HR and Reward in 2026: what the data is really saying

If you look across the spring 2026 UK Reward Management Survey results, there is a clear shift in tone. It’s not the frantic “hire at any cost” market we saw a couple of years ago. Things have settled. But it would be wrong to say the pressure has gone away. It has just changed shape.

Recruitment and retention challenges are still there in the background, but they are no longer the dominant issue for most organisations. Around 43 per cent are reporting recruitment difficulties and 39 per cent expect this to continue in the next six months. Retention is slightly lower, at 31 per cent experiencing challenges and 28 per cent expecting them. Whilst that is still a meaningful minority, it is well below the peak years when it felt like almost everyone was struggling at once. The labour market has cooled. Movement has slowed. Hiring is less frantic.

But here is the real story in the data: the pressure has moved into pay and affordability. Budget and pay pressure are the single biggest challenges HR leaders are talking about. Or more precisely, how to stay competitive when everything is getting more expensive.

And you can see the tension clearly in the data. 47 per cent of employers are still offering new recruits higher salaries than existing employees in similar roles. That is down from the 70 per cent levels seen in 2022, so there has definitely been a rebalancing. But it hasn’t gone away - it’s still a live issue in nearly half of organisations.

Most of the time, those premiums are not extreme. Around three quarters are offering up to 10 per cent more for new hires, and about a quarter are going up to 20 per cent. However, this is still enough to create internal friction and questions around fairness.

And that links directly into why we are seeing pay equity and transparency climb up the agenda. Organisations are increasingly having to explain pay decisions, not just make them. Job evaluation, grading structures, pay frameworks, benchmarking - all “foundations of reward” work is back in focus. Not because it is new, but because it now matters more in terms of credibility and trust.

Pay awards themselves are relatively steady. Most organisations are still planning increases around the 3 per cent mark, and expectations are broadly stable for the next six months. So we are not seeing big movement in headline pay. It feels like a holding pattern after a few years of volatility.

Benefits, though, are where things get more interesting. What stands out is not just what is offered, but what people actually value. The strongest ROI benefits are often the simplest ones; extra annual leave, holiday purchase schemes, flexible working, health cash plans, EAPs, recognition schemes. Things that don’t always cost a lot, but make a noticeable difference to employees.