Your CEO isn't waiting for HR to figure out AI 

In almost every conversation I’m having with HR leaders across Australia right now, there’s a version of the same uncomfortable feeling coming up. The CEO is deep in AI strategy and planning. The CFO is already running the numbers on workforce restructure. The board has questions about it. And somewhere in those conversations, the people agenda – your agenda – is being decided without you in the room.

This is not a reflection on the quality of HR leaders I’m talking to. It’s a reflection of a moment where the pace of change is startling. And I think there’s a real opportunity to move quickly enough to take it.

Mercer’s Global Talent Trends 2026, drawing on nearly 12,000 executives, HR leaders, employees and investors worldwide, confirms what many Australian CPOs are quietly feeling: the C-suite and HR are not aligned on what drives performance. At the same time, Marsh’s Navigating Global Risks in the Pacific identifies workforce resilience as one of the defining risk exposures for the region – not a soft issue, but a hard one with measurable financial consequence.

The window to lead this conversation is open. But it won’t stay that way. Here are three moves worth making now.

In my recent conversations with senior leaders at client organisations, I keep coming back to the same observation: there’s a genuine misalignment between what the C-suite is asking for when it comes to AI, and where HR is actually focusing its energy. What’s striking is that both sides think they’re working on the right things – which makes the gap harder to close.

The Global Talent Trends 2026 puts a number on it. Globally, 63% of C-suite leaders say redesigning work for AI and automation will deliver the highest people-related return on investment in 2026. Only 46% of HR leaders agree. That’s not a small difference; it’s a fundamental disconnect in how the two functions are reading the same business environment.

What I see playing out in practice is that when HR isn’t fluent in the ROI language of AI-enabled work redesign, someone else fills that space. And usually, it’s the CFO with a cost-reduction lens rather than a capability lens.

Research presented at the Gartner HR Symposium / Xpo (Sydney, November 2025), found that many Australian CEOs are already responding to AI capability gaps by shifting investment from people to technology; often overestimating what automation can actually deliver. When that bet doesn’t pay off, HR ends up managing the fallout without having had a say in the original decision. That’s a hard position to be in, and I think we can do better than that.

The Global Talent Trends data is actually encouraging if you look at it the right way: only 51% of C-suite leaders feel their organisation is well-prepared for the human-machine era, and that number is falling (down from 65% in 2024). Confidence is falling, not rising. That is your opening. The CPOs who move now – with a commercially framed point of view on AI-enabled work design – will own this agenda. Those who wait will be responding to someone else’s plan.

When this topic comes up with clients, the conversation almost always starts with recruitment – where are we going to find the people we need? But the more I work through it with HR leaders, the more I think that framing is actually part of the problem. Because the decisions that will determine your organisation’s capability in two or three years’ time aren’t really recruitment decisions. And they’re being made right now, often without HR at the table.

Australia has a structural skills problem that recruitment alone cannot fix. Jobs and Skills Australia flags 29% of assessed occupations as currently in national shortage. Technology roles (particularly cybersecurity and software engineering) are among the most acutely undersupplied, with over 58,000 new positions projected by 2028. And that’s before the AI transition compounds the problem. As roles are redesigned around automation, the skills required are shifting faster than education and migration pipelines can respond.

What the Global Talent Trends data captures really well is the catch-22 sitting at the heart of this: 65% of executives expect 11–30% of their workforce to be redeployed or reskilled due to AI in the next two years. Meanwhile, 59% of HR leaders cite difficulty attracting talent with critical digital skills as their top people challenge. You cannot hire your way out of a skills gap that is being created by the same technology you are trying to implement. The only way through it is deliberate workforce design.

