Organisations across Australia and New Zealand are losing millions each year because of workforce culture and capability gaps, according to new research released by Cornerstone OnDemand.
The study revealed a widening disconnect between leadership perception and employee experience, with businesses paying the price through rising attrition, absenteeism and low confidence in workplace change.
Leadership disconnect
The report highlighted a major perception gap between HR leaders and employees across all six capability pillars measured.
ANZ HR leaders rated workforce culture capability at 80.5 out of 100. Employees, however, rated it significantly lower at 65.6.
Researchers warned the 14.9-point difference could distort strategic decisions around AI investment, restructuring and hiring.
The divide was also visible in AI readiness. While 96% of HR leaders expressed confidence in their organisation’s preparedness for AI adoption, fewer than half of employees agreed.
The study further found Gen X employees scored lower than Millennials and Gen Z across several critical capability areas, despite often leading operational change initiatives inside organisations.
Capability gaps were also found to widen in larger enterprises, where scale intensified concerns around leadership credibility, internal mobility and support during workforce transitions.
Hidden costs
The report, The Hidden Number: The Economic Value of Culture and Capability, found that organisations with 1,000 employees lose an average of AUD $1.64 million annually in Australia and NZD $1.33 million in New Zealand due to unaddressed workforce capability failures.
Researchers said nearly 85% of these losses stem from employee retention issues and absenteeism rather than recruitment inefficiencies. The findings suggest the biggest workforce risks are developing inside organisations rather than during hiring.
AI confidence gap
The findings mirror a separate Cornerstone survey conducted in the United States and United Kingdom involving 2,000 employees.
That research showed 46% of employees were already using AI tools at work without formal employer training, while 65% said they were building AI skills independently outside working hours to remain competitive.
“For years, organisations have measured revenue, cost and productivity without measuring the workforce conditions that determine whether those outcomes improve. This report makes visible what has historically remained hidden: the economic cost of capability gaps,” said Brenton Smith, vice president, Asia-Pacific & Japan, Cornerstone OnDemand
“What should concern CEOs and CFOs is that most of this value leakage is not coming from hiring inefficiency. It is coming from preventable attrition, absenteeism and low confidence in AI-driven change. In ANZ, workforce capability is now a board-level performance lever.”
Rebecca Moulynox, General Manager, Great Place To Work Australia & New Zealand added, “The findings strongly align with what we continue to see across Australia and New Zealand's best workplaces. Where trust, psychological safety and career visibility are strong, retention and productivity outcomes materially outperform the market. The leadership challenge is no longer cultural ambition. It is closing the distance between executive intent and employee experience.”
The findings underline a growing challenge for organisations across ANZ, where workforce culture, employee trust and AI preparedness are becoming as critical to business performance as financial strategy itself.