62% of HR Leaders Are Facing a Self-Inflicted Talent Crisis, Balancing an Employer’s Market with Talent Shortages

isolved’s annual HR trends report finds that, though top talent is hard to recruit, 64% of HR leaders are excited about the impact of AI, with recruitment emerging as a top use case.

isolved, a provider of human capital management (HCM) solutions that help organizations recruit, retain and elevate their workforce,  released its sixth-annual HR trends report, “HR’s New Balancing Act: 7 Trends to Watch in 2026.” This report draws from several isolved studies to equip HR leaders with data-driven best practices for elevating their talent acquisition, skills, benefits and engagement strategies in 2026.

isolved’s HR trends study reveals the major themes revolutionizing HR in 2026, portraying a complex and dynamic talent market.

No one is winning in a “Nobody Market”

At the heart of the report is how HR views its role within the current labor market. When asked to describe the market, HR leaders’ answers are complicated. Over two-thirds (65%) say the power is shifting back to employers, yet 62% say their industry is facing a self-inflicted talent crisis, and outdated hiring practices are the culprit.

“It seems unlikely we’re in an employer’s market if employers can’t find a way to match talent with their open positions,” said Heidi Barnett, President of Talent Acquisition at isolved. “HR leaders know there are plenty of qualified candidates out there, but they’re losing them during the hiring process. Recent research shows job-hunting intent will be up year over year in the first half of 2026. Yet many companies will miss this influx of job-seeking talent by posting roles with unclear requirements and inflated expectations for skills and experience. HR is unsure how to go back to the drawing board and build a recruitment strategy that truly attracts top talent. The solution is to simplify several aspects of their strategies with direct expectations in job descriptions and interviews, less unnecessary elitism, modern recruitment metrics and fewer steps in the job application process.”

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CHROs are becoming tech leaders

Sixty-nine percent (69%) of HR leaders say they’re leveraging AI, and 64% of HR leaders believe it positively impacts their department, with payroll and recruitment emerging as top AI use cases. Those leveraging AI for payroll to detect anomalies before payroll runs not only reduce compliance, risk and costly errors, but also protect trust. Sixty percent (60%) of employees say they’ve been impacted by payroll errors, and nothing erodes trust faster than making a mistake that puts a worker’s livelihood in jeopardy.

Sixty-five percent (65%) of HR leaders say AI helps them work more efficiently. HR teams are increasingly using AI-powered assistants to answer common questions about PTO, holidays and benefits eligibility. The impact of these tools adds up quickly; more than half of HR leaders spend four or more hours a day answering redundant questions.

CEOs are noticing upskilling strategies

Nearly half of HR leaders (48%) say they’re dealing with a skills crisis, and like the talent crisis, it’s self-inflicted. HR leaders say the root cause is a lack of agility; they’re simply not adapting fast enough to technology and industry shifts. They feel this a bit more acutely than the talent crisis. They don’t have full control over labor fluctuations, but they are responsible for upskilling their employees and building future-proof internal mobility programs.

Luckily, HR leaders are ready for change, but they’re still figuring out where to start. Their bosses, business owners, are clear on what matters most. According to isolved’s survey of more than 2,000 business owners, these leaders see the greatest value of professional development in the following areas:

• 46% say professional development improves employee skill sets, productivity and efficiency
• 45% say it boosts employee retention and engagement
• 41% say it strengthens leadership development and succession planning

When adopting a new skills strategy or learning management system (LMS), HR leaders must build an approach that targets these areas and be able to explain how. They should also get employee buy-in with clear skills paths and frequent recognition.

AI is benefiting benefits enrollment

Both HR and employees think benefits are broken. Over one-third (35%) of HR leaders say vague benefit plan details leave employees unsure about their choices, and another 26% say a lack of clear, timely communication leaves employees in the dark on how the enrollment process works. Employees have a lot to say about how this impacts them: 72% of employees say that selecting benefits is a stressful experience, and one in four employees have left a job due to inadequate benefits.

AI adoption for benefits administration is lower, with 34% planning to leverage it in the future. Given how challenging benefits enrollment can be, HR teams may not realize how helpful AI can be here. For example, an AI-powered experience such as isolved Benefits Guidance can use a brief employee survey to deliver clear, personalized plan recommendations, making it easier to compare options and enroll with confidence. Done well, that kind of guidance can reduce the confusion and stress that drives benefit dissatisfaction and help prevent the one-in-four employees who say they’ve left a job due to inadequate benefits from becoming part of the next wave of job seekers as job-hunting intent rises.

“HR has a tough job; they must do right by their organization, empower and support employees and ensure their people strategy drives the outcomes the C-suite wants; that’s a tricky balancing act,” said Amy Mosher, Chief People Officer of isolved. “Luckily, AI, HCM and other cutting-edge technologies are more sophisticated than ever, helping HR move beyond tedious tasks and operate with greater strategic impact. Organizations that leverage these solutions will build a stronger workforce, supercharge employee engagement and experience, remove complexity and navigate disruption.”

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