by Ben Davern, Research & Insights at Irish Management Institute
Paradox seems to define leadership as we enter the second half of the decade. Organisations are urged to move fast but hesitate, workers adopt AI while companies lack guardrails, younger generations demand both security and purpose, and performance systems cling to the past even as disruption accelerates.
The World Economic Forum’s Chief People Officers Outlook 2025 captures one of the clearest of these paradoxes: leaders are hitting pause on short-term hiring and restructuring, but they know deep transformation can’t wait.
The survey of more than 130 senior people leaders worldwide highlights three forces reshaping the workforce: the rapid adoption of AI, intensifying talent scarcity, and shifting workforce expectations. Taken together, these pressures are not just changing how HR functions, but actively redefining the role of the Chief People Officer (CPO) as a central architect of organisational capability.
“What stands out for me,” says Damian Reid, Director of Talent and Business Support at IMI, “Is that contrast between immediate caution and long-term urgency. Organisations are hesitant to move now, but they know the future is coming fast and they need to be ready.”
Short-Term Caution, Long-Term Imperative
Nearly half of respondents expect no major change in labour market conditions over the next year. Yet beneath this apparent stability is a recognition that business models, job design and culture must all evolve to stay competitive.
CPOs are signalling that the near-term freeze is tactical, not strategic. In the medium term, they plan to redesign jobs, retrain staff and reinforce culture as they prepare for AI-driven transformation.
But will this recognition turn into action?
“In many ways, there’s a knowing-gap,” says Reid. “We have leaders who are clear about what needs to change, but the weight of operational pressure — among other factors — means leaders are struggling to act decisively. Change feels constant, but real transformation has arguably slowed. This is not limited to CPOs, by the way.”
According to PwC’s CEO Survey released earlier this year, 42% of CEOs don’t believe their organisations will exist in ten years without business model reinvention. Yet this transformation isn’t happening fast enough. Leaders know reinvention is essential, but too many organisations remain optimised for short-term efficiency, paralysed by uncertainty and stretched by competing priorities.
“Regardless of whether you’re a CPO or CEO” says Reid, “Bridging that critical gap between awareness and execution might be the defining leadership challenge of the moment.”
AI Adoption
CPOs are acutely aware of both the promise and risks of AI. Concerns include employees failing to adapt quickly, skill stagnation as AI takes over routine work, and unresolved ethical questions around data privacy.
Crucially, the people function is taking a seat at the table in shaping AI deployment. Rather than simply adopting tools, CPOs are mapping how AI changes roles, setting governance standards and partnering with technology leaders to ensure human and machine collaboration enhances — rather than undermines — organisational capability.
However, governance is lacking. In Ireland, 91% of workers report using AI, yet only 8% of organisations have robust policies in place. This so-called “shadow AI” risks widening the gap between awareness and strategy, while low lifelong learning participation exposes a fragile skills pipeline.
“The real test for leaders is making AI work for people, not against them,” says Reid. “That means thinking about accountability, reskilling and the human experience of work, rather than just short-term efficiency gains. Especially when AI adoption doesn’t initially come with a definable ROI, which can make organisations more hesitant and lean towards inaction. But leaders need to overcome that thinking to ensure they are creating value long-term.”
Talent Scarcity
Demographic shifts and uneven skills distribution continue to drive competition for talent. A growing number of organisations are pursuing distributed, hybrid and cross-border workforce strategies to widen the talent pool.
This isn’t just a resourcing challenge. It’s about reshaping the operating model to tap into talent wherever it is found, while maintaining cohesion and culture across borders.
At the same time, middle managers — often the glue in these models — face growing strain. Flatter, faster structures have left many caught between pressures from above and below, underdeveloped and under-supported. Burnout risk is high, and their capacity to translate strategy into action is limited, creating a critical bottleneck for organisational transformation. Without intervention, organisations risk losing the very cohort that makes hybrid and distributed models work.
Changing Workforce Expectations
According to the WEF report, younger generations are prioritising flexibility, purpose and wellbeing support. Rising mental health pressures and growing value polarisation inside organisations add new complexity.
On one level, this means retention and attraction strategies must go beyond pay and perks. Culture, purpose and the lived experience of work are now competitive levers.
Yet expectations are nuanced. While Gen Z are often portrayed as purpose-driven idealists, the reality is more pragmatic. Faced with layoffs, economic uncertainty, and a cost-of-living crisis, over 60% say salary is their top priority. Purpose and development opportunities matter, but not at the expense of security.
