Perspective

23 Sep 2025

15 minute read

Shaping the Future: Deloitte's 2025 Global Human Capital Trends – observations from UK Defence

Will AI automate tasks or replace humans? How can organisations focus time and effort on innovation? How can leaders drive human performance?

Authors:

Anna Brown

Zayna Butt

Dale Bass

Deloitte’s 2024 Global Human Capital Trends report introduced an emerging tension between business and human outcomes as organisations navigate these types of questions.¹ In 2025, we surveyed over 10,000 business and human resources leaders across industries and sectors in 93 countries. Only six per cent say their organisations are making great progress in establishing human sustainability—the ability to create value for all people connected to the organisation—as a guiding business strategy.² In this year’s report, we take a deeper dive into some of the specific tensions that underscore the balance between business outcomes and human outcomes.

The report³ aims to help leaders gain traction amid the tensions, exploring some key questions about which they will likely be expected to make important choices in the near future, including:

How do I ensure the right work is being done, and in an optimal way?
How do I access, develop, and motivate the necessary workforce?
Do I have the right organisation and culture to enable performance?

As a follow up to the global survey and report, we conducted in-depth interviews with HR leaders from UK Defence to explore the resonance of the global human capital trends. We found that, like other industries and other parts of the public sector, Defence leaders are struggling with how to create time and space for innovation, adoption of AI, and how to manage and incentivise human performance. Their context is unique, but they are navigating common challenges as they aim to make the most of their people capability.

UK Defence operates within an increasingly volatile global landscape marked by technological advancements, geopolitical shifts and evolving security threats. The UK Strategic Defence Review⁴ (SDR) sets out a new vision for Defence and stresses that in order to deliver national security priorities, transformation in both people and tech capabilities are required. This will require a cultural and workforce transformation to unlock greater agility and innovation. Business and HR leaders face complex tensions – and successfully navigating these will help to ‘unlock’ people capability across the whole force.

Our interviews focused on three trends from our global report, and brought these to life in the unique environment of UK Defence:

when work gets in the way of work
AI is revolutionising work
engineering human performance

Trend 1: When work gets in the way of work

Tensions: Finding time for the work that matters most, focusing on what is important, balancing empowerment with control and oversight

Organisations often struggle to focus human effort on key business outcomes. Deloitte’s 2025 Human Capital Trends global survey found that employees believe 41 per cent of daily work is spent on non value-added tasks.⁵ Significantly, 68 per cent report they don’t have enough time to focus on important tasks (the tyranny of the urgent). It’s not difficult to see how ‘work gets in the way of work’.

Our survey respondents say creating capacity for worker growth, imagination and deeper thinking is a top priority. And yet they also say it’s one of the areas where they’re making the least progress among all the topics surveyed. Our global report introduced the concept of ‘slack’: unstructured time that allows employees to think, innovate and learn – critically important in the context of new technology and new demands on the workforce. While the global report found 82 per cent of organisations recognise the critical importance of freeing up capacity and creating slack, only 35 per cent are taking action, and just 8 per cent report making significant progress.⁶

UK Defence is facing the same tension: how to free up time to innovate and transform, with a constrained workforce burdened by ever increasing demands on their time.

“We don’t have the time to change.”
“The ability to get things done is harder today than I've ever known.”
“You end up with a great deal of activity that is around trying to get permission for things.”

The burden of bureaucracy and complexity, along with gapped posts and restrictions on hiring, means that there is no slack in the system and people are working at maximum capacity – with no time to experiment, innovate or transform.

The SDR identifies the need to remove red tape and excessive bureaucracy, and to transform in fundamental ways (innovation, agility, One Defence, skills-based). Defence faces increasingly complex and transformational demands, with a workforce that can’t free up time to catch up to the pace of change. Bureaucratic bottlenecks, layers of scrutiny, multiple approval stages, and complex governance significantly increase the time and effort required to deliver new things. These same obstacles make it difficult to agree priorities (what is important), and stop work when needed.

