HR in 2025: What We Learned and What’s Next for 2026

If you work in HR, here’s a scene that might feel uncomfortably familiar:

It’s December 2025. Your engagement dashboard is painfully flat. Another manager has Slacked you, “My team is struggling – what can HR do?” Your CEO wants lower employee turnover without significant salary increases.  

And somewhere between rewriting a layoff email, mediating an argument in Slack, and answering a sixth “quick question” about AI policy… you catch yourself thinking:

“No one really supports us, but everyone blames us.”

If that resonates, you’re not alone.

In 2025, global employee engagement fell again; down to about only one in five employees actively engaged at work. At the same time, multiple surveys show 60–65% of workers report feeling some level of burnout.  

And HR teams are sitting right in the middle of that storm.

In our 2025 Employee Recognition Trends Report, we went deep into one part of this picture: how recognition is evolving as a lever to improve engagement, retention, and performance. Based on a survey of U.S. HR leaders and people managers from mid-sized organizations, we saw a clear shift:  

Recognition is no longer a “feel-good” program. It’s becoming a measurable performance system.  

Let’s dive into what we learned this year, and what to focus on in 2026. Engagement isn’t dead – but how we try to improve it is changing fast.

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2025: The Year HR Held Everything Together (With Very Little Glue)

Let’s start with the obvious: employee engagement is fragile right now. And disengagement costs the global economy hundreds of billions of dollars in lost productivity.

Our own Recognition Trends Report confirms that reality through changes in HR behaviours. HR leaders told us:

• 85% measure employee engagement as a primary recognition outcome

• 42% specifically track retention and turnover as recognition outcomes

In other words: HR knows engagement is a business problem, not a “soft” one, and they’re tracking it accordingly.

“It’s HR, not the ER” …but it doesn’t always feel that way

Many HR teams described 2025 as the year their role felt like an emergency room without the authority to do surgery.

You were:

• Caught between leaders and employees: asked to “fix culture” without real influence over leadership behavior.

• Given unrealistic expectations around hiring: “We need top talent fast, but we can’t raise compensation or adjust the role.”

• Expected to absorb emotional fallout from layoffs, restructures, and political tensions at work.

Research backs up how heavy this has become. HR and people leaders consistently rank among the most burned-out groups compared to other professionals. At the same time, overall worker stress is high with nearly a third of U.S. workers saying their job causes high levels of stress.

When both HR and the workforce are stretched thin, it’s no wonder “no one supports us, but everyone blames us” has become a quiet mantra.  

So, if 2025 felt like a year of trying to keep humans at the center of work while everything around you was shifting – that's because it was.

What We Learned from HR in 2025  

Against that backdrop, we wanted to understand: How are HR leaders actually using recognition to respond to these pressures?

Our 2025 Employee Recognition Trends Report uncovered a few big themes:

Recognition is now a performance lever, not a perk

Recognition has become one of the most effective levers for retention, motivation, and productivity, especially when it’s embedded in daily work, not just for special occasions.

Organizations that treat recognition as a measurable system are more likely to see stronger engagement and lower turnover, and  can more easily tie recognition data to business KPIs like productivity and profit.

In fact, 67% of organizations in the study reported measurable productivity gains from their recognition program.

Budgets are tight, and that’s not changing

One of the most honest findings: two-thirds of organizations (64%) say budget constraints prevent them from giving recognition.

HR leaders are being asked to improve engagement and retention, but not spend more money doing it.

The solution to this is tricky, but doable:  

1) Empower your managers to give frequent recognition regardless of a monetary component. Monetary rewards are appreciated, but they aren’t appreciation.

👉 Use the Leader’s Guide to Recognition on how leaders can incorporate more recognition into their everyday workflows.

2) Start connecting recognition to business outcomes (that’s where our Employee Recognition Trends Report comes in!). This data can help back your case when wanting to implement a recognition program.  

👉 This Stakeholder Question Prep Sheet gives you a guide on how to answer questions from your C-suite.

Measurement is standard now

Over 90% of organizations now measure recognition outcomes. Top metrics include:

• Engagement (82%)

• Retention/turnover (67%)

• Participation rates (64%)

• ROI/cost-benefit analysis (41%)

Recognition has essentially become a data-backed engagement engine, and the C-suite is paying attention. Recognition has evolved from a program to a system that connects culture, data, and business outcomes.

