Navigating the realities of People & Culture in 2026

As we step into 2026, the Australian People & Culture market has found a new rhythm. The volatility of recent years has eased, but what's emerged in its place is a more deliberate, commercially minded and, in many ways, more demanding environment.

What's clear from conversations with HR and business leaders late in 2025 and into the new year is this: transformation has accelerated. Technology is moving faster than ever, expectations of leaders are higher, and organisations are being far more thoughtful about both who they hire and how they lead.

At the same time, people are more hesitant to move. Businesses are taking longer to make decisions. Good talent has always been hard to find, but now there needs to be a very real reason to leave a role where someone feels secure. No one wants to hire the wrong person, and equally, no one wants to join the wrong organisation. This has placed People & Culture squarely at the centre of commercial decision-making, risk management and transformation.

Based on what we're seeing in real time, here are six trends shaping the HR profession right now.

1. The 'Right to Disconnect' is now lived, not debated

The Fair Work 'Right to Disconnect' is no longer theoretical. It's operational.

For HR teams, the policy work is largely done. The challenge now sits in the day-to-day reality of how work gets done. We're seeing strong demand for HR leaders who can navigate the grey areas: coaching leaders to maintain performance, responsiveness and accountability while respecting new boundaries.

Banning emails after 5pm won't solve this. What's needed is a genuine redesign of how work flows, how expectations are set, and how teams stay connected without creating bottlenecks or disengagement. HR capability here is critical.

2. Retention matters, but it's measured

Retention is firmly on the agenda, but this isn't the panic-driven market of 2022.

Organisations are being far more intentional. Rather than defaulting to counteroffers or inflated packages, the focus has shifted to engagement, development and clarity of role and purpose. The goal isn't keeping everyone. It's keeping the people who truly drive outcomes.

Once again, this calls for strong people leadership and HR teams who understand both the human and commercial impact of retention decisions.

3. A "sticky" and risk-averse candidate market

Despite predictions to the contrary, this remains an employer-led market, but candidates are cautious.

People are sitting tight. Very few are willing to make a move without certainty, and the "leap of faith" we saw in previous years has largely disappeared. This means much of the best talent is passive, not active.

For organisations, this has real implications. Posting an ad is rarely enough. Strategic search, direct engagement and a clear value proposition are essential to attract high-calibre people out of secure roles.

4. HR as a strategic enabler: AI, transformation and productivity

HR’s role has never been more critical or more accountable.

People & Culture in 2026 is fundamentally about evidence, impact and productivity. Leading HR teams are increasingly data-driven, measuring what actually works across leadership, learning, organisational design and role clarity. The focus has shifted from activity to outcomes: what’s effective, what isn’t, and what needs to change quickly.

Two themes are dominating senior HR briefs. The first is AI governance and digital transformation. Organisations need HR leaders who can guide ethical AI use, lift digital capability and reshape learning without losing trust, culture or the human experience.

The second is commercial acumen. Boards and CEOs are looking for HR leaders who understand the P&L, can assess workforce risk, and can clearly link people decisions to business performance. Strategic, commercially minded HR is no longer an advantage. It’s expected.

The most effective HR teams are agile in both mindset and execution. They operate comfortably in ambiguity, surface issues early, and provide clear, grounded advice when it matters most especially when organisations are under commercial or cultural pressure.

5. Salaries stabilise and the four-day office becomes the norm

Salary growth has settled into a more sustainable pattern.

While premium roles still command strong packages, the rapid inflation of recent years has cooled.

What has shifted noticeably is expectations around presence. The hybrid conversation is changing, with four days in the office quickly becoming the baseline for many professional and leadership roles. Employers are prioritising collaboration, connection and culture, and candidates, particularly at senior levels, are increasingly accepting this as the new normal.

6. Recruitment cycles return: in-house first, agency second

As always, recruitment models move in cycles.

Many organisations are initially trying to hire in-house to manage costs. But in a market where candidates aren't actively applying, internal teams are often struggling to access the right talent. We're already seeing the pivot back to specialist agencies, particularly for complex, senior or niche roles.

When job boards are quiet, networks matter. Boutique, specialist recruiters are often the only way to reach high-quality, passive talent.

The way forward

The message for 2026 is clear: quality over quantity.

• For HR professionals and candidates, strong commercial capability, transformation experience and AI literacy are powerful differentiators.
• For employers, unlocking this cautious market requires more than just a role description. It means offering genuine influence, clarity and confidence in where the organisation is heading.

HR has always been a challenging discipline, but the most effective practitioners are those who run toward complexity rather than away from it. They surface issues early, act proactively, and provide clear, grounded advice when it matters most.