“A new way of working is the answer.”
“We need to be bolder and braver and make some decisions and be happy to get a few of them wrong.”

Defence leaders articulated the need for a radically different approach, with much greater use of digital and AI tools, to free up time and use people capability (across the whole force) to maximum effect. This requires a broader cultural change. For example, our discussions with HR leaders about AI adoption within the HR function kept coming back to not having the time and space to experiment with AI, in order to scope and develop ‘time saving’ tools.

JPMorgan Chase, for example, uses AI to take on the time-intensive tasks of financial document interpretation and analysis, revolutionising how its finance division operates.⁷

One of the key ways to free up capacity is to trust and empower the workforce, de-layering effort and delegating effectively – a key aim for leaders in Defence.

“We are brilliant at empowerment when applying mission command when we're overseas in dangerous places. We are superb at saying you should achieve this and how you do it is up to you. Then it's all taken away in headquarters.”

The challenge of empowerment on the ‘business’ side of Defence also reflects the complexity of the governance and organisational design – which demands alignment of leaders and teams in the many instances where accountability and decision making authority are ambiguous.

“There's just no straight line to deliver most things.”

Most importantly, Defence needs clarity about priorities, with resources allocated accordingly – so that low-priority work can be stopped, and important work can be resourced adequately.

“We're not clear as an organisation what we think the really important things are.”

Defence is not alone. Our global report concluded that these challenges are faced across industries in different forms, and goes on to recommend an approach for leaders navigating these tensions:

It’s about more than optimising performance and resources for current work. It’s about reclaiming worker capacity for net new work, improved well-being, and better responsiveness to market changes and challenges. Opening up worker capacity hinges on an organisation’s ability to implement two key things: a new corporate mindset about how we define and value slack—unscheduled, unassigned time that workers have autonomy over how to use—and a new mechanism to evaluate the best path to reducing or streamlining the tasks and processes that create unnecessary work.

Only 22 per cent of our survey respondents say their organisation is highly effective at simplifying work, however. To address the challenges created by an overload of unnecessary work, organisations can pause to take stock of work based with outcomes in mind, applying a work design framework focused on two dimensions: horizontal collaboration, which fosters cross-functional input, and vertical empowerment, which clarifies ownership and accountability across all levels.

Reclaimed capacity can benefit both workers and organisations: one does not need to come at the expense of the other.⁸

Trend 2: AI is revolutionising work

Tensions: incorporating AI into the workforce, finding the balance between augmentation (support for employees) and automation (replacing employees), understanding the impact on the employee value proposition, balancing control with empowerment

Deloitte’s Global Human Capital Trends report explores how organisations need to think through the ways they can help their people thrive in a world where AI is reshaping work and how we do it. An organisation’s employee value proposition (EVP)—sometimes called a workforce or human value proposition—crystallises the reasons people come to an organisation and stay with it. Revising the EVP for a new, AI-fuelled world of work will be essential to realising both human and business outcomes.

It starts with understanding the role of humans in a combined human/AI workforce. Organisations are grappling with questions about what must be done by humans, how work is changing, and whether some (human) jobs will change fundamentally or become unnecessary. In Defence, concerns about data, security and accuracy of AI tools are accentuated. The ‘human in the loop’ needs to be ready to manage the risks associated with AI. It is a complex and rapidly evolving picture, where UK Defence, like other organisations, has to navigate carefully in order to realise the benefits of new technology for both the organisation and the workforce.

Defence leaders we interviewed shared a belief that emerging technologies such as AI will help solve some of the capacity problems they are facing today. There is a strong appetite for change and embracing AI as a tool, particularly with a younger workforce who expect AI to be embedded in their work and the organisation. There is also a recognition that this is challenging, requiring the development of new skills and behaviours.⁹

“How do you get your people and your culture in the right place so that you can harness this opportunity and do so in a way that that gets the benefits and minimises the risk associated with some of these AI technologies?”