The Tech Stack Question: “If We Could Only Keep Three Tools…”

A recurring theme we heard from HR leaders in 2025 was tool fatigue:

“We’re paying for ten systems, and we only fully use five of them.”
“We’re still debating which HRIS, ATS, and engagement tools are actually worth it.”

When asked in a reddit thread, “If you could only choose 3 tools going into 2026, what would you keep?” The same categories kept bubbling up:

1. HRIS & ATS – Your source of truth

2. AI – No explanation needed here

3. And some sort of culture & engagement system

The big mindset shift for 2026 isn’t more tools. It’s fewer, better tools that do more things well:

• Systems that integrate cleanly (HRIS + ATS)

• Platforms that bring together recognition, data, engagement, and day-to-day behavior (not just surveys once a year)

• Tools that give HR leverage: you do something once, and it scales across managers and teams

• More AI & automation so HR can spend less time analyzing data and more time with their people

How HR Actually Used AI in 2025

Many routine tasks can be streamlined now with AI, which enables HR teams to shift their focus to higher-impact work and strategic initiatives.  

When it comes to AI and recognition, AI-assisted writing tools are valued by 73% of HR admins and 60% of managers.

"UKG has embraced AI in its evolving product strategy and within our day-to-day activities within HR and beyond. We’ve shifted to automating manual work so that the time can be reinvested in more valuable interactions between people and better outcomes." Melissa Shore, VP of People Insights and M&A Integration, UKG

Here’s how HR used AI in 2025:

AI in recruitment and onboarding

• Streamline candidate sourcing and analyze resumes faster

• Mitigate bias in hiring to enhance diversity

• Improve the interview process and provide predictions for hiring success

• Automated onboarding workflows to ensure consistency with new hires

AI in employee retention

• Identify attrition risks with predictive analytics

• Provide real-time data for proactive decision-making

• Analyze employee feedback and give detailed reports

• Help with people strategy and offer suggestions based on data

AI in culture and organizational health

• Facilitating more recognition through platforms with AI enablement  

• Personalization in employee training and engagement programs

• Identify skill gaps and opportunities for learning and development

• Helps monitor employee well-being and engagement

AI in crisis management

• Review internal documents and policies faster  

• Provide early or real-time detection of a potentially serious issue (PSI)

• Offer suggestions or support for crisis resolutions

• Help with various communications around crisis protocols

HR leaders aren’t using AI to replace humanity – they're using it to free up time for more human conversations. While headlines debated whether AI would replace HR, AI is actually empowering HR, and setting up HR teams to become more proactive, rather than reactive.

What Is HR Prioritizing in 2026?

Looking across our findings and broader research, a few priorities stand out for better engagement in 2026.

1. Moving the engagement needle

HR is focusing on higher-impact moves, not bigger programs:

• Embedding recognition into daily workflows

• Coaching managers to give more specific, timely appreciation

• Connecting recognition data with turnover, performance, and promotion decisions

2. Rebuilding manager capability

Managers account for a huge share of the variance in team engagement. 2026 will be about:

• Giving managers easier tools and templates for recognition

• Empowering managers to invest in skill development within their teams

• Making training and development a core part of manager enablement, not a side topic, or optional spend

3. Treating recognition as a four-pillar system

Using the four-pillar framework for future-ready recognition strategies:

1. Make it easy – Automate and integrate recognition into existing workflows

2. Empower managers – Provide guidance, coaching, and non-monetary tools

3. Drive financial visibility – Manage recognition budgets with transparency

4. Measure what matters – Connect recognition to engagement, retention, and business outcomes

What’s Next: See What 300+ HR Leaders Are Doing Differently

If 2025 felt like a year of putting out fires, 2026 can be the year you start building a more sustainable, measurable system for engagement.

Our 2025 Employee Recognition Trends Report goes deeper into everything you’ve just read:

• The top barriers holding recognition programs back (and how leaders are fixing them)

• How HR is using AI and automation to make recognition more human

• Benchmarks on budgets, metrics, and outcomes you can take straight to your C-suite

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