Under-resourced HR teams battling cost-of-living fallout, constant change, new report finds
External pressure has emerged as the top challenge anticipated by New Zealand's HR leaders this year, according to a new report, which reveals an industry under pressure as all workplaces navigate significant change.
The report, released by HR tech consultancy Tomorrow's People, found that HR leaders are grappling with the broader context their people are living in without any policy or programme to fix it.
Nearly half of senior HR leaders interviewed for the report said they are increasingly managing the "spillover effects of a cost of living crisis and cumulative stress" that their employees bring with them to work.
"The external pressures are tangible: employees asking for pay advances, increased financial stress showing up as distraction and anxiety, parents struggling with childcare costs, people taking second jobs to make ends meet, previously stable employees facing housing insecurity," the report read.
This is different from the previous years, the report noted, as challenges in recent years were more focused on tactical HR problems.
"HR leaders are grappling with questions that extend far beyond traditional HR challenges — they're managing the spillover effects of external pressures that they fundamentally cannot solve," said Jane Ward, CEO of Tomorrow's People and author of the research.
Change in workplaces
This major challenge comes as all organisations in New Zealand navigate significant change while being under-resourced, according to the report.
It noted that change has become a "baseline condition" for all organisations in the country.
"This shift isn't just a statistical increase, it represents a fundamental change in the operating environment for New Zealand organisations," the report read.
According to the report, the most-cited drivers of change in organisations include economic pressure, technology imperative, market shifts, and workforce evolution.
Many organisations are also experiencing multiple drivers of change simultaneously, the report noted, calling it a "perfect storm of change."
"The conversation has shifted from 'how do we survive this?' to 'how do we build sustainable approaches when pressure never lets up?'" Ward said.
Challenges with change
The changes at work occur as organisations lack fully resourced HR teams, according to the findings.
It found that the average HR team ratio is 1.6 HR people per 100 employees, with 76% of organisations operating with either inadequate or only somewhat adequate resourcing levels.
"The data paints a picture of an industry under pressure," the report read. "HR teams are being asked to do more than ever often with fewer resources and while supporting people through genuine external hardship. This isn't a temporary spike; it's the new operating environment."
According to the report, the path forward for HR leaders will require:
- Honest prioritisation about what will and won't get done
- Strategic use of external support where internal capacity doesn't exist
- Investment in leadership capability as non-negotiable, not optional
- Acknowledgement that some problems extend beyond HR's ability to solve
- Focus on executing the basics brilliantly rather than pursuing everything adequately
