6 HR Trends and Priorities for HR Teams in 2026

HR is at a strategic inflection point as its role has shifted from being primarily operational to becoming a core driver of business resilience and growth. In 2026, this shift is accelerated by external pressures that demand proactive and innovative responses.

Economic uncertainty continues to shape organisational priorities, forcing HR leaders to balance cost control with investment in talent and technology. The cost-of-living impact is influencing employee expectations around pay, benefits, and wellbeing, making retention strategies more complex. At the same time, skills shortages remain a challenge, particularly in areas such as digital transformation and leadership development, where demand far outpaces supply. For more on digital transformation, particularly in operational teams, check our guide with practical strategies to ease your teams through the process.

These factors mean HR teams are shaping the future of work. Understanding the trends behind these pressures is essential for building strategies that keep organisations competitive and employees engaged.

These trends reflect both external pressures and internal priorities for large organisations. They highlight where HR leaders need to focus to navigate complexity and deliver value in a rapidly changing environment.

1. Employee Value Proposition and Pay Transparency

The Employment Rights Act is changing the employment landscape by introducing day-one rights and reforming zero-hours contracts. These changes give employees greater security and flexibility, which means organisations must rethink how they attract and retain talent.

Pay transparency is also becoming a legal requirement in many regions, making salary structures and progression pathways more visible than ever. This shift can strengthen trust but also exposes inconsistencies that need addressing. Recent UK labour market data from the Office for National Statistics shows there were around 1.17 million workers on zero-hours contracts in 2025, highlighting the scale of insecure work the reforms are targeting.

Practical tip: Review your benefits package and ensure it reflects what employees value most. Flexibility, enhanced pensions, and healthcare options are increasingly important for building a strong Employee Value Proposition that goes beyond salary. Download our template for EVPs to help you develop a competitive proposition for prospects. This expectation is echoed by Zoe Wilson, who stresses that employees now prioritise flexibility and benefits over pay alone:

“We’re not just happy with a salary anymore. We want so much more from our employers in terms of investment in me as a professional, employee benefits that make my work-life balance easier. The flexibility, there are so many stats saying people would take less money over flexibility.”

Zoe Wilson, Director of ReThink HR, Attracting the Best Talent, part of our Do the Best Work of Your Life series

2. Manager Capability and Human-Centric Leadership

Many organisations are facing a management capability gap. Managers are under pressure to lead through uncertainty, support wellbeing, and maintain engagement, yet many lack the skills to do so effectively. Mental Health UK’s Burnout Report found that 25 per cent of UK employees do not feel their manager has the necessary skills to support their mental health at work, indicating a significant capability deficit at the core of people leadership. 

Leadership today requires more than technical competence; it demands empathy, adaptability, and an understanding of mental health challenges in the workplace. Zoe Wilson explains why a one-size-fits-all approach to management often fails:

“Managers often treat people exactly the same through processes like probation. One person loves regular meetings and detail, another feels micromanaged and not trusted. Two different styles, two different outcomes, one thrives, one leaves.”

Zoe Wilson, Director of ReThink HR, Performance and Progression, part of our Do the Best Work of Your Life series

Action point: Invest in leadership development programmes that focus on human-centric skills. Coaching, emotional intelligence, and resilience training can help managers create inclusive cultures and support their teams through change.

3. Skills-Based Hiring and AI Recruitment Challenges

Skills-based hiring is gaining traction as organisations move away from traditional qualifications and job titles. This approach helps address talent shortages by focusing on capabilities rather than credentials. Data from TestGorilla’s The State of Skills-based Hiring 2025 shows that around 85 per cent of UK employers now use skills-based hiring methods, a substantial increase from 56 per cent in 2022, and 77 per cent use skills tests to assess candidates, signalling a clear move away from traditional qualifications.

At the same time, about 61 per cent of UK employers report using AI in their hiring processes, highlighting how technology is reshaping recruitment while also elevating concerns about fairness and bias in decision-making. Oli Quayle captures the efficiency AI brings to recruitment:

“AI doesn’t have to sleep, it doesn’t wake up having had a bad day. There are thousands of applications that come in, and the AI doesn’t care that it’s drowning in admin. You can give it really simple instructions, and because it understands natural language, it can extract and compare in record time.”

Oli Quayle, AI Evangelist at The Access Group, Recruiting the Best Talent, part of our Do the Best Work of Your Life series

Practical tip: Use technology to streamline recruitment but keep human interaction at critical points. This ensures candidates feel valued and helps maintain transparency in decision-making.

4. Internal Talent Marketplaces and Upskilling

Retention is as much about opportunity as it is pay. Employees now, more than ever, care about their benefits and extras, as well as the overall company direction and values. Our article on employee benefits as alternatives to pay rises detail how much fully implemented and adopted benefits can save employees and employers.

Internal talent marketplaces allow employees to explore new roles and projects within the organisation, reducing the risk of losing talent to competitors.

According to the Drewberry Employee Benefits And Workplace Satisfaction Survey, only 12 per cent of employees say they’re very satisfied with their benefits package, and 70 per cent say access to training and development influences their decision to stay with an employer. This underscores how benefits and growth opportunities can help drive retention. Upskilling is equally important, but time for learning is limited, so organisations need to make development accessible and relevant.

Action point: Create personalised learning paths and use AI-driven tools to recommend training that aligns with career goals. This approach helps employees see a clear future within the organisation.

