A Year in Review. How 2025 Shifted HR in New Zealand

Here at ELMO, we’ve spent the past 12 months gathering insight directly from the people shaping New Zealand’s workplaces, employees across industries, and the HR professionals supporting them.

Through three waves of our Employee Sentiment Index (ESI), and our flagship annual HR Industry Benchmark Report (HRIB), we built a clear, data-backed picture of where pressure is rising, where momentum grew, and where HR needs to focus next.

What did we learn about Kiwi employee sentiment in 2025?

ELMO’s ESI tracks the prevailing mood of the workforce. While each quarter explores topical issues, the ‘Index’ gives us a baseline reading of security wellbeing, confidence and future outlook. 

The Index began at 63.2 in Q1 (its lowest in five quarters). Driven by slipping job security, reduced wellbeing and a sharp rise in burnout to 49% (up from 28% in Q4).

By mid year, sentiment hadn’t improved. Burnout remained high at 48%. More than half (52%) of employees said their income didn’t meet their needs. Presenteeism increased. People kept showing up to perform their roles, but often without the sense of security or support they needed.

By Q3, we saw the Index climb to 65.4, in a sign of cautious recovery. We witnessed a little more confidence and a touch more recognition, but the deeper challenges hadn’t budged. Burnout only dropped slightly to 45%. Job mobility remained low.

A snapshot of the year 

Q1 (Jan to Mar)

• The Index dropped to 63.2
• Burnout surged to 49%
• Economic and job security slipped, with economic security scoring 22.5
• Wellbeing declined to 13.3
• 18% of employees were “nowhere near” meeting their financial needs

Q2 (Apr to Jun)

• The Index lifted slightly to 64.4
• Burnout remained high at 48%
• Economic security ticked up marginally to 22.9
• Wellbeing increased slightly to 13.6
• Only around 20% felt economically secure
• 14% said they were “nowhere near” earning enough (down from 18% in Q1)
• 65% responded to work messages outside hours to show commitment
• Women were significantly more uncomfortable ignoring after-hours contact than men

Q3 (Jul to Sept)

• The Index rose to 65.4
• Economic and job security lifted slightly to 23.8
• 65% agreed pay felt fair, despite income not keeping pace with living costs
• Burnout reduced slightly to 45%
• Interest in job change remained at 20%

Key lessons for HR

Across the three ESI waves, one message stood out:

Staying is not the same as thriving.

Low mobility doesn’t reflect satisfaction. Instead, it reflects a workforce choosing stability in the face of uncertainty. Burnout, presenteeism and financial pressure point to underlying strain that traditional engagement metrics can miss.

What HR can do?

It may be wise at this stage to strengthen your early warning systems by combining engagement data with wellbeing signals. If you’re not collecting this information, 2026 may be the time. 

While intuition is good, data is even better. When managers are on the frontline of employee mood, it may also be time to invest in training managers to specifically spot silent burnout, and how to intervene. Above all, acting early is the name of the game.

How HR navigated rising expectations

While employees were stretched, HR took on even more, with both responsibility and influence rising.

The HRIB painted a picture between operational constraints and strategic expectation:

• Upskilling and reskilling were top organisational challenges
• 91% of HR professionals faced productivity barriers caused by manual work, legacy processes and unclear goals. 
• HR-Finance collaboration grew faster than CEO / CHRO partnerships
• Leaders turned to HR for insights into people costs, performance and risk
• Many still lacked the systems and resources needed to deliver consistently

Then, we have AI. 2025 will likely be remembered as the year that AI truly came into focus and became a regular part of many people’s roles. And while AI certainly generated more noise this year than any other topic:

• 71% of HR leaders felt ready for AI
• But only 20% of employees said they were being supported to build those skills

This reality created a disconnect and a readiness gap that shaped one of the clearest storylines of the year.

