As we approach 2027, HR leaders have plenty to reflect on. Economic uncertainty, rising employment costs, legislative change and the rapid development of AI have all influenced recruitment decisions throughout 2026. But what has actually happened in the market, and what should businesses be preparing for next?
Last year, we explored the importance of workforce planning, salary benchmarking, flexibility and employee retention. Twelve months on, our latest Salary Guide provides an opportunity to revisit those predictions and see how the market has evolved.
And some of the findings might surprise you.
1️⃣ Hiring hasn't stopped, but priorities have changed
If there is one thing 2026 has demonstrated, it is that businesses are becoming increasingly selective about recruitment.
Despite some rather negative headlines surrounding the UK employment market, our own recruitment activity across the Thames Valley and London tells a slightly different story. Permanent hiring has remained broadly flat, while demand for temporary and interim professionals has increased. This doesn't suggest a booming recruitment market, but neither does it support the idea that businesses have stopped investing in talent. Instead, we are seeing organisations take a more considered approach to headcount, with greater emphasis on business-critical roles, specialist expertise and the ability to respond quickly to change.
Within HR, demand has been particularly strong across Employee Relations and People Partnering. Changes to employment legislation, organisational restructuring and the need to balance commercial pressures with employee wellbeing have all contributed.
What does this mean for 2027?
HR leaders should be thinking beyond simply replacing departing employees.
Which skills will the business need over the next 12 months? Where are the gaps? And could temporary or interim expertise provide a more effective solution than committing to permanent headcount?
Workforce planning needs to be flexible enough to respond to changing business conditions without compromising long-term objectives.
2️⃣ Salary increases have continued, but are they enough?
Despite the economic pressures businesses have faced, salaries have continued to increase.
Our 2027 Salary Guide suggests average salary growth of approximately 3% to 3.55% across many of the markets we serve, with certain specialist skill sets continuing to command higher increases. For employers managing rising costs, this creates an interesting challenge. Businesses are understandably cautious about increasing fixed employment costs. However, failing to keep salaries competitive could make attracting experienced professionals more difficult, particularly in specialist areas where talent remains in demand.
There is also the question of internal equity. If organisations are offering higher salaries to attract new employees while existing team members remain on outdated salary bands, they could inadvertently create retention problems.
For 2027, salary benchmarking should be a fundamental part of workforce planning rather than something reviewed only when a vacancy arises. And remember, salary is only one part of the overall employment package.
3️⃣ Flexibility remains one of the biggest retention risks
Last year's blog highlighted flexibility as a significant factor influencing career decisions.
Our latest research suggests that hasn't changed. In fact, the results reinforce just how firmly flexible working has become embedded in employee expectations.
According to our 2027 Salary Guide:
- 85.2% of HR professionals selected hybrid working as one of their most valued flexibility benefits.
- 72.5% of HR professionals value flexible start and finish times.
- 39.4% of HR respondents said they would begin looking for a new role if their flexibility was significantly reduced.
- Among HR Managers and Senior Managers, that final figure increases to 44.8%.
These are significant numbers for any business considering changes to its working arrangements.
Interestingly, our research also suggests that flexibility is no longer just about how many days employees spend working from home. Autonomy is becoming increasingly important. Employees want to feel trusted to manage their responsibilities, balance their commitments and deliver results without unnecessary restrictions. Of course, businesses need to maintain collaboration, productivity and culture. But there is a balance to be found.
For HR leaders planning into 2027, the question shouldn't simply be how many days employees should spend in the office. It should be whether your working arrangements are helping or hindering attraction, engagement and retention.
Introducing stricter office attendance policies without understanding employee sentiment could prove an expensive decision.
4️⃣ AI is changing HR, but perhaps not in the way many expected
It would be difficult to discuss workforce planning for 2027 without mentioning Artificial Intelligence.
Throughout 2026, AI has continued to influence how organisations operate, and HR is no exception. From reporting and data analysis to meeting summaries, administration and recruitment processes, the opportunities to improve efficiency are becoming increasingly apparent.
But what do HR professionals actually think? One of the more encouraging findings from our latest survey is that 80% of HR professionals believe AI will have a positive impact on their careers. This optimism is relatively consistent across different seniority levels. It suggests that many HR professionals recognise the opportunity to move away from time-consuming administrative responsibilities and spend more time on strategic, people-focused activities.
However, our wider research also identifies a potential problem. Organisations are adopting AI at pace, but employee training and support are not always keeping up.
