As businesses move into 2026, one thing is clear: stability is no longer the baseline. Instead, leaders are planning against a backdrop of economic cooling, political influence, rapid technological change and shifting workforce expectations. The result is a complex, sometimes contradictory set of priorities – but with one unifying goal: productivity.

A Cooling Labour Market Shifts the Balance

After several years of skills shortages and fierce competition for talent, the labour market is continuing to cool. Hiring has slowed in many sectors, wage growth is stabilising, and employers are regaining some leverage.

For businesses, this means a shift in focus from aggressive recruitment to getting more value from existing teams. Retention, performance management and skills development are moving back to the top of the agenda, with an emphasis on efficiency rather than expansion.

Home vs Hybrid: Businesses Remain Divided

The debate over where work happens shows no sign of resolution. Some organisations are doubling down on office-based or structured hybrid models, citing collaboration, culture and productivity. Others continue to embrace flexibility as a competitive advantage and a key factor in employee wellbeing.

What’s emerging in 2026 is less ideology and more pragmatism. Many businesses are moving away from one-size-fits-all policies, instead tailoring working models by role, function or seniority – even if that adds complexity to management.

HR Navigating a Growing Legislative Burden

HR teams are facing increasing pressure as new employment legislation, regulatory expectations and compliance requirements come into force. From worker protections and pay transparency to data use and AI governance, the scope of HR responsibility continues to expand.

In response, businesses are investing more in HR capability, technology and legal support. The challenge is balancing compliance with agility – ensuring organisations stay on the right side of the law without slowing decision-making or innovation.

The Race to Keep Up With AI

Artificial intelligence is no longer an emerging trend – it’s an operational reality. Businesses in 2026 are focused less on whether to adopt AI and more on how fast they can do it responsibly.

Those leading the race are embedding AI into everyday workflows: automating routine tasks, improving decision-making, and enhancing customer experiences. Those falling behind risk productivity gaps that are increasingly hard to close. The priority is clear: AI literacy, governance and integration are now business critical.

Rethinking EDI in a Changing Political Climate

Equality, Diversity and Inclusion strategies are also undergoing reassessment. Following high-profile political condemnation of EDI policies in the US, 54% of UK businesses have reportedly changed their approach or abandoned initiatives altogether.

https://www.peoplemanagement.co.uk/article/1938202/uk-companies-abandon-edi-initiatives-response-trumps-anti-diversity-rhetoric-survey-finds

For some, this reflects genuine uncertainty about legal and reputational risk. For others, it signals a move away from broad programmes towards more targeted, outcomes-driven inclusion efforts. The debate is no longer about values alone, but about impact, accountability and alignment with business objectives.

Productivity Becomes the Defining Priority

Taken together, these trends point to a single overriding focus for 2026: productivity. With economic uncertainty, legislative complexity and constant change, businesses are under pressure to do more with less – and to do it smarter.

That means clearer priorities, better use of technology, more effective people management, and leadership teams willing to make difficult trade-offs. In a turbulent environment, productivity isn’t just about output – it’s about resilience.

The organisations that succeed in 2026 will be those that can adapt quickly, align their people and technology strategies, and stay focused on what truly drives performance.