The 7 HR Trends That Will Impact Businesses in 2026 — and Beyond | Tomorrowist

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now. You need to be a [music] tomorrowist. Today, we're unpacking some

tomorrowist. Today, we're unpacking some of the most significant workplace shifts and what they mean for HR leaders and organizations in the year ahead. The

past year has delivered some real curve balls from rapid changes in inclusion and diversity policies to the evolving role of AI and employee engagement. And

2026 will only see the pace of change accelerate. Joining me to take a closer

accelerate. Joining me to take a closer look at Sherm's predictions for what 2026 has in store is James Atinson, vice president of thought leadership at Sherm. James, welcome.

Sherm. James, welcome.

>> Hello. Oh, thanks for having me today.

>> I'm excited for this conversation, James, and and we certainly have a lot to talk about. Uh before we dive in, a quick note for the audience. The full

report behind today's discussion is a SH member only exclusive. We'll highlight

key points here, but you'll want to check out the full interactive experience at sherm.org/2026

trends to explore all seven predictions in depth. Uh now, let's get started. Um

in depth. Uh now, let's get started. Um

let's start at the beginning, James.

what is the project and and what is Sherm aiming to accomplish with these trends and predictions?

>> Absolutely. Well, this is our 2026 HR trends project and as a part of that we have identified seven key trends for

2026 uh to watch. The project's based on the research that we've been conducting across the year and the the trends that

we're seeing across the broader HR and workplace landscape. Uh it really digs a

workplace landscape. Uh it really digs a lot into our CEO priorities and perspectives research as well uh which looks at the big priorities and challenges and future trends that CEOs

have shared with us.

>> So we capture all of those priorities and the research that we've done and we've uncovered these trends really with the goal of providing very tactical

strategies for HR leaders to drive business impact and stay ahead.

>> That's awesome. Let let's start with the first prediction. We we want to make

first prediction. We we want to make time uh for all seven. And so we'll start with the buzzword of 2025, which has been AI. So uh here's the first prediction. AI hasn't lived up to the

prediction. AI hasn't lived up to the hype, but companies aren't giving up.

Can you walk us through what this trend means and why 2026 is a turning point?

>> Absolutely. Look, there's been a lot of promises that have been made about what AI can do to really solve all of the organizational problems out there,

right? So, you know, AI is going to help

right? So, you know, AI is going to help drive efficiencies, uh reduce costs, improve profitability, drive revenue, and

there are AI solutions that can help in in all of those areas. But the reality is that a lot of organizations simply haven't seen the results that uh that

maybe they were promised or they were expecting. And so that is that is where

expecting. And so that is that is where we are right now. And in fact, one in six HR professionals tell us that when it comes to AI implementation,

um only that one in six tell us that they they've really seen something that's been somewhat successful. And of

course, we've seen headlines of many pilots and projects that are that are um just really not living up to all of this

hype. However,

hype. However, people are still very invested in wanting to make AI deliver on those promises. In fact, with our own

promises. In fact, with our own research, uh CEOs told us that this was their top priority for 2026, adopting AI at their organizations.

Now, on the flip side, they also told us that the biggest challenge they're facing is technological advancements such as AI. So, it's a it's a two-sided priority, but challenge that they're

facing as well. So, so they're not giving up. It's still a a big desire is

giving up. It's still a a big desire is to to capture those results and the promises that have been uh that have been laid out.

>> Yeah. You know, I I think a word that goes alongside AI is FOMO, right? I

think many leaders are juggling, you know, we don't want to miss the AI bandwag AI bandwagon because of all the benefits that, you know, some are predicting or some have even

experienced. And yet for many industries

experienced. And yet for many industries and many organizations how to implement it, which companies and you know service providers to partner with because everybody's promising the world and and

not wanting to not seem innovative to whether it's your investors or your clients. Um you know I I would imagine

clients. Um you know I I would imagine that many executives are are really in in tough conversations on if we don't do anything what is the risk there and but if we p you know uh decide on the wrong

partner or the wrong product, what is that? And so I I agree with you. You

that? And so I I agree with you. You

know, it it hasn't quite lived up to the hype, but I think in the 24/7 news cycles that we live in, you know, uh things seem a lot faster than they actually are. And so, um hopefully 2026,

actually are. And so, um hopefully 2026, uh you know, most of our audience can find products that work for them, test it, um and then, you know, begin to share with others what works. Uh let's

move on to the second one, which has also been, you know, very top of mind for many uh particularly in our HR world. And that is the second prediction

world. And that is the second prediction is that inclusion and diversity is about performance not causes. Uh reframes IND as a performance driver rather than a values conversation. And what does this

values conversation. And what does this shift signal about how organizations will approach inclusion in the new year?

