HR leaders are facing significant changes, with new technologies, shifting employee expectations and globalisation demanding strategy and resilience. Knowing what to expect can help leaders get in the right mindset and craft strategies to guide the organisation through these changes.

These are the top HR trends and challenges you’ll need to prepare for in 2026.

1. Building a Skills-Based Organisation

As the “great resignation” transitions to the “great stay,” companies and HR teams are focusing on developing internal talent rather than on scrambling to hire new workers.

With technologies like AI and machine learning becoming mainstream, organisations must prioritise upskilling and reskilling initiatives for their employees to keep pace with new industry standards and expectations.

While skills development is an investment, it’s a net positive for all parties. Workers can perform their jobs more effectively, and businesses benefit from this enhanced expertise. Employees encouraged by their companies to learn new skills are 47% less likely to seek another job, hence improving retention rates.

2. Navigating the AI Revolution

AI has penetrated nearly every field and industry, and HR is no exception. Companies are integrating various AI technologies into their processes, with 91% of global executives actively scaling up their initiatives. HR teams and businesses experience numerous benefits from AI-powered automation, data analysis and other functions.

Yet, AI in HR adoption also brings new challenges, like algorithmic biases, data privacy concerns and ethical questions about replacing human judgment. To address these risks, HR professionals must combine technology adoption with human oversight and clear usage guidelines.

Teams must understand the capabilities and limitations of AI in HR and communicate company guidelines to concerned stakeholders. For example, if a company uses AI tools to evaluate job applications, hiring managers should inform candidates how the technology works and how their information is handled.

3. Embracing a Booming HR Tech Market

The global HR tech market reached a value of $43.66 billion USD in 2025, and experts believe it will increase to $81.84 billion by 2032. This trajectory likely involves adopting many new HR tech tools, including AI, analytics and automation.

HR teams will need to master discernment alongside integration and data management. You will need to ensure that different tools work together smoothly while also addressing concerns around security and compliance.

4. Ensuring Holistic Compensation and Employee Well-Being

Compensation strategies are evolving. Employees, especially those from younger generations, expect fair compensation from their employers.

Competitive salaries and health insurance are baseline expectations. A company truly stands out by offering comprehensive compensation and benefits, which include the following:

Flexible work arrangements
Paid time off
Mental health and wellness support
Equipment and/or travel allowances

With companies hiring global talent and economic pressures like inflation, workers increasingly seek packages that go beyond the basics. HR teams play a key role in designing compensation terms that attract talent while aligning with business needs.

5. Strengthening Employer Branding

Reputation as an employer matters, especially in competitive talent markets. Branding is crucial to maintain it — consistency creates a strong identity and leads to 33% higher revenue. Social media and employee reviews can have a significant impact on brand and reputation

Aside from a good salary, modern candidates want a sense of inclusion and a positive company culture. HR professionals must align internal culture with external messaging. For example, use real employee stories to create compelling brand narratives that strengthen the organisation’s position in the marketplace.

6. Balancing Global Strategies and Local HR Laws

As more companies operate internationally, HR teams must manage global strategies while respecting local employment laws. What works in Singapore may not work in Japan or Germany. Maintain consistency in company culture while adapting policies to match local contexts.

Expanding a local enterprise into an international entity requires careful planning and strategy. Work with employer of record firms to navigate the specificities of local employment laws and industry standards.

7. Using HR as Business Strategy

Modern HR is far more than an administrative function. It is increasingly becoming a business enabler, shaping how organisations plan and execute their business strategies. This trend is expected to continue accelerating in the year ahead.

Boards and business leaders expect HR to provide insights and strategies on employee acquisition and retention, leadership pipelines, and sustainable expansion. Leverage data and communicate these insights to the rest of the company, helping everyone make smarter business decisions.

Succeeding in these functions requires upskilling in areas like data analysis, forecasting and change management. Successful HR leaders can link people management strategies directly to business goals and outcomes.

8. Understanding Sustainability and Green HR Trends

Sustainability is a growing priority across many organisations in 2026, and it’s also becoming an HR responsibility. These efforts can cover reducing business travel, encouraging energy efficiency, and accommodating hybrid or remote arrangements to reduce commute-related emissions.

Aside from minimising the company’s carbon footprint, practising and incentivising sustainability can attract and retain environmentally conscious workers. Research shows that 86% of employees prefer to work for or support businesses that share their values and concerns.

Preparing HR for the Future

As 2026 approaches, HR professionals face both opportunities and challenges. The future of work and people management will demand agility, ethical leadership, and strong collaboration with leadership and different departments.

Throughout these changes, remember to pace transformations, communicate openly and involve employees in decision-making. Prioritising psychological safety and addressing change fatigue can go a long way in improving employee engagement and retention, even during challenging periods.

At the same time, embracing technology thoughtfully – while keeping the human element front and centre – can help organisations thrive in the years ahead. An empathetic people-first approach isn’t just nice to have; it’s essential.

This article is written by Eleanor Hecks, an HR and hiring writer, who currently serves as Editor-in-Chief at Designerly Magazine, where she specialises in small business news and insights.

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