HR leaders are coming under greater pressure to rethink hiring, leadership development, and retention strategies as a disconnect grows between employee expectations and what organisations are delivering. Research from Personio, Europe’s leading HR software provider for small and mid-sized businesses, reveals that more than half (54 per cent) of employees in the UK are considering a job change within the next year as the gap between expectation and reality contributes to attrition.
These findings come from Personio’s annual Workforce Pulse report, which surveys 6,000 employees and 3,000 HR decision-makers across Europe. Employees considering a change cite a mix of financial, emotional, and developmental reasons for wanting to leave their current roles. Better pay (33 per cent) topped the list, followed by stressful working environments (29 per cent), poor work-life balance (29 per cent), and limited career progression (27 per cent). Meanwhile, 38 per cent of HR leaders say talent shortages are the biggest risk facing their organisations this year.
While the number of HR leaders expecting to make redundancies in the next 12 months has declined (56 per cent in 2024 down to 41 per cent in 2025), misalignment between workforce planning and business needs continues to be costly to businesses. In the past year alone, mis-hires, ineffective learning investment, skills gap and mismatches, inadequate workforce planning, and preventable turnover have cost those companies that are scaling up an average of £233,686.
Recruiting and enabling early-career talent is now a top concern for employers as nearly half (49 per cent) of HR leaders find it challenging to attract candidates under 30. On top of that, 59 per cent of HR leaders say entry-level employees are less prepared for the workplace than before the pandemic, which is prompting 72 per cent of HR teams in the UK to rethink their approach to put greater emphasis on onboarding and offer clearer career progression. The report also reveals that 76 per cent of UK HR leaders now prioritise skills and potential over academic credentials, signalling a clear shift in hiring strategy.
This shift comes at a critical demographic juncture. The working-age population is shrinking, and the EU’s old-age dependency ratio is set to nearly double by 2070. Not only is this reducing the pool of younger workers typically drawn to entry-level positions, but it is intensifying hiring challenges while older workers retire, taking institutional knowledge and experience with them.
Despite the recruitment challenges, 74 per cent of HR leaders say junior talent is central to their workforce strategy.
Employers and employees alike are shifting focus from academic credentials to practical skills and growth potential. A striking 76 per cent of UK HR leaders now prioritise aptitude over qualifications (10 per cent more than the average across EMEA) when making hiring decisions, and 73 per cent have already adjusted their recruitment processes to reflect this. Additionally, 67 per cent expect an increase in focus on skill-based hiring over the next 12 months.
Employees are equally ready for the change as 59 per cent believe university degrees are losing relevance in recruitment, while 73 per cent are calling for employers to focus more on transferable skills, potential, and aptitude during the recruitment process. What’s more, AI is accelerating the trend, as 47 per cent of HR leaders claim they are already using AI for strategic workforce planning, including skills-gap analysis and forecasting.
While younger employees still value time in the office, they want more control over how it’s structured – highlighting a shift away from the traditional 9-5, which 62 per cent consider outdated. Among 25-34 year-olds, 60 per cent say they have the flexibility to work during their most productive hours in their current jobs and 47 per cent report being most productive in the office. However, 31 per cent also admit to being more productive when working from home, suggesting that flexibility, not location, is the key to performance across generations.
However, despite their productivity in the office, the younger generation remains the most resistant to rigid office mandates. A large portion of 25–34-year-olds (39 per cent) would consider leaving their job if required to be in the office more than three days a week, although 43 per cent are currently required to attend 3-4 days weekly. In contrast, older employees (55+) are less likely to face frequent in-office requirements, with only 28 per cent reporting they are asked to attend that often.
Across all age groups, it’s clear that employees are seeking more control over when and how they work, with 55 per cent saying they perform best when allowed to choose their own hours.
Lenke Taylor, Chief People Officer at Personio, observes: “Talent shortages already make hiring and retention difficult, and this study shows that the challenge is growing. HR leaders have a critical opportunity to align people’s skills with business needs and create workplaces that are engaging, productive, and rewarding. That means investing in development, trusting employees to work flexibly, and hiring for potential – not just on their credentials.”
To read the full report, please visit: Personio Workforce Pulse Report
