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How HR Leaders can overcome overwhelm and tackle priorities

Demands on HR and Reward teams are growing faster than ever, while budgets and resources continue to tighten. Between affordability constraints, employee relations (ER), systems projects, skills shortages and an expanding compliance agenda, many HR professionals are grappling with ever-evolving issues.

Drawing on survey insights, HR workshops with over 275 consulting organisations, and recent client conversations, our Managing Director Tim Kellett and Lucilla Kearsey, Consulting Director at People Business held a recent webinar to explore the reality of the HR and reward agenda for 2026. Here we outline the key takeaways: how HR teams can regain control, prioritise effectively and build the business case for the support they need.

The 2026 HR Landscape: The potential overwhelm

When asked what they see as the single biggest HR or reward challenge for 2026, organisations consistently point to four themes:

  • Recruitment, retention and skills shortages
  • Affordability and financial constraints
  • Pay transparency
  • Implementing HR projects alongside “day jobs”

At first glance, the data suggests some easing of pressure, particularly around retention. The true picture emerging from our HR Groups is that the devil is in the detail. Retention challenges have not disappeared; they have become concentrated. Frontline roles, specialist skills and certain geographies remain real hotspots. Many organisations are losing people not just to competitors, but to adjacent sectors or different sectors altogether as individuals rethink careers, heightening early-career attrition.

For HR teams, this makes workforce planning more complex and no less urgent.

Affordability: The pressure behind each decision

Affordability remains one of the most significant contributors to HR overwhelm.

Median pay awards rose sharply in recent years and are now easing, but the cumulative impact is proving unsustainable. Over the past seven years, National Living Wage increases have tracked around 26 per cent higher than median pay awards. Real Living Wage increases have tracked 17 per cent higher. For organisations with a high population of junior roles, this has driven significant pay compression and internal equity challenges.

These challenges are compounded by rising operating costs across many sectors. For HR and Reward teams, this creates constant tension: how to manage costs while remaining competitive, fair and credible. As a result, many organisations are reviewing benefits arrangements where pay awards are constrained. Cars, health cash plans, family-friendly benefits and pension salary sacrifice schemes are all under scrutiny as employers look for alternative ways to support employees.

Other approaches include:

  • Replacing universal pay approaches with targeted spend on critical roles
  • Using one-off payments, bonuses and recognition awards where base pay increases are not affordable
  • Leaning more heavily on non-financial reward: development, flexibility, wellbeing and career pathways

As employers look for alternative ways to support employees without increasing fixed costs, all of this requires excellent communication to manage employee expectations and perceptions of fairness. Total Reward Statements are effective tools to outline the financial and non-financial investment that employers are making in each employee.

Pay Transparency: From compliance to credibility

The EU Pay Transparency Directive is already shaping UK HR agendas, accelerating change well beyond its immediate scope. Around one third of organisations operating in both the EU and UK are actively preparing to improve transparency in the UK, and a quarter are planning to publish pay information voluntarily.

This catalyst has triggered a renewed focus on:

  • Job families and job architecture
  • Consistent role evaluation and job grading
  • Clear and credible pay ranges

While initially driven by regulation, many organisations now see transparency as strategically essential. When affordability is constrained, transparency can become a stabilising force: employees are more likely to accept outcomes if they understand how pay works, where they sit and what progression (vertical or lateral) looks like.

For HR teams, the message is clear: effective frameworks form the basis of good communication around pay and reward systems. Putting this in ‘black and white’ can reduce conflict and support engagement.

The operational load that risks overwhelm

Our January pulse survey asked HR teams where they spend most of their time – and where they struggle to resource effectively. The answers included:

  • Pay award implementation
  • Employee relations
  • Performance management
  • Particular projects, including HRIS upgrades, data management, system integration

These demands are not optional, yet leave little space for broader strategic work.

ER volumes are rising, often linked to restructures, hybrid working tensions, return-to-office mandates and location-based pay questions. Performance management is under scrutiny, with greater emphasis on consistent decision-making and upskilling line managers – many of whom are new, inexperienced or managing fast-growing teams.

Meanwhile, HR systems upgrades promise long-term gains but deliver short-term pain, exposing data quality issues and stretching already thin teams. This aligns with anecdotal feedback from HR professionals who report increased exposure to risk while they grapple with fewer resources at their disposal.

