As 2025 comes to a close, the HR recruitment market has regained confidence, with increased activity across the UK, US and Asia signalling renewed business momentum heading into 2026. Hiring remains selective and strategic, shaped by leaner teams, tighter budgets and accelerating adoption of AI and automation. Across People and Talent, HR Infrastructure, and Reward and People Analytics, organisations are prioritising high-impact roles, technology-enabled operating models and stronger governance. While these shifts create efficiency and insight, they also raise challenges around future talent pipelines and leadership readiness. Looking ahead, HR’s role as a strategic driver of resilience, transformation and growth has never been clearer.
After a period of volatility and cautious decision-making, the final quarter has reinforced a sense of stability and forward momentum. HR hiring continues to serve as a reliable indicator of broader business confidence, and the uptick in activity across the UK, US and Asia suggests organisations are preparing for growth and transformation in 2026. While optimism is evident, hiring remains purposeful and strategic, with businesses prioritising quality and alignment over sheer volume.
This measured approach reflects the themes we’ve tracked throughout the year: leaner HR teams, tighter budgets, and a growing emphasis on technology and data-driven decision-making. AI and automation have moved from theoretical to practical, reshaping operating models and influencing the mix of skills within HR functions. At the same time, offshoring of specialist roles and the reduction of entry-level positions raise important questions about future talent pipelines, a challenge that will require proactive planning and creative solutions. These structural shifts have underpinned a market where transformation mandates, governance alignment, and consultative hiring strategies dominate conversations.
Regionally, trends remain consistent with earlier quarters: steady demand for HR generalists and strategic business partners in Europe, strong appetite for reward and talent acquisition expertise in the US, and rapid adoption of AI-enabled HR solutions across Asia. Interim hiring has continued to play a critical role in bridging gaps and driving change without adding permanent cost, while senior appointments have focused on leaders who can deliver measurable impact that is closely linked to bottom-line growth. When considering 2025 in its entirety, Q4 closes with a balanced sense of optimism: there is confidence in the progress the industry has made, matched with a pragmatic recognition of the risks both present and ahead. What is clear is that HR has shifted from being a supporting function to a strategic driver of resilience and growth.
Whilst we’ve certainly felt an increased buoyancy and optimism in the market this year, we wanted to take a closer look at what our data tells us. HR hiring is often a strong indicator of wider business confidence, so understanding these trends can provide valuable insight into how organisations are thinking about growth and investment. To explore this, we compared activity across our three practice areas of People & Talent, HR Infrastructure, and Reward and People Analytics, using insights from 2024 and 2025.
The People and Talent market experienced robust growth over the last year, with clear signs of increased client engagement and hiring activity compared to 2024. Across Q1 to Q3, HR functions continued to evolve toward leaner structures, with broader roles and dual-hatting becoming common as organisations seek efficiency amid macroeconomic uncertainty. Demand for commercially aligned HR leaders and strategic HRBPs remained strong, alongside growth in Talent Acquisition roles (particularly mid-career hires and junior “second jobber” positions), which have seen salary inflation and market compression. Private equity and financial services firms are driving innovation in talent development, with CHROs prioritising AI-enabled learning platforms and hyper-personalised content. Overall, the People and Talent market felt buoyant and competitive, with businesses prioritising quality and depth in their recruitment decisions.
The role of the CHRO continues to evolve at pace with leaders now tasked with an augmented approach with both people and AI converging. HR leaders have experienced a rapidly changing role over recent years, and this trend continues as AI tools promise efficiency gains for the workforce. The core fundamentals of the CPO role remain unchanged; they are responsible for driving a performance-driven culture, developing high-impact leaders and helping to build a culture that attracts and retains the best talent in the market. Expectations of HR teams are greater than ever before, particularly when factoring AI tools and automation. Read Steven Hayes‘, Managing Director of Catalyst, article about the evolution of the CHRO role here.
