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Take a shot of espresso and settle in. The world of HR and compensation is moving fast, and yes, there’s a lot of change. 2025 felt like a year of constant recalibration. Every decision carried higher stakes, from pay transparency to AI adoption.
In our End-of-Year Top Jobs and HR Predictions Report, our leaders came together to reflect on what was learned in 2025 and what matters the most in 2026. We wanted to answer two big questions: what should HR teams be doing, and what should they be leaving behind.
Leaders include Chief Compensation Strategist Ruth Thomas, Chief People Officer Lexi Clarke, Chief Product Officer Peh Teh, Senior Corporate Employment Counsel Lulu Seikaly, and VP of AI and Data Science Sara Hillenmeyer. Below is a summary of these insights.
How 2025 became the foundation for 2026
Balancing honesty with organizational realities in HR
Transparency moved from aspiration to expectation.
In 2025, HR teams found themselves walking a tightrope. Employees and candidates expected more honesty about pay, policies, and culture, even as organizations navigated economic uncertainty and shifting business priorities.
Lexi Clarke, Chief People Officer, described authenticity as the defining theme of the year. Transparency helped build trust, but it also required careful judgment. “Transparency is great, but it can also be scary when the macro environment is shifting,” Lexi noted. HR leaders had to be clear without overpromising, and open without eroding confidence.
That balancing act doesn’t go away in 2026. Instead, it becomes a core capability. Organizations that succeed will be the ones that treat transparency as an ongoing practice, not a one-time disclosure, and pair honesty with context, communication, and leadership alignment.
Centering compensation as a strategic lever, not just cost control or compliance
Pay decisions became sharper, more intentional, and more defensible.
For years, compensation lived at the intersection of finance constraints and compliance requirements. In 2025, that changed.
Ruth Thomas, Chief Compensation Strategist, and Lulu Seikaly, Senior Corporate Employment Counsel, both saw compensation move from a reactive function to a strategic one. As budgets tightened and labor markets cooled, organizations could no longer rely on broad-based increases or legacy practices. Every pay decision carried more weight and more scrutiny.
Base pay budgets largely stabilized in the mid-three percent range, but that didn’t mean compensation became less important. Instead, organizations shifted toward variable pay, skills-based rewards, and targeted investments in critical roles. The question evolved from how much are we paying? to where does pay actually drive impact?
At the same time, new state laws, global regulations, and the looming EU Pay Transparency Directive forced organizations to document and defend those decisions. According to Lulu, the companies best positioned for 2026 are the ones that used regulatory pressure as an opportunity to strengthen their compensation strategy, tighten pay ranges, and improve governance, not just check a compliance box.
In 2026, compensation sits at the center of trust, retention, and business strategy, not on the sidelines as an administrative exercise.
The shift from AI hype to practical application
AI moved from curiosity to capability.
Peh Teh, Chief Product Officer, and Sara Hillenmeyer, VP of AI and Data Science, both observed how quickly the conversation changed. HR leaders stopped asking whether to use AI and started asking how it could solve real problems today.
Buyers became more sophisticated. They no longer want AI for AI’s sake. They want tools that could support compensation decisions, job matching, workforce planning, and skills analysis. As Sara noted, the market has matured quickly, moving from hype to practical value.
But that shift also raises the stakes. AI is only as strong as the data and methodology behind it. Peh emphasized that while anyone can ask AI how much to pay someone, it’s still on HR to ensure the answer is grounded in reality, backed by defensible data, and aligned with business priorities.
That lesson carries directly into 2026. AI will increasingly support evolving job catalogs and skills-based pay, but without connected systems and trusted data, even the most advanced tools will fall short.
What HR and compensation are carrying forward and leaving behind in 2026
All these lessons now shape what HR teams must double down on in 2026, and what they need to leave behind.
From transparency as a moment to transparency as a mindset
In: Pay transparency and fairness that extend beyond recruitment.
Out: Treating transparency as a one-time posting requirement.
