The Top Challenges Facing UK Employers
As we move into 2026, UK employers are preparing for another year of significant workplace and talent challenges. In a recent HR News article, research by Ciphr, involving over 300 HR decision-makers, highlights the biggest issues organisations expect to face. From skills shortages to hybrid working, it’s clear that people strategy will remain central to business success.
1. Recruiting and Retaining Talent
Nearly a third of HR professionals cited finding qualified candidates as their top concern, closely followed by retaining existing talent. Skills shortages remain acute across many industries, meaning employers must think differently about attraction and retention – particularly important in the Environmental, Sustainability & ESG and Energy talent market.
A compelling employer value proposition, clear career paths, and investment in internal development programmes will all be essential. Partnering strategically with specialist search firms can also help access hard-to-reach, high-quality talent.
2. Managing Costs and Pay Expectations
Rising costs and tightening budgets are placing pressure on HR and finance teams. Balancing fair pay against business constraints will be difficult, especially as employees continue to face cost-of-living pressures. Organisations should review their total reward offering, ensure pay transparency, and link salary growth to skills and performance. Investing wisely in people initiatives that directly drive productivity will deliver stronger returns.
3. The Ongoing Shift to Hybrid Work
Employee expectations around flexibility continue to evolve. While some companies are encouraging more office attendance, many employees now view hybrid work as non-negotiable. Employers must define clear hybrid working strategies, communicate the rationale behind them, and equip managers to lead effectively in a distributed environment. The organisations that succeed will be those that combine flexibility with collaboration and clarity. At Allen & York, we’re finding that almost 95% of candidates we work with want the flexibility hybrid working offers.
4. The Rise of Responsible AI
With artificial intelligence transforming business operations, HR teams are focusing on using it effectively and ethically. While AI offers efficiency gains, it also raises questions around bias, privacy and transparency. Employers should establish clear governance frameworks and upskill teams to ensure technology enhances - rather than replaces - human judgement in talent decisions.
5. Legislative and Compliance Pressures
A quarter of HR leaders expressed concern about upcoming employment legislation and regulatory changes. Staying ahead of reforms, updating policies, and embedding compliance into everyday practices will be vital to avoid risk and protect reputation.
The Allen & York Perspective
At Allen & York, we see these challenges not just as risks, but as opportunities for reinvention. By aligning people strategy with business goals, organisations can build agility, strengthen culture, and secure long-term growth. Our work in talent search supports clients to attract, develop and retain the leaders who make this transformation possible. Get in touch to find out more.