Flexible work was supposed to improve the employee experience.
And in many ways, it has.
Flexibility is now far more embedded in how organisations operate than it was even a few years ago. Hybrid work is common, digital collaboration is seamless, and advances in AI are rapidly reshaping how work gets done.
Yet despite this progress, new global data suggests something important is being missed.
Mercer’s 2026 Global Talent Trends research shows employee thriving has dropped sharply to 44% globally – down from 66% in 2024. In Australia, the decline is even more pronounced.
At the same time, organisations are under increasing pressure to lift productivity, accelerate transformation and navigate ongoing economic uncertainty.
So if flexibility is more embedded than ever, why are so many employees struggling?
That question sat at the heart of a recent conversation between Emma Walsh, CEO of Parents At Work, and Cynthia Cottrell, Partner, Workforce Solutions and Digital at Mercer, a Marsh Business.
Their discussion revealed an important shift in thinking: flexibility itself is not the problem. The challenge is whether organisations are redesigning work, leadership and culture in ways that allow people to genuinely thrive.
Flexibility is no longer a workplace perk
As Emma reflected during the conversation, recent fuel pressures and ongoing global disruption have once again pushed flexible work back into the spotlight.
These moments reinforce something many organisations are now recognising: flexibility is no longer simply an employee benefit or a work-from-home policy. Rather, it’s a business capability.
Organisations increasingly need the ability to adapt quickly to changing economic, operational and workforce conditions, while still enabling people to perform at their best.
As Cynthia explained:
“Flexible work should not be seen as something that happens during pandemics or when fuel prices are too high – it should be seen as a competitive advantage for organisations.”
Importantly, organisations that embedded flexibility before COVID have often navigated ongoing disruption more successfully because flexibility became part of how work was designed, not simply a temporary response.
The issue isn’t flexibility – it’s how work is designed
Despite this progress, there is still a gap between how flexibility is intended to work and how it is actually experienced day-to-day.
Emma describes this as the “unstickiness” of flexible work – where the idea is sound, the policy is in place, but something doesn’t quite translate into practice.
Cynthia pointed to leadership as a key part of that challenge. At Marsh, flexibility has long been part of how work is designed, but it hasn’t been left to chance. There has been a deliberate focus on equipping leaders to manage flexible teams and creating an environment where people feel trusted to work differently:
“It’s about making it OK to work different hours with no judgement. People should feel safe to do what they need to do and still deliver.”
What becomes clear is that flexibility doesn’t fail because the idea is flawed. Rather, it falters when the surrounding systems, behaviours and expectations don’t shift with it.
This reflects a broader shift occurring across leading organisations: moving away from measuring visibility and time spent working, towards measuring contribution, outcomes and impact.
The organisations making the most progress are focusing on:
- Training leaders to manage flexible and hybrid teams effectively
- Building psychological safety and trust
- Designing work around outcomes rather than hours
- Giving employees greater agency in how work gets done
- Creating clearer alignment between flexibility, productivity and wellbeing
In other words, flexibility works best when it is embedded into culture, leadership and work design, and not treated as a standalone policy.
Thriving has declined but flexibility can be part of the solution
Mercer’s findings point to a broader set of pressures shaping employee experience today.
Rising cost-of-living pressures, burnout, financial stress and declining job satisfaction are all contributing to lower levels of thriving.
At the same time, organisations are asking employees to navigate significant transformation, often while learning new technologies and adapting to AI-enabled ways of working.
As Cynthia noted:
“You’ve got a lot more people who are really unhappy in their jobs, but fewer opportunities to move, and at the same time, organisations are asking for higher levels of productivity.”
This creates a difficult dynamic. Organisations are pushing forward with transformation, but the human experience of work is becoming more strained.
This is where flexibility becomes increasingly important, not less.
The data reinforces that thriving is influenced by far more than where people work. It is shaped by whether people feel trusted, supported, valued and able to contribute sustainably alongside the realities of modern life.
Cynthia describes a shift towards what Mercer calls a “life experience” contract. This is one that recognises employees as individuals with broader lives, responsibilities and aspirations:
“It’s less about when or where you work, and much more about what you are actually contributing.”
In this model, flexibility becomes central to how organisations create value, not just for the business, but for their people.
AI is changing the shape of work
Overlaying all of this is the rapid acceleration of AI.
Rather than simply improving efficiency, AI is changing how work is structured. Tasks can be broken down, distributed and completed in more flexible ways – often outside traditional patterns.
Cynthia describes this as a turning point:
“You’re not going to hit productivity goals by imposing old ways of working.”
In fact, AI is making flexibility more important, not less. As work becomes more fluid, organisations need to create conditions where people can operate at their best, whether that’s early in the morning, late at night, or across different roles.
Rethinking how work is designed
This shift is also driving a move towards more skills-based ways of working.
Instead of anchoring work in fixed roles, organisations are starting to think more about how individual skills can be applied to specific tasks. This opens up new possibilities for how work is allocated, how careers develop, and how people participate in the workforce.
Cynthia sees this as a particularly important shift for flexibility and a critical enabler of more inclusive, family-friendly work:
“It opens up a world of possibilities for how we work – especially for people who need to work in different ways at different points in their lives.”
For organisations, it creates a more adaptable model. For employees, it creates more choice.
What will matter most from here
Looking ahead, Cynthia believes we are not far from a point where flexibility becomes embedded for everyone.
As access to AI becomes universal, the differentiator will no longer be technology. It will be how organisations create environments where people can thrive.
“The only differentiator organisations will have is their culture and how well their employees are thriving in that environment.”
At the same time, employees will have more options than ever before including the ability to work across multiple roles or operate independently.
In that context, flexibility becomes central to staying competitive.
A final thought
The decline in employee thriving is a warning sign.
Flexibility alone is not enough. Hybrid work and flexible policies can support better work, but they do not automatically create healthier employee experiences. When flexibility sits alongside rising workloads, constant change and outdated leadership practices, burnout and disengagement can still grow
The question is no longer whether flexibility works. The question is whether organisations are truly set up to make it work in practice, not just in principle.
Because if the gap between intention and experience remains, flexibility will continue to fall short of what it promises. And in a world where people have more choice than ever, that gap is one organisations can’t afford to ignore.