Yeah, we we've certainly seen uh a lot of shifts uh in inclusion and diversity across 2025 uh as a result of you know changes in

federal policies and and really pressures to deliver financial impact.

What I'll say though is that even amidst all of these uh challenges for uh for inclusion and diversity across the year, we found that three and 10 organizations

have actually increased their uh their spend on IND initiatives across the year and and really only 6% have have decreased that that spend. So there is

still a desire to focus on inclusion and diversity at many organizations.

But the shift that is happening is moving more towards trying to understand exactly how IND initiatives are going to

impact the bottom line. Now there's a lot of research out there to suggest that more inclusive and more diverse organizations perform better.

But what individual organizations are doing is trying to figure out how do they actually tie in each of those initiatives to key outcomes whether it's

employee engagement, performance management or overall performance, retention, um even driving revenue. All

of these things are ways in which organizations are saying hey we want to show that at our organization what what those outcomes are.

The the third prediction um it says that workforce uh workforce fragmentation will peak as companies lean into micro teams, freelancers and even AI agents.

Um at a high level, what does this evolution mean for how organizations are structured?

>> Sure. So we have seen this process of workforce fragmentation happening across the last several years in particular and

we think about this as being uh workforce fragmentation as as really being kind of different types of workers workers in different locations uh different responsibilities and the

shifts themselves have really come in three big areas. one is kind of the who of that of that workforce. And so we're

seeing a a rise in more independent contractors, gig workers, uh kind of more flexibility in the workforce in in

terms of those types of workers and we see that trend is expected to increase moving forward. Uh we also see a big

moving forward. Uh we also see a big change in the wear of the workforce.

Certainly, there's been a rise across the last five, six years of remote and hybrid work. And even though there's

hybrid work. And even though there's been a big push to bring people back into the office, we still see more than one in five people regularly working

remotely or in a hybrid environment across the year a across the country.

And uh these are the types of things that people are uh expecting. And then

you mentioned AI agents, right? That's

kind of the what uh some might say the who depending on how you define an AI agent. Uh but but really organizations

agent. Uh but but really organizations are experimenting with bringing in AI agents to take over you know even up to

complex tasks. And once you bring all of

complex tasks. And once you bring all of these things together, we're really in a situation where we're expecting this fragmentation to increase. Uh a and it's

really creating more of a structural shift in in how work is resourced. Um

moving away from some of these stable and long-term roles to a more modular adaptive workforce strategy.

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And and I think you know none of these seven predictions are in their silos and they're not mutually exclusive right and so we started off at the top you know AI hasn't lived up to the hype and I think

you know we have quickly evolved our conversation on AI even in terms of how can it help me do my tasks faster and we've all used AI in virtual calls to

summarize things to summarize emails or to edit things and now we've evolved into you know can AI agents either for you know supplement complement or even replace you know some of the menial

tasks. Obviously it comes with a you

tasks. Obviously it comes with a you know uh a lot of risks there in terms of even proprietary information or processes or even uh some things that many people have experienced which is AI

hallucination just makes stuff up and says everything's a good idea. It's a

very accommodating you know again thing or person depending on how you view your uh GPT from time to time. Um but but speaking of that uh you know and sort of

uh the humanization of what AI can do in terms of you know opinions and subjective thought in the workplace the fourth prediction uh that we're putting out there is that AI coaches will be the

death of annual performance reviews. Um

what does that mean and and what does this shift tell us about how future of performance management uh effect in 2026 and beyond?

>> Sure. Well, let's start with where performance management is today. Uh, and

in many places, it's actually not working very well. It's a a once a year slightly awkward conversation where you review what's been happening, you know,

for a particular employee.

But, you know, HR professionals are telling us six and 10 say that, you know, half of their managers aren't really able to address underperformance in their employees. And uh four in 10

tell us that their managers aren't capable of really providing uh constructive feedback.