This raises an important question for HR leaders. Are businesses investing as much in developing their employees' capabilities as they are in the technology itself? Introducing new systems without appropriate training could create skills gaps, uncertainty and disengagement. Looking ahead, we expect digital capability, AI literacy, commercial awareness and the ability to interpret workforce data to become increasingly valuable across HR. The challenge will be ensuring employees at every level have opportunities to develop these skills.
And while automation may reduce the need for certain administrative tasks, organisations must also consider how they develop their future talent. If entry-level opportunities disappear, where will tomorrow's HR Managers and Directors gain their experience?
5️⃣ Are businesses investing in the benefits employees actually want?
Another interesting theme from our 2027 Salary Guide is the disconnect between the benefits organisations provide and those employees genuinely value.
Many businesses continue to invest in workplace perks designed to improve engagement and strengthen company culture. These can certainly have their place. However, our research suggests employees are placing greater importance on benefits that support financial security and quality of life. Pensions, bonus schemes, healthcare and flexibility consistently feature among the most valued benefits.
And while progression brings stronger financial rewards, it doesn't necessarily deliver the additional freedom employees might expect.
For HR leaders reviewing their reward strategies, this presents an opportunity. Rather than simply adding more benefits, perhaps the focus should be on understanding which benefits are making the biggest difference. A discounted gym membership might be appreciated, but is it going to prevent someone leaving because their flexibility has been reduced or their salary is no longer competitive? Probably not.
The most effective reward strategies for 2027 will be those built around genuine employee needs rather than assumptions about what employees want.
6️⃣ Employee Relations and specialist HR expertise will remain important
One of the clearest trends we've experienced during 2026 has been the demand for experienced Employee Relations professionals.
With employment legislation evolving and organisations navigating restructuring, redundancy programmes and wider workforce changes, businesses increasingly need HR professionals who can combine technical knowledge with commercial judgement.
We have also experienced growth in the HR interim market, particularly across Employee Relations, HRIS and experienced generalist appointments. This is interesting because it suggests organisations are recognising the value of accessing specialist expertise without necessarily increasing permanent headcount.
For 2027, HR leaders should assess whether their existing teams have the capacity and expertise to manage anticipated changes. That might involve investing in internal training, restructuring responsibilities or bringing in interim professionals to support specific projects. The important thing is identifying those requirements early. Waiting until a complex Employee Relations issue arises or a major transformation programme is underway could leave organisations facing unnecessary pressure.
7. Workforce planning needs to become more strategic
Perhaps the biggest lesson from 2026 is that workforce planning can no longer be treated as a straightforward headcount exercise.
HR professionals are increasingly expected to contribute to commercial decisions, manage organisational risk and help shape the direction of the business. And with economic uncertainty likely to remain a consideration, the ability to plan for different scenarios will become even more important. Rather than simply asking how many people the business needs, HR leaders should be considering:
- Skills: Which capabilities will become more important as technology and business requirements evolve?
- Retention: Where are the greatest risks of losing experienced employees, and what can be done to address them?
- Reward: Are salary structures and benefits competitive, fair and aligned with employee expectations?
- Flexibility: Do working arrangements support productivity while remaining attractive to existing and prospective employees?
- Workforce structure: Could interim appointments, internal development or redeployment provide alternatives to permanent recruitment?
- Succession: Are there sufficient opportunities for junior professionals to develop into future leaders?
These conversations should involve HR, Finance and senior leadership working together. After all, workforce planning is not solely an HR responsibility. It is a business priority.
The 2027 Outlook: Cautious Optimism, but Preparation Is Key
Looking back, 2026 has been a challenging year for employers and professionals alike. However, our findings suggest there are reasons for cautious optimism. Businesses are still hiring, salaries are continuing to rise and demand remains strong for professionals with specialist expertise. At the same time, employee expectations around flexibility, reward and development are becoming increasingly established.
Perhaps most importantly, HR's role within organisations continues to evolve. The profession is moving further towards strategic business partnering, with greater responsibility for helping organisations navigate technology, legislative change and increasingly complex workforce challenges.
For employers, the message is relatively straightforward.
The businesses best positioned for 2027 won't necessarily be those with the largest recruitment budgets. They will be those that understand their workforce, invest in the right skills and make informed decisions about when, where and how to hire.
And in a market where uncertainty has become something of a constant, that preparation could make all the difference.