What HR can do

• Prioritise what really moves the needle and cements HR’s position while letting go of legacy tasks
• Secure systems that reduce the manual load, using ROI to move the conversation beyond utility
• Use people data to make planning more precise

2025 showed that HR certainly doesn’t need more tasks, it needs more traction and space to move. 2026 should be the year where HR is equipped to deliver on what it’s being asked to lead.

Where pay and performance expectations diverged

In 2025, pay became a symbol for fairness and transparency. Yet still, we found that many believe they weren’t earning enough.

• 38-40% said they earned ‘just about enough’
• 35-38% said ‘not quite enough’
• 14-18% said ‘nowhere near enough’

Employees said performance should drive pay, but believed profitability was the actual driver. This disconnect signals a deeper issue: trust.

What HR can do

• Make pay frameworks much more visible and transparent
• Better communicate the “why” behind remuneration decisions
• Review how performance links to progression, not just rewards

The real story behind skills and confidence

Mid-year ESI data showed a clear divide in how employees viewed their own capabilities. 

• 66% felt their skill set was specialised and unlikely to be replaced
• 61% viewed AI as supportive, not threatening

On the surface, that sounds reassuring, but the deeper story tells us otherwise. Only around 15-20% of employees felt they were being supported to build future-focused skills like AI. Most said their development came through informal, on-the-job learning, creating uneven capability across the workforce.

What HR can do

• Audit and refine current learning pathways
• Map workforce skills to business needs
• Embed structured, accessible development pathways that create genuine career mobility 

Where flexibility met trust 

While Australia introduced ‘Right to Disconnect’ legislation, we know that boundaries, wellbeing and presenteeism are issues that transcend policy. In New Zealand, many of the same pressure points were present.

We found that many employees were still responding to after-hours messages, and 65% said they did so to show commitment. Some faced consequences for not engaging. These habits can erode trust and signal a lack of psychological safety.

What can HR do

• Train leaders to embrace ‘switch-off’ behaviour
• Normalise healthy communication boundaries
• Embed psychological safety into workflows, not just policies

AI needs to be the focus of training

If there’s one thing 2025 made clear, it’s that AI and learning can’t be treated separately. The gap between ambition and readiness is widening and employees are noticing.

While AI investment surged, a notably small portion of employees felt confident they were being equipped for that future. For example, only 52% of New Zealand employees felt their employer was helping them prepare for the impact of AI. This disconnect poses a long-term risk to capability.

AI isn’t a technology rollout; it’s a capability challenge. Without structured, scalable learning, capability gaps will widen.

What HR can do

• Make AI literacy a core L&D component in 2026
• Build digital skills intorole design, not merely as a side project 
• Empower employees to self-direct learning, with clear paths and guardrails around acceptable tools

In 2026 AI can’t accelerate performance if people aren’t properly prepared to use it to help them out.

What we learned about the workforce

The workforce of 2025 showed consistent patterns:

• Persistent burnout
• Financial pressure
• Low job movement and high effort
• Confidence in skills, but concern about the future

What did we learn? 

Don’t confuse staying with thriving. In 2026, HR will need to measure employee health, not just headcount.

What can HR do?

Rethink your engagement strategies, integrate wellbeing, financial literacy and work/life balance into your employee experience.

What did we learn about HR in 2025?

HR spent 2025 walking a bit of a tightrope. While it seems clear that HR is beginning to generate more influence in their organisations (and more hunger to focus on strategy, not busywork) there may very well be bigger expectations, but the same constraints around manual processes and fiddly admin.

The reality is that HR doesn’t just need more recognition, it needs proper resourcing and better tools.

What can HR do?

Build your case for more support and resourcing by using metrics and data to show the true cost of system fragmentation. HR can’t be expected to lead transformation from a reactive position.

What matters most for HR in 2026?

When we look to the year ahead, several priorities stand out:

• Workforce planning must become data-led
• AI needs to move from concept to embedded infrastructure
• Learning must build future skills, especially around digital and AI literacy
• HR leaders need space to be strategic

If 2025 was the wake up call, 2026 is the moment to act. The systems, structures and strategies HR builds now will define how resilient, responsive and people-focused organisations can be in the future.