Summary: Small and mid-sized businesses will face increased HR pressure in 2026 as AI adoption accelerates, ACA subsidy uncertainty affects healthcare affordability, and performance management shifts to continuous feedback. Organizations with limited HR capacity will need clearer AI policies, proactive benefits planning, and stronger manager training to retain talent, manage risk, and stay competitive.
Heading into 2026, small and mid-sized businesses are balancing new expectations, emerging technologies, policy and compliance changes, and ongoing demands from teams who want clarity, consistency, and support. For many organizations, HR responsibilities pile up faster than internal capacity can absorb them, which creates risk and strains culture.
Based on our work with growing organizations across many industries, we see these three HR trends rising to the top for 2026. They reflect what business leaders are experiencing day to day and where they will need the most support in the year ahead.
1. AI Is Here. The Next Step Is Coordinating Its Use Across the Organization.
AI is already integrated into daily work for most growing businesses, whether leaders explicitly planned for it or not. According to McKinsey, 88 percent of organizations now use AI in at least one business function. Many everyday tools now rely on AI behind the scenes, from accounting and CRM platforms to HR systems, communication tools, and search engines.
Heading into 2026, AI adoption is no longer the barrier. The real challenge is creating clarity and consistency as employees use a wide range of AI-enabled tools.
In 2026, businesses will shift from experimenting with AI to coordinating its use. Teams will need guidance on what information can be shared with AI tools, how to review AI-generated work, and when human judgment must be applied. Policies will need to reflect how people actually work, and training will help employees understand both the benefits and limits of the technology.
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By putting clearer structure around AI use, businesses can strengthen decision-making and help employees get more value from the tools already in place. Without this alignment, teams may default to inconsistent or risky AI use that creates more confusion than efficiency.
2. Healthcare Subsidy Uncertainty Will Create New Pressure for Smaller Employers
Many small and mid-sized companies rely on individual marketplace plans and federal subsidies to help their employees access affordable healthcare. As discussions continue around whether Affordable Care Act (ACA) premium subsidies will be renewed, 2026 may bring significant cost increases for employees who purchase individual plans, especially in organizations that don't offer a group health plan.
If subsidies lapse or are reduced, premiums in the individual marketplace could rise sharply. Cost-sensitive employees are likely to feel the impact immediately and may begin to explore jobs with more competitive benefits or larger employers with established group plans.
At the same time, many smaller organizations don’t realize they may qualify for a group plan with as few as two employees, or that group coverage is often more cost-effective than expected.
In 2026, forward-thinking employers will:
- Assess their potential exposure if ACA subsidies change
- Evaluate whether a small-group plan is feasible
- Model potential impacts on retention and hiring
- Communicate openly with employees and prepare contingency plans
Organizations that get ahead of this issue will be better positioned to support their employees, stay competitive in the talent market, and make thoughtful decisions about their benefits strategy if the policy landscape shifts.
3. Leadership Skills Will Be Tested as Performance Management Moves to Continuous Feedback
Manager expectations continue to rise, and 2026 will bring additional pressure as more organizations shift away from once-a-year reviews toward ongoing performance conversations.
The move toward continuous feedback will push organizations to strengthen leadership development and performance management systems. We expect more businesses to:
- Replace annual-only reviews with quarterly or structured check-ins
- Train managers to give direct, actionable feedback throughout the year
- Adopt tools that help track goals and performance over time
- Equip new managers with training that builds confidence, fairness, and clarity
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Strong, well-supported managers will remain one of the most reliable drivers of culture, engagement, and retention. Companies that prioritize manager readiness will see more stability across teams and stronger alignment to organizational goals.
Navigate These 2026 HR Trends with Confidence
These trends highlight the growing complexity of people operations and the increased expectations placed on small and mid-sized businesses. Managing HR while also running your business can feel overwhelming, especially when new responsibilities emerge faster than internal teams can keep up.
NorthstarPMO provides practical, hands-on support that helps you stay ahead of HR needs while building systems that support long-term success. Our fractional HR support can help you:
- Develop practical and responsible AI guidelines
- Evaluate healthcare and benefits changes and manage the impact on your employees and business
- Strengthen compliance and reduce your risk
- Modernize performance management and support manager development
- Strengthen your leadership bench through training, coaching, and guidance
Our team integrates with yours to address immediate challenges and navigate uncertainty with clarity and confidence. By approaching these 2026 HR trends proactively, you can stay ahead of emerging needs rather than reacting under pressure.
If you want support planning for 2026 and ensuring your HR foundation is prepared for what is ahead, schedule a discovery call to explore how we can help.
Updated for 2026 on 1/9/26.
Frequently Asked Questions
The top 2025 HR trends are structured AI use across teams, potential healthcare cost increases due to ACA subsidy uncertainty, and the transition to continuous performance management.
AI is already embedded in payroll, HRIS, and communication tools. Policies reduce risks related to data privacy, accuracy, and inconsistent employee use.
Employees who rely on marketplace plans could face higher premiums, which may lead to turnover, reduced engagement, and hiring challenges for employers without group health plans.
Frequent check-ins improve alignment, engagement, and performance. Annual reviews alone are not sufficient for teams that expect timely guidance and clear expectations.
Fractional HR provides policy development, benefits strategy support, manager training, compliance oversight, and hands-on execution, giving small and mid-sized businesses expert HR capacity without the cost of a full-time hire.