Happy New Year!
Realising that it is now 2026 feels slightly unbelievable, but for the first time in three years, I feel more excited about what’s ahead.
People who know me will say I’m usually pretty positive, but this feels different. We ended 2025 strongly as a business, following a very challenging middle of the year where tightening budgets, tariffs and slower decision-making made progress harder. That combination, pressure followed by momentum, often signals a market that is starting to stabilise.
2026 is also the Year of the Horse (for those who follow the Chinese zodiac), which happens to be my year, so I’ll happily take that as another reason for optimism.
Looking back at 2025 through an HR lens, a few themes stood out very clearly:
- Performance, not purpose, has moved to the centre of the HR agenda As the year progressed, it became clear that businesses were asking HR to be far more focused on performance outcomes. This meant supporting leaders to manage underperformance more decisively, addressing capability gaps in management layers, and being more honest about who is, and isn’t, moving the organisation forward. HR is increasingly expected to enable performance, not just protect process.
- Low-cost locations remain essential — but capability matters more than ever India, the Philippines and Mexico continue to play a critical role in global operating models, particularly for GCCs and shared services. However, the focus is shifting toward identifying talent that can operate effectively in Western business environments, communicate confidently with senior stakeholders, and adapt quickly. For HR, this requires a sharper lens on assessment, development and cultural alignment, not just hiring at scale.
- Hybrid working has quietly shifted Over the course of 2025, we saw a steady move toward four days in the office becoming the norm. Organisations offering two or three days are now increasingly the exception. For HR teams, this has required careful navigation, balancing engagement, attraction and retention while also supporting leadership expectations around collaboration, accountability and pace.
- AI remains a work in progress AI continues to dominate HR conversations, yet many organisations are still struggling to define where it genuinely adds value. While experimentation is widespread, clarity on ownership, governance and real-world application remains limited. In 2026, HR has an opportunity to move from curiosity to credibility by helping the business embed AI in practical, productivity-enhancing ways.
- Juniorisation has become a common cost strategy We saw many organisations reduce seniority and replace experience with mid-level talent in an effort to manage costs. While this can be effective in the short term, it places increased pressure on development, coaching and succession planning. HR’s role in ensuring capability keeps pace with expectation has never been more important.
2026 will continue to challenge HR to be more commercial, more confident and more influential. The function is being asked to balance empathy with accountability, and culture with performance. For HR leaders willing to lean into that tension, this feels like a year where the function can meaningfully elevate its impact, and truly help shape the business it supports.
If you would like to chat about the market further, drop me an email at se@elliottscotthr.com
