10 workforce trends HR leaders say will shape 2026
10 workforce trends HR leaders say will shape 2026
The start of a new year is a natural checkpoint for HR leaders. And as organizations enter 2026, HR leaders are reassessing whether their talent strategies align with evolving employee expectations, accelerating technology, and increasing business pressures.
While the issues themselves are familiar, leaders say the differentiator this year will be execution—specifically, whether organizations can turn plans into measurable action.
A recent survey of HR professionals conducted by payroll and HCM provider Paylocity between November 2025 and January 2026 identifies the 10 workforce trends expected to have the greatest impact in the year ahead.
The findings point to sustained challenges around retention and compensation, uneven adoption of artificial intelligence, and a widening gap between what companies aim to achieve and what they are prepared to deliver.
1. Retention and Engagement Remain HR’s Top Priority
Retention continues to dominate the HR agenda. More than 61% of respondents ranked retention and engagement among their top three priorities, and nearly 80% placed it in their top five.
No other issue appeared as consistently across the survey results, underscoring the importance of employee stability and day-to-day experience in driving organizational performance.
“Employee retention is both HR’s biggest priority and biggest challenge,” one respondent noted.
2. AI and Automation Adoption Emerges as the Most Polarizing Trend
Artificial intelligence topped the list of priorities for 26% of respondents—the highest share of any trend surveyed. Yet roughly one-quarter ranked AI among their lowest concerns.
This divide reflects sharp differences in organizational readiness, governance structures, and risk tolerance, rather than a lack of interest in AI’s potential.
3. Compensation and Benefits Remain a Persistent Pressure Point
With pay closely tied to retention and trust, compensation continues to weigh heavily on HR teams. More than 70% of respondents ranked compensation and benefits among their top five priorities.
Leaders say compensation is increasingly seen as a signal of organizational commitment, not merely a market benchmark.
4. Manager Capability Becomes a Critical Lever
Manager effectiveness remains a fundamental driver of the employee experience. Two-thirds of HR leaders ranked manager capability in their top five priorities, emphasizing that strong front-line managers have an outsized influence on engagement, performance, and retention.
5. Skills and Upskilling Shift Toward Skills-Based Models
Skills development remains a high priority, with 66% of respondents citing skills and upskilling among their top concerns. The focus is moving away from standalone training programs toward skills-based ecosystems that support internal mobility and adaptability as roles evolve in 2026.
6. Compliance Challenges Intensify Amid Workforce Complexity
More than 42% of respondents ranked employment law and compliance among their chief concerns. Remote work, multistate hiring, and rapid regulatory change are adding complexity and increasing pressure on HR teams charged with managing risk.
7. An Execution Gap Emerges as a Defining Challenge
Although urgency is high, many organizations lack clear pathways to act. Nearly 98% of respondents said their top workforce issue carries high or critical business impact, yet only 15% reported having a defined plan in place.
Fewer than 4 in 10 said they had both a budget and a timeline established, highlighting a growing execution gap between strategic intent and operational readiness.
8. HR–Finance Alignment Proves Key to Driving Action
Alignment between HR and finance strongly correlated with execution readiness. Among respondents reporting full alignment, more than 73% had both a budget and a timeline in place.
That figure declined sharply for those with limited collaboration, underscoring the importance of financial partnership in translating workforce strategy into action.
9. AI Adoption Expected to Focus on Automation and Learning—Despite Trust Concerns
In 2026, HR leaders expect AI use to concentrate on workflow automation, learning and development, and workforce analytics. Adoption remains slower in areas where judgment and nuance are critical, such as performance management and employee feedback.
Security, data privacy, and limited internal expertise remain the top barriers to adoption.
“AI too often generates incorrect or incomplete data. The technology is not yet trustworthy,” one respondent said.
10. HR Technology Priorities Shift Toward Integration and Security
HR teams are increasingly prioritizing tools that reduce friction and support compliance. Automation across HR, finance, and IT ranked as the most important platform characteristic, followed by enhanced security and data privacy features.
While vendor consolidation remains attractive, a slight majority still prefer multisystem flexibility, reflecting the complexity of many organizations’ technology ecosystems.
Looking Ahead for 2026
The survey suggests that 2026 will be less about identifying new workforce challenges and more about effectively addressing known ones. Retention, compensation, manager effectiveness, and skills development remain foundational priorities, while AI adoption continues to accelerate—albeit unevenly.
Organizations that successfully align strategy, budget, and execution may be the best positioned to translate workforce ambitions into measurable impact in the year ahead.
About the Source: The survey this article is based on was conducted from Nov. 11, 2025, to Jan. 8, 2026, by Dr. Shari Simpson, an HR thought leader and speaker employed by Paylocity. It received 403 responses, of which 276 were completed. Results are unweighted and reflect the views of participating HR professionals.
This story was produced by Paylocity and reviewed and distributed by Stacker.
