The Top 5 Human Resource Management Challenges for 2026

In this article we discuss:

• What’s the Role of HR in Modern Businesses?
• Top 5 Human Resource Management Challenges
• Looking Ahead

Human resources has always been the backbone of workforce management and employee support. The HR function of the future is taking that a step further, positioning themselves as strategic partners to the business. 

This means they’ll be able to anticipate workforce needs, support professional development and upskilling, shape culture, and use workforce data to plan talent and hiring strategies, all while still carrying their traditional workload. That’s a whole lot more to do in the same amount of time.

As organizations work to evolve, new human resource management challenges emerge: meeting today’s demands while still maintaining the productivity and efficiency that define good HR. Fortunately, with the right technology and management strategies, HR leaders can guide their teams through this transition and keep their companies moving forward.

What's the Role of HR in Modern Businesses?

Many still view HR through lenses of hiring or policy, but today its value is in helping shape an organization’s workforce for success both now and in the future. Modern HR professionals are data interpreters, change facilitators, and advisors, connecting people strategies with business outcomes.

Their work is a large factor in how effective companies are at adapting to changing markets and new technologies emerging all the time.

Modern roles and responsibilities of a human resources department include:

• Strategic workforce planning: Ensures the organization has the right people with the right skills at the right time by forecasting needs and aligning talent strategy with business objectives.

• Talent acquisition and retention: Attracts talent to not only fit current roles but also support future growth, while creating an environment that motivates employees to stay and build careers.

• Performance management: Establishes clear performance standards and provides the systems, coaching, and accountability that enable employees to meet and exceed expectations.

• Employee experience and well-being: Enhances the employee experience by creating policies and programs to build motivation and offer holistic support.

• People analytics and compliance: Uses workforce data to reveal patterns and guide strategy while ensuring the organization operates within labor laws, privacy standards, and ethical boundaries.

This broader scope of responsibility shows how HR now touches nearly every aspect of business strategy, from growth planning to policy to risk management and more. HR’s influence is no longer limited to employee administration but extends to shaping how organizations compete, adapt, and succeed in the marketplace.

The Top 5 Human Resource Management Challenges

HR teams face a myriad of challenges that don't happen in isolation. While they balance tension between traditional HR work and new responsibilities, external factors like market shifts, regulatory pressures, higher competition for talent, and technology disruption require HR leaders to think broadly and act decisively.

These are five of the top challenges modern HR teams face today and proven strategies for overcoming them in the future.

1. Attracting and Retaining Top Talent

Finding and keeping the right talent is an ongoing effort for HR. SHRM reports 7 in 10 employers are having difficulty filling full-time positions. At the same time, the latest Workday Global Workforce report found 75% of industries are experiencing an increasing volume of voluntary high-potential turnover.

HR leaders must rethink talent and recruitment strategies to better compete for top talent and retain their best employees. Transformation begins with recognizing the shifting relationship between candidates and employers. Today’s job seekers not only expect competitive pay and benefits but also meaningful work and a strong connection to an organization’s strategy, mission and values from the start.

That means employee retention and employee engagement efforts should start as soon as candidates enter the job pipeline, not just after they’re hired or onboarded.

2. Upskilling and Reskilling

Skills are one of the most timely concerns HR leaders are dealing with both in their own function and across the business. According to the Workday Global State of Skills report, the majority of business leaders are worried about skills shortages in the next three years, and only 32% believe their organizations currently have the skills they’ll need in the future.

With widening gaps between what employees can do now and what businesses will need in the future, HR leaders have to act quickly to ready their workforces for what's next. 

Luckily, the solution is already within reach: internal mobility. Employees want to stay with organizations who invest in their professional development and career growth, and for employers, the payoff is better performance. Workday research found that internal hires were 80% more likely to be rated as top performers in new roles than external hires, further demonstrating the value of looking at your current workforce before turning to external candidates.

3. Compliance and Regulatory Complexity

As companies expand globally and laws evolve rapidly, HR teams must manage an increasingly complicated compliance landscape. Failing to keep pace can lead to financial penalties, reputational harm, and even legal action. This pressure makes compliance one of HR’s most persistent and high-stakes challenges.

Gartner research identifies data governance implementation and clear, visibly compliance assessment initiatives as key to managing these risks and flagging potential issues before they become problematic. Yet only 37% of leaders reported they have confidence in their ability to assess compliance effectiveness.

The right technology plays a crucial role in solving this problem by giving leaders the data visibility they need to understand and evaluate compliance programs. A centralized HRIS system, for example, can provide real-time updates and reporting capabilities. An HRIS can also connect to a cloud-based ERP system to link HR and workforce planning directly with other core functions, like finance and operations.

4. Adapting to Technology and AI

Digital transformation is reshaping every phase of the employee lifecycle from recruitment to performance tracking to ongoing retention and career advancement. And while new tools offer enormous potential, many HR teams struggle to integrate them effectively.

Artificial intelligence (AI)—the most transformative business technology in decades—is proving a tough sell for HR. Nearly half (47%) of HR leaders reported to Workday that they don’t fully trust AI, the highest of any function surveyed. Yet the majority of AI pioneers in the HR function say AI is delivering measurable business value at their organization.

While some AI-related concerns have merit, letting them hold teams back from adoption risks leaving HR fragmented and outdated. The more pressing issue is investing in the internal skills and technology tools to implement and adopt AI effectively. With these foundations in place, AI in HR can significantly cut down on repetitive work and give HR professionals more time to focus on strategy and people.

5. Strategic Workforce Planning

Organizations that fail to plan for future workforce needs often find themselves reacting to crises instead of leading through change. Misalignment between business strategy and staffing priorities can create costly gaps and slow growth. Strategic workforce planning directly addresses this risk.

Most HR leaders recognize the criticality of better and more holistic planning, but Gartner reports that today only 15% are engaged in it at a truly strategic level. Making it an HR priority and planning effectively in collaboration with other stakeholders across the company will be a strategic differentiator in the future, both for optimizing budgets and resource allocation and for retaining top talent that drives performance.

By forecasting demand, analyzing skills inventories, and running scenario planning exercises, HR leaders can align their company's people strategy with long-term business goals.

Looking Ahead

The challenges facing HR are complex, but they are also opportunities to shape stronger and more resilient workforces. With the right mix of strategy, technology, and foresight, HR leaders can turn obstacles into advantages that position their companies for long-term success.

Looking forward, the role of HR will only continue to expand. Rather than serving as a support function, it must be recognized as a strategic driver that connects talent strategy with business outcomes. Organizations that empower HR in this way will be better equipped to navigate disruption and create workplaces where people and performance thrive.

Feeling the strain of rapid market changes on your talent strategy? Develop a plan to define goals, evaluate possible vendors, and unlock workforce potential with the right skills technology in this Workday Buyer's Guide.