The HR Infrastructure market experienced one of the most dramatic shifts last year, with activity levels rising sharply compared to 2024. Clearly, investment in HR technology accelerated throughout 2025, with CHROs prioritising agile, modular platforms like HiBob and BambooHR over traditional tier-1 systems for cost efficiency, faster deployment, and enhanced employee experience. Payroll and benefits functions also underwent a clear strategic transformation, with senior hires consolidating global operations and driving automation. Q3 saw continued demand for HRIS leads and shared services specialists as firms centralised operations and embedded scalable, tech-enabled solutions. AI adoption is now a core focus, enabling predictive analytics and streamlined service delivery, while offshoring of systems and data roles to regions such as Eastern Europe and India is expanding beyond large enterprises to mid-sized firms.
This dual trend of automation and relocation promises efficiency gains but, equally, raises concerns about future talent availability in high-cost hubs, prompting organisations to rethink workforce planning and succession strategies. Throughout 2025, all signs pointed to a market in expansion mode, where businesses were planning ahead and laying the groundwork for future growth. This is typical of a sector undergoing change, with decision-making cycles lengthening as stakeholders align on priorities and funding. Overall, as we enter 2026 the market feels energised and forward-looking, signalling confidence in long-term HR infrastructure investment.
In early 2025 we saw a clear demand for mid-to-senior level Reward professionals, a hiring trend that stabilised in Q2, and picked up again in Q3 as firms prepared for year-end and the EU Pay Transparency Directive which will impact many firms in 2026. Throughout 2025, salaries have risen amid talent scarcity, exacerbated by offshoring of Analyst roles and shrinking domestic pipelines. Boutique financial services firms have reinforced leadership teams, triggering restructuring and future hiring waves, while cost-conscious behaviours persist. This points to a market focused on fewer but more critical hires, with clients taking a rigorous approach to benchmarking and decision-making. Rather than suggesting a slowdown, these trends reflect a shift toward precision and quality, where businesses prioritise high-impact appointments over volume.
As expected, technology adoption has also been reshaping reward processes: automating BAU tasks and reducing reliance on junior talent, which continues to pose long-term succession challenges for regulated organisations that require HQ-based expertise, as written about by Rigers Kabashi. Interim and fixed-term solutions continued to gain traction in Q3 and Q4 to ensure coverage for critical year-end cycles (predominantly due to EU Pay Transparency), whilst additional projects are underway.
Throughout 2025, we hosted, facilitated, and chaired a series of roundtables and networking events. These sessions have been designed to build peer networks, share ideas, exchange best practices, and explore critical developments in the Reward and People Analytics space, and HR more in general.
Lucy Bills, a Director in Catalyst and who leads our UK and Europe Reward and People Analytics practice, chaired carried interest roundtables in partnership with EWM and FTI Consulting, alongside regular reward-focused sessions with alternative and asset managers. These events highlighted regulatory changes, their impact on reward structures, and common challenges faced across the industry.
Our broader People-focused events explored how organisations create value through their people. Discussions centred on what drives revenue and how the Chief People Officer role has evolved to foster environments that deliver measurable improvements in revenue per head, productivity, and performance. Interventions ranged from basic processes and policies to advanced AI-enabled solutions, with a common theme: initiatives are fully aligned with business objectives, and Chief People Officers deeply understand their human capital.
Catalyst hosted a live webinar with Gemma Bullivant covering the EU Pay Transparency Directive – a game-changer for pay equity. By June 2026, every EU Member State must enforce new rules on pay reporting, transparency, and equal pay.
This highly interactive session supported HR leaders to cut through the complexity and focus on what matters most for getting compliance right. We explored what it means in practice and why action is critical, walking our audience through key dates and milestones and unpacking the major changes in recruitment, pay setting, reporting, and employee rights. Attendees learned practical steps to assess readiness and build a compliance plan, gained answers to common questions like EORs and the 5% pay gap rule, and discovered how to turn compliance into a strategic advantage.
Specialist insights emerged across the year from our Private Equity Portfolio CPO network hosted by Director Victoria Johnston. This discussion group meets monthly to address challenges across deal cycles, investor expectations, and growth through people.
