Research reveals that the costs are not because of hiring inefficiencies
Organisations across Australia and New Zealand are collectively losing millions of dollars every year because of preventable workforce capability failures, and most of it has nothing to do with hiring.
That is acccording to a new report from workforce solutions firm Cornerstone OnDemand, validated by Great Place To Work Australia and New Zealand.
The research, based on surveys of 452 leaders and 780 employees conducted by YouGov in December 2025, found that for every 1,000 employees, organisations are losing AUD$1.64 million annually in Australia and NZD$1.33 million in New Zealand.
Critically, around 85% of those costs stem not from recruitment inefficiency but from employee attrition and absenteeism.
"What should concern CEOs and CFOs is that most of this value leakage is not coming from hiring inefficiency," said Brenton Smith, vice president, Asia-Pacific & Japan at Cornerstone OnDemand.
"It is coming from preventable attrition, absenteeism, and low confidence in AI-driven change. In ANZ, workforce capability is now a board-level performance lever."
Major disconnect in employee experience
The report, titled The Hidden Number: The Economic Value of Culture and Capability, also measures workforce conditions across six pillars including skills visibility, learning activation, leadership capability, and AI readiness.
It exposes a major disconnect between how leaders perceive their organisations and how employees actually experience them.
Across all six pillars, HR leaders rated workforce capability significantly higher than employees did. On culture capability alone, ANZ leaders scored their organisations 80.5 out of 100 — while employees gave it just 65.6, a 14.9-point gap.
The AI readiness chasm is even more pronounced. While 96% of HR leaders reported confidence in their organisation's AI readiness, fewer than half of employees agreed.
Rebecca Moulynox, General Manager at Great Place To Work Australia & New Zealand, said the results were consistent with what her organisation observes across the region's top-rated workplaces.
"Where trust, psychological safety, and career visibility are strong, retention, and productivity outcomes materially outperform the market," she said. "The leadership challenge is no longer culture ambition. It is closing the distance between executive intent and employee experience."
The report also identifies generational fault lines within the workforce.
Gen X employees scored significantly lower than Millennials and Gen Z across critical capability areas, a concern that researchers noted given that this generation carries much of the responsibility for executing organisational change.
The problem compounds at scale: capability gaps widen in larger enterprises, where size deepens disconnects in leadership credibility, internal mobility, and support for workforce transitions.
Smith framed the issue as one of measurement, not just management.
"For years, organisations have measured revenue, cost and productivity without measuring the workforce conditions that determine whether those outcomes improve," he said.
"This report makes visible what has historically remained hidden: the economic cost of capability gaps."