Of course, it's not fair to just blame managers. You know, HR professionals

managers. You know, HR professionals say, "Hey, we're not providing enough training to do this." Well, we're not equipping managers with the data they need to have these types of

conversations. This is where an AI

conversations. This is where an AI coaching tool can come into play. I it

it's really about kind of transforming these static reviews into a more dynamic ongoing continuous feedback cycle. It's

equipping managers with data that they need and insights about how their employees are performing and it really has the opportunity to kind of change

that dynamic of coaching and feedback for managers.

You know, I I think we've all, you know, have seen some stuff on the internet where the manager will write out an email or performance review and accidentally leave that last tag, right?

The when the GPT asks, "Do you want me to ask this in a different format?" And

and you know, so we we that's the comical side of it, right? But I think that the concerning side as a prediction um is you know inclusive of this is how does this impact people's you know

performances their promotions and even sometimes their livelihood when you know organizations sometimes don't have that check right and I think um it goes both ways I think right and I think you know

for for some it certainly does help uh manage a large task if you're a manager with lots of you know independent contributors that you have to manage um it certainly helps but you know it'll be interesting to see and I think again AI

AI will get, you know, as they often say, today is the worst that AI will ever be.

>> And so, as particularly AI that's task specific gets better, it'll be interesting to see how this plays out in the next year. Uh we're about the halfway point of our seven. Um the fifth

prediction, uh employees work harder, smarter, and collect two paychecks. Uh

we saw this conversation happen again in in the pandemic. Uh but this highlights the normalization of side hustles and polywork. uh how do you see moonlighting

polywork. uh how do you see moonlighting reshaping the employer employee relationships in 2026? And I think many of our audience may have heard about uh

this one person uh who uh made the news uh had 20 some odd jobs and uh once one found out then the other 25 found out and it became a mess. But the fact that

even somebody can get to that point right um speaks to uh you know it is a byproduct or an effect of remote work.

it is you know how AI agents and even AI other AI tools can mimic jobs or mimic you know showing up to work in the first place but uh tell us about the prediction here about the the poly work

which is a new phrase that I think many of us are hearing for the first time.

>> Absolutely. Well I I think very few people are holding down 20 jobs and kudos to [laughter] um to that person for figuring out how to manage all of that. It sounds very

complicated. Um, but you know, our own

complicated. Um, but you know, our own research tells us that about seven and 10 people have had some kind of side hustle either currently or or at some

point in their career. That that kind of extra little bit that you're making additional money in. Uh maybe you're learning a new skill as a part of that.

Um, again, it's often driven by financial concerns and the benefits of of having that extra income are really why most people uh do that. You know, as

we head into 2026, we do see a bit of a softening labor market. There's some

concerns around inflation. We just saw a slight uptick in unemployment this week.

Um, so we're actually expecting this trend to continue across the year. Now

for in that employer employee relationship uh it raises a couple of issues. First you know HR professionals

issues. First you know HR professionals tell us that they are concerned about you know potential conflicts of interest between their primary job and you know a

a side hustle. Uh they're concerned about things like time management or even using the the resources of a one

company on the side hustle itself. So,

it's important for for um HR to really set clear policies around this, not just assume it's not happening or that it will work itself out, but but having

those clear guidelines and and guard rails will help to make that that better. I think it's also important to

better. I think it's also important to understand why people are doing this in the first place. Is it because they're not making enough money in their first job to to do that? Is it because they

feel like they're not getting the development for their career? Whatever

those cases may be, uh there's an opportunity to really understand those and perhaps improve certain situations, especially for that top talent you want

to have, you know, fully focused on your one one job.