“We have to get better AI, but we also have to get better people. The employee value proposition needs to include upskilling people across the organisation on how to use AI in a way that is safe and productive and effective.”

However, a significant barrier to fully harnessing the potential of new technological tools like AI is simply that workers are not encouraged to experiment and figure out how to use the tools to their advantage (see previous section on ‘freeing up capacity’).

“We're just really behind the curve with this and how we use it as an organisation or even just use it as individual workers to help us be more efficient.”

In addition to augmenting human effort on the front line, AI has the potential to help with simplifying policy, cleansing data, and other ‘back office’ tasks that will free up time across the workforce.

“In the policy space I think we see a lot of opportunity for using AI to be more efficient, but we will always need the human intervention.”

The SDR calls for a shift towards more use of AI as an immediate priority.¹⁰ The vision to be bolder and adopt AI more widely and fundamentally is also the vision shared by Deloitte’s State of the State report.¹¹

The global report builds on this to highlight the transformative impact of AI on the employee value proposition, focusing on sharing the rewards of AI, fostering human capabilities and promoting a collaborative human-machine relationship. Successfully navigating this transition requires a strategic approach that prioritises human well-being alongside technological advancement, ultimately creating a mutually beneficial future.

Delivering this future requires attention to the human side of AI adoption – the skills people need to develop and operate in an AI-enabled world – and a recognition that this is part of the value proposition for civil servants and service personnel.

“If you don't move to a more digitally driven world where you put digital in the hands of your employees, particularly the ones that are under the age of 25, who just expect this, they're going to go and work for somebody else.”

Financial services organisation USAA has intentionally made the development of human capabilities in light of AI part of its EVP. Amala Duggirala, executive vice president and enterprise chief information officer of USAA, explains, “As a result of AI transformation, we have started planning for the skills of the future, and the ways to re-skill our workforce to align with these future skills. This will also involve the employee value proposition shifting to skills that are uniquely human—and moving away from skills that machines can master. Our planning and intent are oriented toward giving employees the opportunities and training to adapt as the work environment changes.”¹²

Achieving this vision in the SDR also demands that leaders navigate the complexity of transformation to an AI-enabled way of working, while recognising the particular challenges of Defence. This requires leaders to grapple with the tension between automation (replacing humans with AI) and augmentation (supporting humans with AI) – and think ahead to ‘convergence’ where humans and AI are seen as part of a single workforce. The use of AI also challenges Defence to think differently about decision making – where AI can provide valuable input, where military judgement is needed, and where input from a wider peer group with different points of view is needed. These are transformative ideas, requiring re-thinking of the nature of the ‘task’ or outcome, so that it can be broken down in different ways.

“The bit that we're still struggling with is the temptation to try and fit AI into existing processes.”

As always, Defence has unique considerations at the front line – demand for increased lethality and AI tools to support this, while maintaining appropriate levels of scrutiny and decision making by humans.

“Fewer people will be involved in the combat and lethality, but war is still a human endeavour.”

Our global report brought out the challenges facing leaders across industries, and an indication of the way forward:

The collaboration and possible convergence of AI and people make technology’s promise inextricable from human potential. That means we can’t realize the value of AI without accounting for its impact on the human experience—and we can’t create a compelling human experience without accounting for the impact of AI.

Leaders appear to be paying little attention to this shift, much less augmenting their EVPs to account for it. According to our 2025 Global Human Capital Trends survey, only 52 per cent of respondents view unlocking the potential of blurring human and tech boundaries as very or critically important. To the extent they have considered the people side of AI transformation, most have focused mainly on tactics—exploring use cases, AI adoption and change management, AI fluency, and the disaggregation of jobs into tasks to determine which to assign to machines or humans.¹³ Although organisations say reinventing their EVP to reflect increased human and machine collaboration is important, few are making great progress.