Here’s the strategic risk that most CPOs aren’t yet naming explicitly: your CEO is already making skills scarcity decisions: which roles to invest in, which to automate, which to offshore. Those are fundamentally workforce strategy decisions. If HR isn’t shaping that conversation with data and a clear point of view, it can get defaulted to the CFO’s cost model. The CPOs who are holding their ground are the ones who’ve reframed this – from a sourcing problem to a strategic design challenge. That shift in framing changes everything about the conversation you’re able to have.

Inflation, geopolitical pressure, regulatory change and constrained budgets are converging. The CPO who quantifies the people impact owns the room.

Of the three areas I wanted to cover, this is the one I find HR leaders least comfortable talking about – not because they don’t understand it, but because it doesn’t always feel like “HR’s territory”. I’d push back on that. The cost environment right now is creating some of the most significant people risks I’ve seen in years, and the CPOs who are able to connect those macro pressures to a clear people narrative are the ones getting taken seriously in budget conversations.

The environment itself is genuinely complex. Ongoing conflict in the Middle East continues to drive oil price volatility, feeding through to transport, energy and supply chain costs that compress operating margins, and inevitably flow into decisions about workforce investment. Domestically, while headline inflation has eased from its 2022 peak, it continues to run above wage growth, meaning employees are experiencing real wage decline even as employers feel the squeeze of a labour cost base that outpaces revenue growth. The Global Talent Trends data reflects that tension exactly: the percentage of employees who are thriving at work has dropped from 66% in 2024 to just 44% today – lower than at the height of COVID-19. I don’t think that’s widely understood yet, and I think it should be. That’s not an engagement score. That’s a productivity and retention risk with a dollar figure attached.

For Australian CPOs, I think this environment creates three simultaneous pressure points that are landing on your desk at once:

1. Annual remuneration cycles are more fraught than they have been in years. Employee expectations of meaningful pay increases collide with a business that cannot sustain them, and the CPO is the one managing that tension directly.
2. Long-term strategic people investment (capability programs, technology platforms, culture and wellbeing initiatives) is increasingly being redirected to fund operational priorities and protect front-line profitability. The CPO’s roadmap is being shortened by the CFO’s spreadsheet, and the downstream cost of that trade-off is rarely calculated before the decision is made.
3. Payday Super changes the compliance landscape from 1 July 2026. From that date, employers must pay super guarantee on payday – not quarterly – with contributions required to be received by the super fund within seven business days. The calculation base also changes, moving from ordinary time earnings to a broader ‘qualifying earnings’ definition. Late payments will attract a super guarantee charge assessed directly by the ATO, with interest compounding daily and an administrative uplift tied to the employer’s compliance history. For HR and payroll teams already managing cost pressure, this is an additional operational burden that requires systems readiness, process change and cash flow planning – now, not in June.

One more dimension worth naming: Marsh’s Navigating Global Risks in the Pacific report makes clear that geopolitical risk is no longer a board-level abstraction. It is actively influencing cost structures, supply chains and workforce decisions for Australian businesses in real time. CPOs who can connect macro risk to people cost in a coherent, commercially-framed narrative are the ones who get budget defended, not cut. That’s a capability worth building.

The CPOs who come out of 2026 with more influence – not less – are those who reposition themselves as strategic risk leaders: commercially fluent, data-grounded, and visible in C-suite conversations where workforce decisions are being made. The data exists. The frameworks exist. The gap is in putting them together and bringing them to the table.

Mercer works with CPOs across Australia to translate workforce insight into commercial strategy. If any of these three imperatives resonates, or if you’re not sure where to start, we’d welcome the conversation.

Sources: Mercer Global Talent Trends 2026 (12,000 respondents, 16 geographies, 16 industries, released February 2026); Marsh Navigating Global Risks – Australia, New Zealand and Pacific 2026; Jobs and Skills Australia Occupation Shortage List 2025; Ai Group Australian Industry Outlook 2026; Gartner HR Symposium / Xpo, Sydney, November 2025; Commonwealth Bank Wage and Labour Insights January 2026; Australian Taxation Office, About Payday Super (updated November 2025).

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