As we move toward 2026, the demands placed on HR are greater than ever, especially as economic and marketplace uncertainty are clouding the road ahead. The HR trends shaping this landscape include the continuing (and still hesitant) adoption of artificial intelligence, the relentless pressure of rising costs, the renewed urgency of leadership development, and a sharper focus on skills and culture.
Key HR Trends for 2026
- The cautious but ongoing adoption of artificial intelligence (AI) across HR functions.
- A growing focus on skills development to close persistent talent gaps.
- Renewed urgency around leadership development, especially for mid-level managers.
- A need for strategic pay planning amid economic volatility.
- Major shifts in benefit strategy as healthcare costs rise.
Together, these trends point to a single defining theme for HR in 2026: adaptability. Businesses that can evolve their strategies by leveraging technology responsibly while investing in culture and capability, will be best positioned to thrive in a competitive and uncertain marketplace.
AI in HR: What's Working and What's Not in 2026
When we wrote about AI in our 2024 HR Outlook, we said, “AI is set to impact almost every facet of the HR function [but it’s] important to approach the adoption of AI with caution.”
Two years later, that basic sentiment remains true. Artificial intelligence has dominated workplace conversations for several years now, yet many organizations remain uncertain about how it truly fits into HR, and as many as 95% of pilot tests are failing to bring about the transformation AI enthusiasts were promising.
As a result, analysis by Gartner suggests that no Fortune 500 companies will eliminate human agents even by 2028, and half with plans to reduce headcount through AI alternatives will end up dropping such plans over the next two years. “At the end of the day do we think there will be fewer agents? Yes. But a fully agentless future is not going to happen,” Kathy Ross, Senior Director Analyst in the Gartner Customer Service & Support practice, told HR Dive.
Still, it seems clear that AI is here to stay in some capacity, and it remains poised to be a net job creator. The World Economic Forum projects that by 2030, AI will displace 92 million roles while creating 170 million new ones. The net result is a gain of 78 million jobs worldwide.
For HR in 2026, the question becomes how to source the skills needed to make AI work, and how to ensure that AI complements and makes human talent more effective, rather than becoming a time and resource sink. "Don't invest in AI for the sake of investing," says Martin Birch, CEO of document management firm ibml. "Do it with human intelligence in mind. Invest in tools that five your team more time for intrinsically human tasks."
Why the Skill Gaps Will Challenge HR in 2026
Another, related HR trend heading into 2026 is the ongoing talent mismatch. On the surface, labor markets have cooled, but that does not mean the skills gap has closed.
“We’re not going to have the people to do the work,” RedThread Research co-founder Stacia Garr said last month at the HR Tech conference in Las Vegas, arguing that skills gaps and mismatches are becoming acute. Even when the market is flush with job candidates, that doesn’t mean those candidates have the right job skills.
Yet CEO priorities seem to be shifting away from employee investments. Recent research found that 56% of CEOs identified growth as their top concern, but only 21% cited workforce priorities. Employees are slipping down the executive agenda. Yet the contradiction is obvious: businesses cannot meet growth goals if they fail to cultivate the right talent and skills.
There’s tension between those competing priorities that companies will have to navigate in 2026. Most of that will fall to HR. “We are the ones who have to hold up what people need,” said Garr.
Leadership Development and Why Mid-Level Managers Matter in 2026
Of all the skills gaps, leadership may be the most consequential. According to MIT Sloan Review, midlevel managers play a surprisingly critical role in shaping culture. “Specifically, we found that the most successful midlevel leaders find ways to link the ‘big-C’ culture of their organization — its official set of values — with the ‘small-c’ culture that plays out in the narrower and vibrant daily patterns of interaction,” researchers wrote.
Those managers understand that culture is a performance driver. However, they often struggle with execution. Going into an economic environment where companies will likely need to get more work done with a smaller headcount. And given that a strong culture tends to predict organizational performance, it’s crucial to get this right by empowering mid-level managers with the know-how they need.
The future of HR depends heavily on preparing leaders to foster collaboration, resolve conflicts, and sustain engagement across hybrid or dispersed workforces.
How Employers Are Pay Planning in an Uncertain Economy for 2026
If 2026 has a theme, it might be caution. Salary planning illustrates the point. According to Payscale’s 2025-2026 Salary Budget Survey, 68% of employers expect salary budgets to remain unchanged from 2025. The average projected increase is 3.5%, down from 3.6% this year. That is only modestly above the expected 2.7% cost-of-living adjustment.
“Inflation is starting to creep back up with economic uncertainty mounting and labor markets shifting in favor of employers, which may mean that pay increase plans will need to be revisited,” says Ruth Thomas of Payscale.
Flexibility is the watchword. Organizations must stay nimble in case inflation or labor market pressures accelerate again. Pay will remain one of the most closely watched HR trends as the economy enters another unpredictable year.
Rethinking Employee Benefit Strategies for 2026
If pay budgets are steady, benefits are anything but. Employers are staring down the largest healthcare cost increase in two decades. The Business Group on Health projects a median 9% percent rise in costs for 2026, the largest in over a decade.
Faced with these pressures, organizations are rethinking their benefits strategies. A report from WTW found that two-thirds (63%) of employers plan to reallocate or rebalance benefits spending:
- 73% will address costs by enhancing value or switching to better-value vendors.
- 44% intend to tackle high-cost medical conditions.
- 37% will switch to using preferred provider networks.
That’s not all. Other tactics include renegotiating vendor contracts, limiting coverage for costly weight loss medications, and even exploring stipends for employees to purchase their own individual coverage. In short, “employers are taking a step back and looking to focus on what drives real value for employees and the business,” says Jeff Levin-Scherz, population health leader of the health and benefits practice for North America at WTW.
The Business Group on Health agrees: “This once-in-a-generation combination of events places employers at a crossroads. Employers need to take broader and bolder actions for themselves and their workforce.”
What All These HR Trends Mean for the Future of HR
Looking across these shifts (AI adoption, the skills gap, leadership readiness, pay, and benefits) one theme stands out: adaptability. The future of HR will not be defined by any single technology or policy change but by how effectively organizations respond to complexity and uncertainty. HR leaders must prepare their organizations for volatility while maintaining focus on culture and people. Business leaders should see these HR trends not as HR-only concerns but as strategic imperatives in 2026 and beyond.
CoAdvantage, one of the nation's largest Professional Employer Organization (PEOs), helps small to mid-size companies with HR administration, benefits, payroll, and compliance. To learn more about future-forward CoAdQuantum HCM platform, designed to enable employers to meet tomorrow's needs today, contact us today.
FAQs on 2026 HR Trends
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