Performance, managers and risk of burnout

Performance management continues to evolve, but many organisations are still catching up. There is a clear shift towards:

  • Continuous feedback rather than annual ratings
  • Coaching-style managers rather than directive ones
  • Objectives that can flex as business needs change

When this is not supported properly, the risks are significant: burnout, disengagement, attrition and disputes around fairness. Employees increasingly want evidence that their organisation is invested in their development and growth. Structured check-ins, clarity on expectations and feedback that flows both ways, including on managers, are becoming essential. Upskilling line managers is therefore one of the most critical HR priorities for 2026.

Technology and AI

HR systems and data continue to be a source of pressure, but also opportunity. HRIS implementations take time and energy, yet scrutiny of data quality is only increasing. AI is beginning to play a more meaningful role, helping organisations automate processes, personalise learning, support onboarding and reduce administrative burden. Some organisations are even exploring wearable technology to monitor and support wellbeing.

The key lesson from the webinar was clear: the focus should be on choosing AI and automation that genuinely meets workforce needs, not technology for technology’s sake. HR teams that start by identifying where AI can remove friction and cognitive load on employees are far more likely to see real gains.

Reframing Overwhelm: From firefighting to focus

Overwhelm is a signal that prioritisation, governance and resourcing need to catch up with reality.

The most effective HR teams heading into 2026 are doing three things differently:

1. Actively managing pay and reward trade-offs

They accept that budgets are finite and make conscious, transparent decisions about where spend will, and will not, be focused. They separate pay progression from performance where necessary, link progression to skills and contribution, and use alternative reward tools to maintain motivation.

2. Strengthening line manager capability

They invest in coaching managers to have real-time, proportionate conversations, intervene early in ER issues, and manage performance consistently. Managers are repositioned as coaches, not rule-enforcers.

3. Designing HR around employees, not processes

Performance frameworks are becoming more flexible. Objectives for agile workforces need to be able to shift. Feedback flows both ways: employees understand how they’re assessed; and how managers are assessed too.

Building the Business Case: Seven steps to support HR teams

One of the biggest barriers HR professionals face is limited budget or staffing, even when the need is obvious. A strong, evidence-based business case makes all the difference. Lucilla outlined the key components required to make a robust business case:

1. Start with the problem

Use data to clearly evidence where current HR capacity is creating risk, cost or delay, such as rising ER case volumes, slow hiring or high turnover. This shows leaders the issue is not anecdotal, but already affecting performance, compliance or spend.

2. Align with business strategy

Link HR capacity directly to business priorities like growth, transformation, risk management or culture. This reframes HR support as an enabler of strategic outcomes, not a standalone function.

3.  Present the solution

Define exactly what is needed, whether a permanent hire, specialist role, interim support, technology or outsourcing, and why this option fits the problem. Specificity builds confidence that the request is proportionate and well thought through.

4. Quantify costs and benefits

Set out the financial impact, including ROI from reduced turnover, faster hiring, lower legal exposure or improved productivity. Balance this with critical non-financial gains such as engagement, leadership effectiveness and organisational resilience.

5. Address risks

Acknowledge potential risks and show how they will be managed through clear scope, prioritisation, KPIs and governance. This reassures decision-makers that investment will be controlled and outcomes monitored.

6. Set success metrics

Define how success will be measured, using clear indicators such as time-to-hire, ER resolution times, engagement scores or delivery milestones. This makes progress visible and holds the investment accountable.

7. Provide an implementation plan

Outline a phased approach covering approval, onboarding, delivery and formal review at 6 and 12 months. This demonstrates readiness to execute and creates natural checkpoints for course correction.

This approach shifts the conversation to justifying measurable returns from investment by the organisation.

Key HR priorities for 2026

Looking ahead, the most common priorities for HR teams are:

  1. Upskilling line managers
  2. Preparing for legislative change
  3. Improving employee engagement and experience
  4. Organisational design and restructures
  5. HR systems and automation

Beyond 2026, challenges will intensify: a misaligned labour market, increased M&A activity, AI-augmented roles, erosion of traditional career ladders, and a workforce increasingly seeking supplementary income. Career development will become a critical deciding factor in retention rates.

Get in touch

Being in HR today is demanding, but is also uniquely impactful. HR professionals build relationships, shape culture and drive meaningful change. Overwhelm is the result of rising expectations and insufficient support.

Our webinar [link to catch up] hopefully helped in explaining how HR and Reward professionals can prioritise, use data confidently and make the case for the right tools and resources; helping HR teams move from constant firefighting to purposeful progress – and bring clarity to their objectives in 2026.


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