Under Pressure: Making the Case With HR
by PJ Manalo, Editorial Contributor
If you’re leading HR in an INGO or multilateral right now, you don’t need anyone to tell you that the ground has shifted. Funding conversations that used to be annual are happening quarterly—or monthly. Staffing decisions that used to be strategic are suddenly triaged. At the same time, pay transparency expectations—especially in the EU—are no longer theoretical. They are becoming operational requirements, with real consequences for how organizations explain and defend pay decisions.
The reality is that these aren’t two parallel challenges. They converge on a single question that sits squarely with HR:
Can your organization demonstrate how work is structured, how pay is determined, and how individual outcomes are justified—under pressure and under scrutiny?
This article isn’t about rehashing problems—you already know what they are. It’s about forward motion. The sector’s experience during the funding shocks of 2025 offers a useful snapshot of how organizations reacted in the moment. But what will move organizations forward now is understanding where their HR system is resilient, where it is exposed, and where to act next. That is where HR Effectiveness comes in.
Funding Contractions Forced Structural Decisions—Fast
In the latter half of 2025, many development organizations faced an abrupt funding shock that forced immediate workforce decisions. Birches Group conducted a pulse survey with members of its NGO Advisory Group to capture how organizations responded to the disruption.
The headline isn’t surprising—but it is instructive. Most organizations moved quickly to restructure: layoffs, furloughs, role redesign, and organizational restructuring were widespread. Decisions tended to rely more on roles, locations, and programs than on employee-specific criteria such as performance or tenure. In other words, organizations reached first for structural levers, not individual ones.
That pattern connects directly to what many HR leaders experienced on the ground. When the timeline is compressed, and the stakes are high, three signals tend to surface quickly—not as “best practices,” but as practical realities:
- Organizations act quickly—even without perfect systems—because delay is not an option.
- Compensation changes, development pauses, and blunt equity measures are used to preserve internal fairness when choices are limited.
- Trust is protected less by policy detail and more by clear, repeated communication.
Workforce Actions Taken During the 2025 Funding Shock
86% of respondents have implemented some level of restructuring, including position elimination, layoffs, reclassification, or redesign of roles.
53% have made changes in compensation and/or benefits, including freezing or reduction of salaries, allowances, benefits, and reduced work hours.
53% of organizations have paused promotions and learning and development activities.
This snapshot matters because it revealed something important for HR leaders: when funding contracts are suddenly cut, the organization leans—sometimes heavily—on whatever job architecture, role clarity, and pay logic already exists.
What does this mean practically? When decisions are role-based, the quality of your job architecture is no longer an HR “nice-to-have.” It becomes the backbone of fairness, speed, and credibility.
A Practical Example: Downsizing, Then Rebuilding (Anne’s Story)
One organization in the NGO Advisory Group not only experienced the funding shock—it also took the HR Effectiveness Assessment and then participated in a walkthrough of its results. The assessment wasn’t the point by itself. The point was what it enabled: a structured conversation about what had to come next.
Anne, the Global Compensation Specialist who took the assessment on behalf of their organization, said:
After the cuts, we didn’t just lose headcount—we lost certainty. We needed a clear picture of what capacity we still had, what it cost, and whether our structure still matched the programs we needed to win.
That organization’s challenge was not simply “How do we reduce cost?” It was, “How do we rationalize and rebuild?” They needed to understand the following:
- What remained in the post-downsizing structure (roles, levels, occupations, and gaps)
- How remaining roles mapped to the work funders would now support (program shifts and new portfolio priorities)
- Whether their pay structure could do two things at once: remain competitive enough to secure talent in a tightened labor market, and remain credible and affordable to funders
And in this situation, the sequence mattered. Anne put it plainly:
We kept wanting to jump straight to pay decisions, but the assessment made it obvious: we had to get Jobs right first. If the job architecture isn’t aligned to the work, everything downstream becomes an argument.
That is exactly the kind of prioritization HR Effectiveness is meant to prompt—not a long list of issues, but clarity on where to begin.
EU Pay Transparency Will Test HR
If funding pressure exposes stress fractures, pay transparency will illuminate them.
The EU Pay Transparency Directive is often framed as a reporting exercise—gender pay gaps, pay ranges, and disclosures. But transparency doesn’t create questions; it forces answers to questions employees, donors, regulators, and boards will increasingly ask:
- Why is this role paid at this level?
