There's a growing and disturbing trend we are observing: a bubbling crisis in HR, that is starting to create fractures at the executive level. We don't use the term "crisis" lightly, however the current state of people management is showing obvious signs of disarray leading to a crisis in HR, being borne out by the most senior executives in the fuction.
What are we seeing?
Critically Low Engagement
Gallup's State of the Global Workplace 2026 report states that employee engagement globally has dropped to just 20%. This is the lowest level since the COVID-19 pandemic was in full swing and everyone was fearing for their own safety and feeling trapped inside their own homes. This has two major implications for HR: first, HR professionals are not immune to low engagement themselves, and HR is often given the role of the "culture ambassadors" within organisations. Such low levels of engagement are indicators that something is very wrong with people management generally, and the HR profession is not best placed to solve it.
Endless Transformation
We are seeing businesses embark on restructure and transformation after restructure and transformation. The bulk of the transformation activities landing within the orbit of senior HR professionals to manage: the conversations with work councils, unions and employee representatives; preparing redundancies; preparing line managers to deliver redundancy news; managing the care of employee's leaving and those staying... Just to list a few actions. It is draining and it is seemingly endless in the current corporate operating environment. Where endless transformation makes most employees both change weary and change wary, this is even more exacerbated for HR professionals who are responsible for much of the execution and, as a result, often left having to rebuild professional and organisation al trust.
Erosion of Trust
The growing complexity and evolving expectations of HR in many organisations has eroded trust. It is next to impossible to expect HR professionals to be organisational culture carriers and ambassadors, whilst also implementing mass redundancies. The cognitive dissonance is palpable, and it ultimately leads to confusion and organisational trust erosion (further impacting engagement). At the most senior levels, the Chief HR Officer is the person on the executive to whom the board goes in order to remove a CEO, and a CEO discusses the firing of another executive - that creates an organisational challenge during times where navigating complex operating environments requires executive team cohesion. Trust is needed at every level, yet the current operating environment makes it challenging to create and retain for HR professionals.
Identity Crisis
A deeper crisis being felt by HR professionals is one of professional identity. What are the evolving expectations of the function? Is HR a strategic partner, a personnel administrator, an employee/ engagement champion or a change agent? This identity crisis also creates circumstances where HR professionals find their capabilities mismatched with evolving organisational expectations: are they there to advocate for and support employees - or to drive business strategy and shareholder value? And, what can they do when those expectations are not aligned. How can HR professionals best support managers who require operational assistance, within complex regulatory environments, whilst there is a growing expectation for manager self-service. The result is a no-win situation for HR professionals who often find themselves criticised from multiple angles.
Impact of AI
Whilst there are many more observations we can make about why HR is presently in crisis, we cannot overlook the impact of AI. As much as AI bring many opportunities to build new business models, make work more efficient, or create breakthroughs, it is also creating workplace crises. Reports of mass redundancies as a result of AI, and reports of organisations hiring back employees displaced by AI, create a fragmented and shaky foundation for organisational culture, good leadership and management, and for employees. No-one works well under the threat of impending doom. This is the most significant organisational change we will see in our career lifetimes, and very few people are prepared for how to operate effectively in the world of AI. Increasingly, it is becoming the role of HR to source the learning, design and implement the change programs, review and reshape the work being done - all whilst trying to educate themselves, keep pace with accelerated AI-driven change and managed the myriad of other responsibilities they have.
What Can Be Done?
We are not suggesting that this crisis requires the extreme action of Ryan Breslow, CEO of Bolt who fired the entire HR department when the company's valuation plummeted. Bolt has a People Operation's team. There is a lesson there, however. Breslow fired the HR department reportedly stating they were creating problems that didn't exist. That sounds a lot like a function that was no longer meeting the needs of its customers and stakeholders because those needs had evolved more quickly than the function itself had shifted its focus. The lesson than be derived from this example is that clarity of purpose needs to be central to the HR function of the future. In the case of Bolt, that was a People Operations team. For other organisations it will be different depending upon their needs - but what is not sustainable going forward is an expectation that the HR function, and the professionals within that function, are able to be all things, to all stakeholders, all the time. If HR are to be culture carriers and focused on employee engagement, that work needs to be separate (but aligned) to a transformation team with responsibility for end-to-end restructuring. If HR are to be the drivers of the future of work, they need to be given the scope and investment necessary to deepen their understanding of AI and digital, learning how to reshape work, redesign teams and enable others to build their capabilities - and this work needs to be the core focus, not a bolt on to business partnering, administration and other activities.
The traditional Ulrich model of HR is being challenged in this moment. HR needs to build new capabilities to continue to meet the needs of its client groups and stakeholders. More focus is on HR embedding into the "business as usual" activities those areas that have long been considered "strategic", and making them practical for each business: data analytics, systems thinking, organisational design, workforce planning, AI governance and digital ethics.
Despite this outlook, there's hope that HR will emerge from this current state with a clearer business imperative than ever:
- HR has higher strategic visibility than before, and this should be leveraged within organisations
- People issues are business issues - particularly talent, capability building, wellbeing, engagement and culture
- Expansion scope of HR as that described above creates the challenge of focus, but it also highlights the organisational relevance of the function
Perhaps the better question is: Can HR evolve quickly enough to meet the changing and expanding demands being placed upon it?
What do you think? Comment below.
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