By 2026, transparency is no longer confined to job ads. Organizations are expected to explain why people are paid what they are, how ranges are set, and how pay connects to performance, growth, and opportunity.
Lulu Seikaly emphasized that total rewards transparency is the next frontier. Salary alone is no longer enough. Benefits, equity, bonuses, and career paths are all part of the conversation, particularly as Gen Z enters the workforce expecting clarity, context, and consistency.
From intuition-driven pay decisions to defensible, data-backed strategy
In: Data-driven decision-making with clear, defensible methodologies
Out: Non-defensible pay decisions and manual, spreadsheet-driven processes
As compensation becomes more visible and more regulated, “we’ve always done it this way” no longer holds up. Organizations heading into 2026 are tightening methodologies, documenting rationale, and ensuring decisions can withstand both internal and external scrutiny.
This shift also reinforces why pay equity analysis and total compensation reviews can’t be optional. Ignoring them introduces risk — legally, financially, and culturally.
From AI experimentation to operational value
In: Skills-based talent management and real-time insights
Out: AI tools layered on top of disconnected systems
Sara Hillenmeyer noted that AI will increasingly support job matching and evolving job catalogs, particularly for roles where skills change faster than traditional surveys can keep up. But integration remains the challenge. Without connected systems and trusted data, even the best AI tools fall short.
Peh Teh reinforced that point. AI raises the stakes for data quality and methodology. “Anyone can ask AI how much to pay someone,” he said. “It’s still on HR to make sure the answer is grounded in reality.”
In 2026, AI isn’t about novelty. It’s about enabling better decisions, faster, especially when budgets are tight and skills are changing quickly.
From siloed ownership to shared accountability
In: Cross-functional collaboration across HR, compensation, finance, and legal
Out: Assuming HR owns pay decisions in isolation
Lexi Clarke emphasized the growing importance of strong partnerships with finance leaders. HR and compensation professionals are no longer just managing programs. They are directly linking people investments to business outcomes.
This collaboration becomes even more critical as organizations navigate pay transparency laws, evolving skills needs, and tighter budgets. Compensation strategy now lives at the intersection of talent, risk, and growth.
What’s in and out for 2026 in summary
In:
- Pay transparency and fairness beyond recruitment
- Skills-based talent management and real-time insights
- Viewing compensation as an investment, not just a cost
- Cross-functional collaboration across HR, finance, and legal
- Defensible, data-driven pay decisions
Out:
- Manual processes, spreadsheets, and siloed workflows
- Non-defensible or poorly documented pay decisions
- Treating transparency as a compliance checkbox
- Assuming remote roles are exempt from regional pay laws
- Ignoring pay equity and total rewards considerations
Actionable tips for HR leaders in 2026
Lulu: Audit your pay ranges before posting them. Ensure they reflect reality and are well-documented. Inconsistencies will raise questions from leadership and, in some cases, legal challenges.
Sara: Audit your jobs and track critical roles where skills are shifting. Stay ahead of the market to avoid surprises.
Lexi: Inventory your HR tech stack and review where you spend your time. Identify manual processes that could be automated with technology or AI.
Peh: Update job descriptions regularly to ensure benchmarking and compensation data remain accurate.
Ruth: Stay curious. The pace of change is accelerating, and curiosity will help HR leaders embrace new tools, data, and opportunities.
Looking ahead
If 2025 was a year of recalibration and strategic maturity, 2026 will be a year of acceleration. The organizations that succeed will be those that treat talent strategy as a core competitive advantage, grounded in transparency, intelligence, and human judgment.
Compensation will continue to sit at the center of that strategy. Not as a spreadsheet exercise, but as a trust building tool that connects pay, purpose, performance, and growth.
For more insights, watch the full episode of Comp and Coffee and stay tuned for our upcoming Compensation Best Practices report, coming in mid-February. We will dive deeper into the data, trends, and decisions, shaping the future of pay and work.