- Why do two people in the same band have different salaries?
- What governs starting pay and salary adjustments?
- How do recruitment, learning and development, and performance actually connect to pay outcomes?
If those answers are informal, inconsistent, or manager-dependent, transparency doesn’t simply reveal gaps—it amplifies them.
Unlike funding shocks, pay transparency is not a temporary disruption. It is a permanent operating condition. Without a structured solution and disciplined, accountable follow-through, the gaps will widen.
Not Just Compliance: Funders are Looking at People Systems
Pay transparency is often treated as “EU compliance.” But the underlying issue—whether an organization can demonstrate fairness, consistency, and control—extends beyond regulators.
Many funders already examine people systems as part of due diligence and risk assessment. For example, the Global Fund to Fight AIDS, TB, and Malaria uses capacity assessment frameworks that include human resources systems and staffing capacity as part of implementation readiness, and it reinforces integrity expectations through due diligence processes for implementing partners and key actors.
The point is not that every funder will ask the same questions. The point is that, in a tighter funding market, the ability to show disciplined HR systems increasingly reads as a signal of operational maturity—and therefore of investment-worthiness.
2025 was Just the Start—And Simply Reacting is Unsustainable
The late‑2025 crisis survey is useful precisely because it is limited. It captured how organizations reacted under acute pressure. But it’s not enough to just react.
The real question now is, “What did we do in the crisis?” It is:
Are our HR systems strong enough to support the next decision—before it becomes a crisis?
The Pivot: From Tactics to Fundamentally Good HR
This is where the conversation must shift.
In periods of strain, HR teams understandably focus on coping: reducing headcount, freezing pay, and holding morale together. Those actions are necessary—but they are tactical.
The next step is about fundamentally good HR:
- making pay and workforce decisions grounded in strategy and transparency
- making differentiations explainable because they are anchored in demonstrated capacity and widely observable performance across individual staff
- making outcomes defensible—to staff, to leadership, and externally, to donors and funders
This is exactly the gap that the HR Effectiveness Assessment is designed to surface.
Why HR Effectiveness Matters Now
Across 87 organizations—a mix of targeted participants from the INGO, international organization, and governmental sectors—that took the HR Effectiveness Assessment through the end of February 2026, a consistent picture emerged.
The overall average score was 57.8 out of 120, placing the cohort in the Emerging (near Established) category. The distribution is revealing:
In other words: many organizations have real strengths, but most are still building the coherence needed to be consistently defensible under pressure.
Waste vs. Abuse: Where Risk Tends to Live
The HR Effectiveness framework makes an important distinction that becomes highly practical in turbulent contexts: waste tends to arise from inefficiencies in structure; abuse tends to arise from inconsistencies in capacity decisions.
- Workforce Formation (Jobs + Pay) is about structure—job architectures, job evaluation, market positioning, and salary scales. When these are weak or misaligned, organizations experience waste: unclear roles, mismatched staffing, distorted pay relationships, rework, and chronic inefficiency.
- Workforce Management (Skills + Performance) is about capacity—how individuals are assessed, developed, and recognized. When these are weak or inconsistent, organizations experience abuse (or at a minimum, perceived unfairness): subjectivity in hiring and pay decisions, opaque progression, biased performance outcomes, and inconsistent treatment across managers and locations.
This is why the assessment is more than a “score.” It shows where risk accumulates—and why. It helps organizations prioritize risk mitigation (where vulnerabilities are high) and strengthen operational effectiveness (where foundations can be leveraged).
What the Data Shows (Overall Cohort)
Three findings matter most for the current environment.
- Principles are stronger than Policies and Tools
Across the cohort, organizations were strongest on Principles (the “why”; 51% overall group average), with Policies (46%) and Tools (49%) lagging behind.
That is the core “intent vs. execution” gap: many organizations agree on fairness and merit in principle, but lack the operational methods and instruments to apply those principles consistently.
- Workforce Formation is stronger than Workforce Management
This helps explain why structural decisions about Jobs and Pay are often easier than individual differentiation.