“We’re seeing that today’s talent is unapologetically selective,” says Reid. “They’re clear about what they want, and they’ll walk if organisations don’t deliver. That doesn’t mean purpose is irrelevant. It means organisations must deliver both competitive pay and meaningful work if they want to attract and keep the best people.”
Transformation Priorities for 2026
The WEF survey highlights three top priorities for the next 12 months:
- Reviewing organisational structures and job design (cited by over half of respondents).
- Strengthening culture and articulating purpose.
- Supporting workforce deployment of AI and automation.
Together, these represent CPOs’ evolving role: less about managing policies, and more about shaping the conditions for long-term resilience and sustainable performance.
But are there challenges the report doesn’t surface?
“Too many organisations are trying to achieve transformation with outdated tools,” says Reid. “Yes, we can talk about AI, but performance management is basically rooted in the 20th century, where you have these rigid KPIs and OKRs and annual targets that are completely obsolete within weeks, plus incentive models that basically reward caution and punish experimentation.”
Although many leaders love to talk about “failing fast” and “building innovation cultures,” most organisations are still afraid of failure, with risk aversion baked into culture, incentives and leadership expectations. Worse, in cultures where failure is punished, not only is risk-taking and innovation stifled but the consequences extend beyond innovation. In areas like cybersecurity or AI deployment, a fear of speaking up can be dangerous.
“True efficiency is often unknown until it’s tested and then measured,” adds Reid, “But how often do genuine breakthroughs follow traditional project management cycles? We see that organisations obsessed with immediate results don’t generally reward experimentation, and they definitely don’t reward intelligent failure. The number one priority for CPOs has to be reimagining high performance.”
This means shifting means shifting from surveillance and control to empowerment and accountability, balancing freedom with adaptive governance. High-performing organisations will be those that redesign performance conversations, reward calculated risk and build trust to empower teams.
Performance cannot be a static measure; it is a continuous dialogue aligned to purpose, culture and long-term value creation, balancing today’s objectives with the capability to respond to tomorrow’s challenges.
From People Function to Strategic Architect
The Outlook makes clear that the CPO’s remit is expanding. To deliver on this agenda, people leaders are sharpening their business acumen, data fluency and influence at board level.
HR can no longer be a service function. It must operate as a strategic partner driving organisational design, workforce transformation, and culture at scale.
“We’re moving into an era where the CPO isn’t just supporting the business strategy,” says Reid, “Instead, they’re actively co-authoring it. They’re shaping how organisations deliver value in the first place. That obsession with long-term value is key to unlocking sustainable high performance and organisational transformation. Admittedly, these are very different questions to what a CPO or HR leader would have been asking even a few years ago!”
The Human vs Machine Equation
The WEF frames this as the central challenge of the coming years: balancing caution in the present with transformation for the future, embedding AI responsibly while keeping humans at the centre.
If the findings show anything, it is that standing still is not an option. Organisations that treat AI, talent and culture as side issues may find themselves left behind. Those that place the people function at the heart of transformation will be better positioned to thrive.
The evolving remit also addresses systemic challenges: interconnected global and technological complexity, fragile supply chains and rapid market disruption. Leading through uncertainty is not about resilience alone; it is about converting disorder into opportunity, enabling teams to thrive amidst complexity, and embedding human-centred, adaptable governance.
Conclusion
Arguably the Outlook crystallises a turning point. The people agenda cannot be about incremental change; instead, it must be about re-engineering organisations for resilience and advantage in an era of disruption.
If 2025 had a defining theme, it may be paradox itself: caution and urgency, empowerment and control, innovation and risk aversion. The WEF makes clear that these tensions will not be resolved automatically. Standing still is not an option.. The challenge for leaders is to navigate paradox without falling victim to paralysis, translating awareness into execution and short-term caution into long-term transformation.
“Caution may be the current setting,” says Reid, “But embracing transformation is the critical imperative for leaders, and where the real long-term opportunities lie. That has to be the mindset going forward.”
About the author
Ben Davern is responsible for research & Insights with the Irish Management Institute (IMI), Ireland’s leading executive education provider since 1952. Ben’s research and content focus includes leadership and management, skills gaps and capability development, talent strategy, AI & automation, Future of Work, High-Performance teams, cognitive diversity.
