In an industry as dynamic and ever-changing as human resources, the list of challenges facing HR leaders continues to grow. It’s not enough to simply know what obstacles might be looming on the horizon. Now, more than ever, leaders need to take a strategic and proactive approach to mitigating challenges within their organizations, not just to keep up but to get ahead in this fast-paced environment. Let’s dive into the top HR issues for 2026 and why addressing these challenges is good for organizational success.
1. Embracing and Integrating Artificial Intelligence
The tide of AI has swept across the workplace, and HR departments are at the forefront of figuring out just how to leverage it. In fact, data from SHRM shows that a staggering 89% of HR leaders expect AI to redefine how their organizations create and capture value in 2026. Integrating the technology into HR workflows can be segmented into two parts, according to JR Keller, associate professor of HR studies at Cornell University’s School of Industrial and Labor Relations, as interviewed by HR Dive. In the interview, he pointed out that it can be used to automate redundant tasks, like screening resumes, yet the real challenge lies in enterprise tools, which often lack a clear roadmap or defined use cases.
2. Using AI Responsibly
It’s not enough to know how and when to integrate AI. Now, it’s also essential for HR leaders to consider the ethical implications of integrating this technology into their processes. There are two key elements to this issue: improper use of AI and AI biases. According to a recent KPMG study conducted in partnership with the University of Melbourne, nearly half (48%) of all employees report uploading sensitive data to generative, publicly available AI tools. In addition, the report revealed that more than half (56%) have made mistakes in their work because of AI. This could be mitigated by expanding AI-related training and education programs within the workplace, as only 39% have reported any kind of training, whether formal or informal.
AI also plays a significant role in hiring processes, with 65% of respondents in a study reporting they were already using AI in their workflows, with more than half exploring new AI tools. Combined with data from a University of Washington study that showed that when using slightly biased AI models, recruiters showed a preference for white or non-white candidates, aligning with the biased AI recommendations. Unless biases were obvious, 90% of decisions followed AI suggestions. However, when study participants took implicit association tests, biased decisions dropped to 13%, a clear mitigation tool against AI biases in the hiring process.
3. Closing the Skills Gap
A continuing trend from years past, HR leaders continue to battle skills shortages, making it one of the top HR challenges 2026. According to SHRM, 69% of organizations are having prolonged challenges in filling full-time roles. What’s more, nearly a third of organizations are seeking to fill roles that require completely new skill sets, such as AI, data analysis, and cybersecurity. Despite the troubles facing hiring and HR teams, the outlook isn’t completely bleak. Data has shown that programs like apprenticeships, internships, or job rotations have shown an 92% success rate in addressing talent shortages. Other methods, such as upskilling current employees and implementing creative recruitment strategies like offering flexible work environments and nurturing candidate relationships, have proven successful.
4. Attracting and Retaining Talent in an Uncertain Labor Market
2025 saw record levels of layoffs, 175% greater than the prior year. Yet, even with this level of workers re-entering the job market, employers continue to struggle, as mentioned previously. What’s more, this year, only 22% of employees plan on staying in their current roles, which could be particularly troublesome for organizations. Thus, one of the top HR issues for 2026 will be employee retention. While many factors influence retention, common drivers include management, availability (or lack thereof) of advancement opportunities, work-life balance, and culture. In 2026, employers need to look beyond pay to provide employees with the belonging, greater connection, and autonomy they need to not just survive, but thrive in the workplace. When employees thrive, organizations see retention increase by as much as six times.
5. Declining Employee Engagement
According to recent data published by Gallup, employees are incredibly disengaged, making it one of the top HR challenges 2026. With just under a third of all employees actively engaged, most (52%) are not engaged, while the rest 17% are actively disengaged. At the same time, manager engagement is also decreasing. The causes are multifaceted: prolonged remote or hybrid work can leave employees feeling disconnected, change fatigue can drain morale, and poor manager communication can erode clarity. Considering 70% of employee engagement is driven by managers, leadership development programs are essential, which is why leadership development opportunities have jumped to the top priority for HR leaders. Beyond developing those in leadership roles, another key component of overcoming engagement is ensuring employees are recognized for the work they do. Recognition doesn’t just make people feel good; it helps people envision a long-term future with an organization and increases productivity.
6. Overcoming Employee Burnout
Burnout and mental health continue to make the list of top HR issues for 2026, posing a direct threat to productivity and talent retention. Considering that 25% of employees have considered quitting a job due to their mental health, and 72% report being stressed about their finances, prioritizing employee well-being has never been more important. In addition, the growing adoption of AI is also a stressor for an overwhelming majority of employees, with 95% reporting significant stress and managers reporting being burnt out. Much of this stems from the unprecedented rate of change within organizations. With AI being rolled out and incorporated into many workflows, many employers can implement changes faster than ever before, leaving employees scrambling to catch up.