5. Flexible Working as a Strategic Imperative

Flexible working is now a day-one right in the UK. Employees expect options for remote work, compressed hours, and even four-day weeks. While flexibility improves engagement, it also creates challenges for collaboration and career development, especially for early-career employees who benefit from in-person mentoring. Zoe Wilson reflects on how remote work has transformed the employee experience:

“Sometimes you go through your whole employee life cycle never actually meeting your colleagues, which is something we wouldn’t have dreamed of. But that’s the reality now with remote interviews and onboarding processes.”

Zoe Wilson, Director of ReThink HR, Mastering the Employee Lifecycle part of our Do the Best Work of Your Life series

Around 28 per cent of UK employees in 2025 working in hybrid arrangements and another 13–16 per cent working fully remotely, reflecting how widespread flexibility has become and how it shapes employee expectations. Government research also show that around 40 per cent of workers now reject roles that don’t offer flexible hours, signalling the strength of this preference in decisions about where to work.

Practical tip: Develop hybrid working policies that balance flexibility with opportunities for connection. Consider structured office days for team building and learning.

6. AI and HR Tech: Promise vs Reality

AI is almost inescapable when it comes to HR, but the gap between expectation and reality is widening and causes issues within organisations. Vendors often market advanced features that sound transformative, yet many organisations struggle with implementation and ethical concerns. Oli Quayle shares a candid view on the frustrations of overcomplicated tech stacks: “I’m spending too much time on the tech, not enough time with my people. Frankenstack was a great intention, the promise didn’t quite live up.”

Shadow IT is another emerging risk. A significant portion of the workforce is already using tools like ChatGPT with company data (16%), often without oversight. This raises questions about compliance, security, and governance. Meanwhile, confidence in AI reliability is slipping, with more HR leaders expressing doubts compared to last year.

Despite these challenges, AI can deliver tangible benefits when implemented thoughtfully, such as reducing administrative workload and improving content creation. However, employees still want human oversight for critical decisions like redundancies and disciplinary actions.

Action point: Evaluate HR tech investments carefully. Look beyond vendor promises and assess functionality, compliance, and integration. Communicate clearly about AI’s role in your organisation, focusing on job security and ethical use to build trust. 

Beyond the core HR trends shaping 2026, large organisations are facing new priorities that go deeper than traditional workforce management. These areas reflect growing regulatory requirements and rising employee expectations for purpose-driven, inclusive workplaces.

ESG and DEI Integration

Environmental, Social and Governance (ESG) performance is a key driver of employee engagement and brand reputation. HR teams are now expected to align people strategies with ESG goals, ensuring that sustainability and social responsibility are embedded in everyday practices. Candidates choose companies based on how their personal values align with organisational values.

Mandatory pay gap reporting is expanding beyond gender to include ethnicity and other diversity metrics. At the same time, inclusion efforts are evolving to address neurodiversity, recognising the value of different thinking styles in innovation and problem-solving. These changes require HR leaders to create frameworks that genuinely support equity and belonging.

Action point: Audit your current DEI and ESG initiatives. Identify gaps in pay transparency, accessibility, and inclusion, and develop measurable goals that link directly to organisational values.

Mental Health and Wellbeing Overload

Rising expectations mean HR teams are now responsible for managing mental health support at scale, often without additional resources. This includes addressing stress, burnout, and the impact of economic uncertainty on financial wellbeing. Discover strategies on how to support your employee’s financial wellbeing in our blog.

Larger businesses must balance proactive wellbeing strategies with realistic delivery. Employees expect more than token gestures; they want access to meaningful support such as mental health resources, flexible working arrangements, and training for managers to recognise early signs of distress. Take some data from our Employee Benefits Impact Report which portrays the reality of engagement with benefits across 2,000 companies, particularly data pertaining to the utilisation of Employee Assistance Programmes:

• Online counselling is the dominant channel with 58.9% utilising 
• Face to face counselling up from 16.1% to 39% of sessions

These stats indicate that employees value deeper therapeutic relationships and workplace mental health stigma continues to reduce. The support needs are also evolving, with significant financial pressures on people diversifying the support required. Large organisations should continue to invest in promoting holistic support and EAP delivery, which can help ensure that all employees, no matter where they’re based, have access to the support they require.

Action point: Develop a wellbeing framework that combines preventative measures with responsive support. This could include mental health first aid training, confidential counselling services, and clear communication about available resources.

HR leaders need to adopt a proactive, strategic approach. Preparing for a productive 2026 requires a combination of mindset shifts, capability building, and smart investment decisions. 

1. Reframe HR’s value proposition: Link HR initiatives to measurable business outcomes such as productivity, retention, and cost savings to demonstrate impact.
2. Invest in capability: Upskill managers and HR teams in leadership, digital literacy, and resilience to meet the demands of a changing workplace.
3. Build cross-functional partnerships: Partner with operational leaders to embed cultural change and ensure alignment with business priorities.
4. Be selective with HR tech: Choose technology based on functionality, compliance, and integration rather than vendor hype, and pilot before scaling.

If you are looking for effective ways to choose new HR tech, check out our guide to choosing HR software.

HR leaders face a period of rapid change, and the decisions made now will shape how organisations compete for talent and manage complexity in the years ahead. Responding to these trends is urgent, but it is also an opportunity.

Businesses that strengthen their HR strategy, invest in capability, and choose technology wisely can create a real advantage in attracting and retaining the best people.

Find out how our HR software can support your strategy.