HR leaders are facing a changing work environment due to demographic changes, the ongoing integration of AI and the need for better people-related decision making.

Personio’s Workforce Pulse 2025 report, which canvassed 6,000 employees and 3,000 HR decision makers across the UK, Germany, Spain and the Netherlands, 

Last year’s report found that many European employees were focused on securing new roles due to high levels of disengagement, which rose to 51% in the 2025 edition.

At the same time, more than one in three (39%) HR leaders said employee engagement has declined in the past 12 months.

However, the number of HR leaders expecting to make redundancies fell to 39% in 2025, compared to 60% the year prior.

Personio noted that this year’s version of the report shows a more balanced picture of the HR landscape, one that is being driven by three primary factors: decision intelligence, AI integration and demographic change.

The report highlights that forward-thinking HR leaders are making AI-enabled decisions, data-backed strategies and future-proofing their teams.

From employee disengagement to demographic change challenges

Discussing the report’s findings exclusively with UNLEASH, Personio CPO Lenke Taylor highlights a few major changes since the 2024 iteration.

The first is the level of employee disengagement, which despite having increased year-on-year is a “much less relevant topic this year” she explains.

“Hopefully that’s because of steps HR leaders have taken to change that, but we’ve seen it shift more toward people having challenges with demographic changes in the employee population and around entry level hiring,” Taylor says.

The 2025 report found that nearly half (48%) of HR leaders are focused on entry-level recruitment, as young talent pools shrink due to ageing populations.

This trend ties into the second factor, Taylor adds, which is how organizations and workers are approaching AI – an indicator of just how fast this space is moving.

“12 months ago, people were just talking about the ideas of AI and what that’s going to mean. Now it’s here, it’s arrived, so how do we become much more literate and part of this generation of people that are going to work with AI more regularly?”

Conversely, Taylor also points out that the report shows a consistent trend that “helping people navigate work, life balance and productivity continue to remain areas that are high priority for HR leaders.”

Looking ahead to the next 12-18 months, AI is unsurprisingly tipped as the most transformational factor for HR leaders, both from an organizational standpoint and in leading the HR function.

I’m seeing in my own networks more discussion around the HR leader as not just the people leader, but the AI captain of the changing way of work,” Taylor adds.

A ‘clear opportunity’ for HR leaders on employee AI training

Another key finding from the 2025 report is the disparity between the level of training and support employees want on AI, and what they are actually getting.

The use of AI is clearly on the rise – 43% of employees are currently using AI in their role, compared to 24% in last year’s survey.

However, Personio found just one third (36%) of workers believe their AI training is adequate and 44% want more support on this.

Furthermore, 39% of workers said they know “very little” about how to use AI at work.

Taylor says there is a “clear opportunity there for HR leaders to step in on their own or with others in their leadership team” to set the organizational agenda for “how people use these tools, set ways for people to comfortably experiment and get comfortable with the tools.”

My own experience seeing this happen here in Personio is that the more employees have that opportunity with access to the tools, the space to learn how that might apply it in their work, and the opportunity to collaborate with people around them, the more successful and comfortable they feel in adapting to new technologies”, she explains.

Indeed, Personio’s report found that employees that received adequate AI training were more likely to be productive and motivated, satisfied with career development and supportive of senior leadership.

While HR leaders are embracing the potential of what AI can do for their departments and organizations – 43% of HR leaders are already using AI for strategic workforce planning, while 36% use AI to support recruitment – but there will be immense pressure to keep up with innovation, such as the leap from generative to agentic AI.

Taylor says this is “a real challenge” but there are options for HR leaders, such as gathering thought leaders internally to form AI Councils and learning from external HR peers. 

She also recommends HR peers find a level of comfort on their own testing and learning AI tools: “In some ways, it’s on us to be the first ones that are willing to test and try to see what happens. 

“If we can lead ourselves, that will help others come along in that journey as well.”