available, they won't stick around in an environment that doesn't meet their needs.
The demographic challenges facing European businesses — an aging workforce and a shrinking pool of young talent — are deeply intertwined with the evolution of hybrid work. As organisations compete for Gen Z and younger millennial talent, flexibility and trust have become non-negotiable. The data shows that younger workers are just as likely to prioritise flexibility as their older counterparts — and are just as willing to leave if their expectations around hybrid work aren't met.
For many, hybrid work practices are now an expectation rather than a perk
I would prioritise flexibility in where I work when looking for a new job.
Going to the office is a waste of time and money.
Being required to work in the office more than three days a week would make me consider quitting.
Accordingly, hybrid work is now the norm for European businesses with up to 2,000 employees, but the transition has been far from seamless. Our data reveals a significant portion of the workforce feeling unheard regarding hybrid policies.
Hybrid work at a glance
Smart hybrid working structures — ones where employees are trusted to work well remotely as well as in-office — aren't just nice-to-haves. They're strong drivers for both attraction and retention. Yet only 53% say their employer has kept its promises about hybrid working, and less than half (45%) say employees were consulted before decisions were made about hybrid working policies.
What changes when remote workers feel trusted?
High motivation
High productivity
Intention to look for a new job (next 12 months)
High trust in CEO
High trust in HR
The data shows a strong correlation between employees' perceptions of being trusted to work remotely or from home and positive outcomes across motivation, productivity, and engagement. Employees who feel trusted are more than twice as likely to report high motivation (59% vs. 23%) and more than half as likely to report high productivity (69% vs. 42%). They're also less likely to be looking for a new job in the next year (41% vs. 66%), and significantly more likely to express high trust in both their CEO and HR.
While this does not prove that trust alone causes these outcomes, it underscores the importance of trust as a key ingredient in successful hybrid teams, and a critical lever for hybrid-native leadership.
The next imperative: Hybrid-native leadership
Hybrid-native leadership means designing team management, communication, and development practices specifically for distributed teams, rather than simply adapting in-person techniques. It's about treating hybrid as the default, not the exception.
Despite its importance, less than a quarter (24%) of HR leaders identify “managing remote or hybrid teams effectively” as a challenge that needs to be addressed in the coming year. This signals a risk of complacency — and an opportunity for forward-thinking organisations to lead the way.
Making hybrid work: Start with intentional design
Most hybrid models fail because they're retrofitted onto outdated office-based systems. We need to shift from 'remote-enabled' to truly 'hybrid-native' thinking with structures, rituals, and workflows that don't rely on physical presence as a proxy for productivity or engagement.
The core issue isn't remote work itself, it's the lack of intentional design in how hybrid models are implemented. A simple place to start would be to review your team meetings. Take one recurring meeting, like a weekly team call or project check-in, and redesign it for hybrid effectiveness. Ask:
Is this meeting necessary, or can part of it be asynchronous?
Are all participants equally engaged, regardless of location?
Are decisions and outcomes documented and accessible to everyone?
Make one small, intentional change, such as sharing clear agendas with pre-read materials to boost focus, encouraging cameras-on for more personal connection, or using collaborative digital tools like virtual whiteboards to ensure equal participation from all locations. This kind of micro-redesign builds momentum and shows that hybrid success is about how we work together, not where we are.
Europe's demographic shifts are rewriting the rules of talent attraction and retention. The organisations that will thrive in this new era are those that:
Actively nurture young talent by offering clear progression, skills development, and meaningful work
Embrace hybrid-native leadership by designing work structures around trust, flexibility, and outcomes
Consult and involve employees in shaping hybrid policies, ensuring buy-in and alignment across generations
Invest in leadership development that equips managers to build connection, trust, and accountability across distributed teams
As demographic shifts accelerate and hybrid work becomes the norm, the winners will be those who treat flexibility and trust as strategic imperatives. By tackling these challenges head-on, European businesses can build resilient, future-ready workforces — no matter what lies ahead.
82024 Ageing Report. Economic and Budgetary Projections for the EU Member States (2022-2070)
Conclusion
What to do today
The trends explored in this report — Decision Intelligence, AI-enabled workforce planning, and demographic shifts — are deeply interconnected. Our data shows their impact is greatest where they converge: in the everyday choices HR leaders make, the skills they nurture, and the trust they build.
As discussed at the outset, 2025 is a pivotal moment for scaling businesses. These forces create real opportunities for organisations to move with focus and agility, unlocking progress through targeted pilots and experiments.
Teams that blend data-driven frameworks with human insight are better equipped to adapt, minimise costly missteps, and foster environments where employees want to stay and grow. The organisations investing in new skills and flexible strategies are best placed to navigate uncertainty and deliver measurable results.
Despite the challenges, the opportunities are significant. Our findings highlight that incremental, focused actions can drive real and lasting impact.
By connecting these practical steps to your organisation's unique context, you can build resilience, unlock value, and help set the pace for the future of work.
Start with these five actions:
1
Build your Decision Intelligence muscle:
Implement a decision journal requirement that prompts your people team to document both data inputs and intuitive factors for key people decisions. Include expected and actual outcomes.
Begin mapping skills rather than just roles in your organisation, starting with one team or department as a pilot. Think about the critical work that the team is responsible for and separate that work into blocks of tasks, then skills required to carry out those tasks.
Consider your Employer Branding and build tailored onboarding programmes for young talent that emphasise development, impact opportunities, and connection to organisational purpose.
Assess your HR data, identify where AI can add value, and ensure your team feels confident using new tools. Start with low-risk pilots that automate repetitive tasks or support workforce planning, and focus on integrating AI into existing workflows for lasting impact.
Create processes and leadership approaches designed specifically for distributed teams. Take one recurring meeting and redesign it for hybrid effectiveness, ensuring there's a clear agenda with pre-read materials and documented outcomes.
Research for the 2025 Workforce Pulse report was conducted by Censuswide among a sample of 6,001 employees and 3,003 HR decision-makers at companies with 10-2,000 workers across the UK, Germany, Spain, and the Netherlands. The data was collected between June 25th and July 7th, 2025.