Key themes in 2025 included:
Catalyst Partners will continue to strengthen and expand its roundtable and networking programs, building on the momentum and insights gained in 2025. We will focus on deepening conversations around regulatory developments in reward structures, advancing AI-driven solutions for HR efficiency, and exploring innovative approaches to equity participation and workforce engagement. Our Private Equity Portfolio CPO network will remain a cornerstone, addressing investor expectations and growth strategies through people, while broader forums will tackle emerging trends such as global compliance, technology integration, and creating measurable value through human capital. By fostering these peer networks and knowledge-sharing platforms, we aim to equip leaders with practical strategies that align people initiatives with business performance in an increasingly complex and competitive environment.
There is no doubt that HR is in a deep phase of evolution as it continues to be reshaped by AI. Deloitte’s 2026 Global Human Capital Trends Report emphasises that “agentic AI”, where autonomous systems collaborate with humans, combined with HR, should create a ‘Talent Orchestration Hub’ – coordinating hybrid teams, AI-driven workflows and re-evaluated employee value propositions. This then signals a radical shift in the role HR can play in key decision-making, utilising real-time and predictive data to enable functions such as Talent Acquisition, Total Rewards and Service Delivery to be strategic integrators of human and machine intelligence.
With much of the above technology still in its infancy, it creates obvious blind spots, particularly for leaders tasked with equipping the next generation of the workforce to operationalise AI. HR Leaders must close the gap between this technological transformation and leadership readiness, or face employee disengagement, and potentially a retention crisis. This is backed up by McKinsey’s HR Monitor report, stating that “36% of employees across Europe and the United States are not satisfied with their current employer”, due to shifting employee expectations to reshape the future of work. Failure to equip employees with the readiness to combat organisational change could be catastrophic.
In light of the above, we see an uptick in potential channels of workflow across HR Shared Services, Technology, Rewards and Talent. With organisations streamlining process enhancements, we envisage many firms looking to hire external talent, particularly from non-traditional HR backgrounds that will add a new commercial lens to aid transformation. In smaller, more nimble companies, we are already having conversations with CEOs and owners to hire a more strategic CHRO to activate their AI-focus for 2026.
Amidst radical AI transformation, a key theme that will creep into 2026 will centre around CHROs needing to balance flexibility with organisational cohesion. Industry observation has many corporate businesses returning to a full ‘in-office’ working policy as return-to-office mandates continue to return. A report by McKinsey saw the proportion of in-person workers of at least four days a week increase from 34% to 68%. HR Leaders will need to make key decisions to enable resilience and long-term business growth, whilst striking a balance between innovation and compassion. These points have echoed through to our conversations with a variety of clients who are engaging in tough decision-making processes centred around organisational growth balanced with retaining key personnel. This could increase regretted attrition, particularly in some of the more senior COE roles such as Total Rewards, Executive Compensation, Workday Specialists and Heads of Shared Services where talent pools are thin and often hired remotely.
2025 can be seen as a pivotal year for HR, defined by resilience, transformation, and a clear shift toward strategic influence. While the market has regained confidence, hiring remains deliberate, with organisations prioritising impact over volume and embedding technology at the heart of their people strategies. AI and automation have moved from concept to reality, reshaping operating models and challenging traditional talent pipelines, while offshoring continues to alter the geography of specialist roles. These trends signal both opportunity and complexity: efficiency gains on one hand, and succession risks on the other.
As we look to 2026, HR leaders must balance innovation with foresight, investing in future-ready skills, building robust early-career pipelines, and ensuring governance and culture keep pace with technological change. The organisations that succeed will be those that stop viewing HR as a cost centre and understand its value as a strategic engine for an organisation. One which will drive growth, enable transformation, and be fundamental in shaping both the human and digital workforce to come.
Thank you to all of our wonderful clients and candidates for your partnership and support throughout 2025. We look forward to continuing to work alongside you during 2026 and beyond.
Happy New Year from our global teams at Catalyst Partners.
If you are interested in scheduling a meeting to discuss any of the above trends in more depth with our market specialists, please do get in touch at catalyst@catalystpartners.com.