Thus, successful companies are exploring how they can expand support, from mental health benefits and employee assistance programs to financial wellness resources, telehealth, and flexible PTO policies. Another important component is psychological safety at work. Employees need to feel safe to speak up about stress and to know that their leaders genuinely care about their health. The real challenge for HR leaders is to create a culture where taking care of oneself is encouraged and where support is readily accessible.
7. Navigating DEI Scrutiny
After years of DEI being at the forefront, 2025 saw companies facing DEI backlash. Companies, like IBM, Google, Walmart, and many more, publicly scaled back DEI initiatives, while 21% of public companies completely eliminated DEI programs. Following the overturning of affirmative action in 202414, and the Trump administration’s decision to implement a $100,000 registration fee for HB-1 visa applicants, it’s a particularly critical time for companies. For 2026, this means approaching DEI strategically in a way that balances legal compliance, brand reputation, talent retention, and responsible AI use, while fostering employee trust.
8. Creating Culture in Hybrid Environments
According to SHRM research, employees who experience a positive work culture are 68% less likely to leave. This places the impetus on HR leaders to cultivate an environment where employees are empowered to be productive and shown they’re valued members within the organization. Among the numerous top HR issues for 2026, the challenge of remote work remains a persistent concern, having a direct impact on culture and morale. Data from Gallup shows that while remote and hybrid employees have higher engagement rates than non-remote-capable workers, they are also more distressed. The driving factors behind this can range from the stress of autonomy, mental distance created by physical distance, and frustrations around technologies used for communication and collaboration. To overcome this hurdle, leaders need to focus on encouraging regular interaction beyond just transactional meetings; for example, creating virtual watercooler moments, establishing mentoring or buddy systems, and hosting periodic in-person team events to strengthen relationships.
9. Keeping Up with Regulatory Compliance
The landscape of employment regulations is constantly shifting, making it one of the top HR challenges for 2026. This is even more true for employers operating in multiple jurisdictions where new or changing laws covering everything from stricter pay transparency requirements in many states to expanded leave and accommodation mandates create additional compliance complexities. For example, thirteen states now have fully mandated retirement programs, which require employers to understand the requirements in each state where they have employees. On top of that, emerging AI regulations, minimum wage increases, and other challenges are increasing the compliance requirements for HR teams across the country. More than just being necessary from a regulatory standpoint, compliance is increasingly visible to employees, which has a powerful impact on trust and culture within the organization. Thus, HR leaders will need to approach compliance not as a checkbox exercise but as an ongoing dialogue with the workforce, making sure everyone understands not just the “what” but the “why” of new policies and integrating compliance into their broader HR strategy.
10. Addressing Change and Complexity
The only constant HR departments can rely on in 2026 is change. Economic swings, restructurings, new technologies, and evolving business strategies all mean that organizations will continue to transform. Change fatigue is a real risk: many employees and HR professionals alike feel worn down by nearly continuous evolutions in how work is done. Going forward, this means that HR’s challenge is to embed agility and resilience into the organization’s DNA, taking a lead in change management to ensure changes are communicated clearly, empathetically, and with a vision that employees can buy into. According to Gartner, one of the top priorities for HR leaders this year will be the ability to turn change into an instinctive part of work, increasing successful change adoption by as much as three times. Organizations can begin to address this challenge by ensuring leaders don’t just focus on the future, but guide employees in the present, while also building skills necessary to effectively navigate change.
11. Keeping Pace with HR’s Evolving Role
Perhaps one of the top HR issues for 2026 is the evolving role of the HR department itself. HR leaders are facing growing expectations; CEOs and executive teams want HR to not only manage hiring or benefits, but to drive business outcomes through talent strategy. In 2026, HR professionals must shift from being administrators to being strategic partners in their organizations. To do this, HR departments will need to streamline and modernize their own operations, for example, breaking down data silos by integrating HR systems, automating low-value tasks, and outsourcing transactional work. This frees HR professionals to focus on strategic initiatives and consult with business leaders on workforce planning, culture, and change initiatives.
Conclusion
As HR leaders look ahead, from managing the new complexities of AI in the workplace to DEI setbacks and evolving compliance needs, facing the top HR issues for 2026 can be a daunting task. However, many of these challenges can also be framed as opportunities to make organizations more resilient to change and develop organizational cultures that go beyond just being a place to work by prioritizing the wants, needs, and well-being of the people who drive these organizations forward.
For leaders unsure where to begin, partnering with an HR outsourcing (HRO) firm might be the right strategy. By working with an HRO, HR leaders can leverage entire external teams dedicated to managing HR compliance, benefits administration, and payroll, allowing their departments to focus on strategic initiatives that drive business results, rather than just tedious day-to-day tasks.
With an HRO like Corban OneSource, you can feel confident that your HR activities are compliant and consistent with employment regulations and best practices. Whether you need full-service support or have a few specific needs you’d like outsourced, Corban OneSource is ready to help you tackle your most pressing HR challenges.
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