Organisations will need to continuously reevaluate and enhance their EVPs based on evolutions in technology and their impact on work and workers. Eventually, AI could even change organisations’ fundamental structures. Wharton professor Ethan Mollick observes that today’s structures have been built to accommodate finite human expertise and attention by delegating tasks and establishing layers of management to make decisions. To add expertise or attention, organisations had to add people, demanding a larger hierarchy.¹⁴ In the future, organisations could add expertise and attention without expanding the hierarchy—potentially unlocking worker autonomy like never before.¹⁵

Trend 3: Engineering human performance

Tensions: Assessing performance and/or potential, balancing personalisation with standardisation (processes, policies, career pathways, etc), integrating performance management with wider talent management processes

In Deloitte’s 2025 Global Human Capital Trends survey, only a third of executives (32%) said their approach to performance management enabled timely, high-quality talent decisions about high and low performers.¹⁶ A staggeringly low 2 per cent of Chief Human Resource Officers believe their systems are working well.¹⁷ This lack of confidence is echoed by employees - the global survey found 61 per cent of managers and 72 per cent of workers distrust their organisation's performance management. Only a quarter of organisations report their managers are very effective at enabling the performance of their teams.¹⁸ A Betterworks study found that 64 per cent of workers consider performance reviews unproductive and unhelpful for improving performance.¹⁹

When UK Defence HR leaders were interviewed, they felt that the performance management process itself is trusted and seen as ‘fair’ – the question is whether it is focused on the right things to develop the future workforce. Are we measuring people against the right (future) standard? Are we reflecting the agility needed in how we manage our workforce (both military and civilian)? Are we rewarding and incentivising the behaviours that will drive success in the future?

“Performance management is delivering the people of yesterday and not the people of tomorrow.”

Defence leaders observed that the performance management cycle tends to focus on completion of tasks/outputs to the satisfaction of the line manager (who is also being assessed on completion of tasks/outputs of their team). It is backward looking rather than forward looking. Particularly for military team members, this crucial input to promotion and assignment decisions (the annual performance report) may not put sufficient focus on skills, behaviours and growth potential.

“Performance management is talking about delivery, not necessarily about leadership and culture.”

We also heard a view that there is a tension between measuring and managing delivery (task focus), which is seen as a strength of the UK Defence performance management process, and measuring or enabling broader talent management across the organisation.

“What we should do far better is link it to career opportunities and succession planning. I think people see it as a paper-based exercise that doesn't really generate very much for them for the amount of effort that they've put in.”

UK Defence has an opportunity to incorporate skills into the performance management process as part of the implementation of a Skills-Based approach which will unlock greater organisational agility in filling capability gaps and improving retention.²⁰

“The current system does not always draw through the right talent. It often masks skills and talents that people have which don't get captured in the process and therefore the organisation misses the opportunity of being able to employ those skills.”

Our global report brought out this challenge and urged leaders to consider a broader approach to human performance:

To effectively drive human performance, we need to adopt additional practices and tools beyond performance management processes. We call this expanded approach ‘engineering human performance’. Engineering human performance includes a robust performance management process, but it goes beyond process to incorporate organisational culture and design, manager and people connections, tech and data, workforce practices, and workplace design.²¹

Consider the high-stakes world of Formula One, where McLaren Racing’s approach to performance extends beyond the track. Daniel Gallo, McLaren’s chief people and sustainability officer, emphasizes that the welfare of the team is as crucial as the performance of the car. McLaren has implemented various strategies to support the physical and mental well-being of its employees, including access to in-house doctors, psychologists, and fitness coaches for manufacturing staff and race teams alike. “We’re very clear that human performance equals car performance and that’s a fundamental competitive differentiator for us,” Gallo told Raconteur.²² Ultimately, Gallo’s methods show that investing in employee well-being and fostering a strong culture can lead to stronger business results. McLaren’s number-one finish in the 2024 Constructors’ Championship is a testament to the impact of these efforts.²³

An optimal performance management process is just one part of how UK Defence drives human performance. A holistic approach would incorporate skills-based career management and workforce planning, ongoing developmental feedback focused on behaviours and cultures, and leveraging technology to gather real-time data so that insights can be actioned immediately.