This difference is not enormous—but it is consistent. Under pressure, organizations tend to have more “architecture” (30.6 out of 60 for the cohort average) than “differentiation logic.” Organization structures and pay scales tended to be strong. How individuals are recognized for their skills and achievements? Not so much.
- Skills is consistently the weakest area
Across quadrants, Skills was the weakest on average:
- Skills average: 12.5 (out of 30) → Emerging
- Within Skills specifically:
- Principles: 54% (stronger intent; Established)
- Policies: 35% (weak operational method; Emerging)
- Tools: 38% (limited or disconnected instruments; Emerging)
This is why pay transparency becomes so hard so fast.
Many organizations can show the range. Few can consistently justify why one person enters at one point, and another enters at another; why someone progresses; why the organization is confident that differentiation reflects capability rather than managerial discretion.
Overall, this is not a critique. It is a roadmap. A roadmap can have stops along the way. You can prioritize. You can sequence. You can focus first on Jobs, then Pay, then Skills, then Performance. But the direction must be clear—and the prioritization must be disciplined—because the four areas are connected. If you fix one quadrant in isolation while another remains fragile, pressure will simply reappear somewhere else.
What Action Looks Like in Practice
The purpose of HR Effectiveness is not to generate another report. It is to prioritize action.
Three practical implications follow.
- Know where you stand—before you redesign
Without a clear picture of maturity, organizations often jump straight to solutions: rewriting policies, redesigning structures, launching tools. Unfortunately, in Birches Group’s experience, the initial problem statement is rarely the real problem. The assessment helps answer a simpler question first: Where are we already strong, and where are we exposed?
That clarity prevents over‑engineering—and helps avoid false confidence.
- Focus effort where risk and visibility intersect
The assessment consistently shows where pressure concentrates:
- Jobs and Pay anchor credibility during restructuring.
- Skills and Performance anchor credibility under transparency.
You do not need to fix everything at once. You need to fix what will be tested next.
- Make HR logic visible—and trusted
Ultimately, effectiveness is about visibility. Not perfection.
Can you explain your job structure? Your pay logic? Your progression rules?
But it shouldn’t only be HR that can explain these points.
At the Integrated level of the HR Effectiveness Assessment, systems are not just present—they are trusted. Trusted by staff and management, and credible to governance and donors. That trust is evident when:
- Managers anchor their decisions on consistent frameworks and are held to account
- Staff can describe the rules with confidence (even if they don’t love every outcome)
- Resource development and leadership teams can communicate workforce systems to donors as evidence of accountability, fairness, and prudent use of funds
When the logic is widely understood—not locked inside HR—it becomes a strategic asset.
Are You Ready for What Comes Next?
The sector has lived through the shock phase. But it is foolish to assume the worst is over—or to presume to know where the next disruption will come from. The question now is preparedness: how well-positioned is your organization to weather the next disruption?
Taking the HR Effectiveness Assessment is a concrete way to move from reaction to intent—from anecdote to evidence. It gives HR leaders a structured view of maturity across Jobs, Pay, Skills, and Performance, and a common language to engage leadership in decisions that are coming regardless.
As one HR leader who took the assessment put it:
Taking it with colleagues across HR functions helped us stop debating symptoms. We could finally agree on where the system was breaking—and what to tackle first.
And another noted:
It gave me a way to structure the conversation with non‑HR leaders. Instead of ‘HR problems,’ we were talking about organizational risk and operational credibility.
Others across the sector have already taken this step—not because conditions were ideal, but because clarity was needed.
How Does HR Thrive Under Pressure?
Thriving under pressure does not mean having perfect systems. It means having clear logic, disciplined priorities, and tools that hold when decisions get hard.
If pressure is the test, HR Effectiveness is the diagnostic that helps you prepare.
The terror of knowing rarely comes from sudden crisis. It comes from recognition—from seeing the system as it truly is, understanding what it can and cannot support, and realizing that inaction now carries its own cost.
Are you ready to take the assessment—or to talk with us about what your results mean and what to do next?
Take the HR Effectiveness Assessment: Understand your maturity, identify your priorities, and move forward with confidence
As the Senior Consultant for business strategy and product design, PJ focuses on the ongoing evolution of our products and services and provides consulting expertise in organization design, job evaluation, scale design, training, skills assessment, and performance management. PJ began his Birches Group career as a survey analyst in 2006.