>> No, thanks James. I I think you're right and you bring up a good point. you know,

we're talking about these predictions at a high level and uh certainly how it impacts large organizations, small organizations and the leaders. Um but

many of these predictions rise or or sit a top some of the the deeper root causes of why things are happening. Um you

know, AI certainly didn't happen in a bubble, right? And people picking up

bubble, right? And people picking up side jobs, whether it is to make money or because they don't feel safe in that first job, right? Because there's a lot of insecurity about the labor market as

well. uh which leads n uh naturally into

well. uh which leads n uh naturally into our sixth prediction which is that recruitment is broken and technology alone can't fix it and so there's some underlying causes that we have to talk

about um at a high level what's fundamentally failing in the hiring process now and is there a way out of it

in a lot of ways we've uh leaned on technology to help fix some of the challenges and it may have created some additional ones uh along the way, right? And and that's

probably true in in many areas of of life. Uh but for recruiting in

life. Uh but for recruiting in particular, you know, heads of of of recruiting tell us that they're expecting

a bigger trend in 2026 of applicants using AI to complete their job applications and to to craft the perfect resume. At the same time, they're

resume. At the same time, they're expecting to use AI to improve their own recruiting processes.

And so, in in many places, we're having AI speak to AI as a part of the recruiting process. And we've really

recruiting process. And we've really lost a bit of that human touch. Uh we've

also lost the ability to have uh real judgment around who might be a really good fit for an organization. and one in five organizations tell us that their AI

tools um have screened out some highly qualified candidates uh when they've gone back and taken a look at them. So I

think it's it's key for organizations to really understand where where AI is important to leverage in the process uh

especially efficiencies that will be felt on both sides both from the recruiter side as well as the candidate side. But it's also important to

side. But it's also important to understand where exactly do we still need to maintain that human touch? Where

do we need to have that human interaction in order to evaluate some of the things that might not be evaluated through a keyword search on a resume?

And and and I think in some ways we've we've gone too far in one direction and need to kind of recalibrate a little bit across the recruiting process. Yeah, we

we'll dig deep into this a little bit later in the conversation, but I think everybody knows, you know, we're in this sort of, you know, that that Spider-Man visual, right? Like you have the uh the

visual, right? Like you have the uh the the job description is written by AI and then that's fed through AI by the applicant to come up with the nonI detectable resume.

>> Yeah. And both sides are using AI and the AI detector to try to figure out how they can you know ultimately I you know perhaps the the the goal needs to be

reset right is it to game the system is it to save money and time and efficiency because obviously you can't you know manually sift through the tens of thousands of applicants you might get for a singular position and so how do

you balance that I think is is the ultimate you know goal. Um final uh uh you know top of the funnel um prediction here before we dig deep into a few of

these is that structured training is dead and points to real time personalized upskilling that replaces traditional training. So traditional

traditional training. So traditional training in terms of you take the day half a day you go to a classroom setting or you're mandated to watch the same video. Um tell us a little bit about on

video. Um tell us a little bit about on demand upskilling as technology the change of technology accelerates as we've mentioned and how does this redefine learning um and how does this

redefinition of learning transform how organizations both big and small build capability?

>> Yeah absolutely well look the the pace of change in skills and the skills that we need for our jobs it just continues to get faster and faster and faster.

Just think about the things that you were doing today in your job uh that you weren't even on your radar 3 years ago, right? And and then three years before

right? And and then three years before and 3 months and and so on. And so

unfortunately the the traditional learning models that let's take a day and walk through this curriculum that been tweaked a couple of times across

the last couple of years. um that really is not going to help with this rapidly evolving skills landscape

and you you bring in AI and how it is really reshaping a lot of how work is getting done day in and day out and a lot of kind of our traditional

approaches are really just not keeping pace. Uh so you know half of CHRO's tell

pace. Uh so you know half of CHRO's tell us they do expect an increased investment in this more rapid skills development and and we have the ability

through these technologies um to to better understand what the skills gaps are to better understand

um kind of how all of this comes together from an employee perspective um to really target the development that's needed for that particular particular

role as well as their aspirations across their career. And so these more ondemand

their career. And so these more ondemand and personalized learning experiences are really changing the nature of L & D

at most organizations and we expect that to only accelerate in the year ahead.

>> That wraps up our discussion today. Uh,

as a reminder, Sherm's HR trends and predictions for 2026 is a member only exclusive and is available as an interactive digital experience at sherm.org/2026

sherm.org/2026 trends. This isn't your average static

trends. This isn't your average static report. It's designed to help you

report. It's designed to help you explore each trend. Dig into the data that we talked about today uh and take action for your organization. Thanks

again to James Agson from Sherm for joining us today and uh we'll see you next time. Thank you all for tuning in.

next time. Thank you all for tuning in.

Happy holidays and happy new year.

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