HR leaders are stepping into 2026 with a powerful but demanding mandate: help the organisation grow and cut costs
New research from International Workplace Group (IWG) shows an executive landscape defined by both confidence and caution.
An overwhelming majority (95%) of CEOs are optimistic about 2026 and a further 84% expect economic conditions to improve, yet every single one also says cost control is essential, with CFOs reducing budgets by around a tenth on average.
For HR, that combination means the people agenda has to deliver efficiency and advantage at the same time.
Mark Dixon, founder and CEO of IWG, is clear that senior leaders are not simply in a cost‑cutting mindset. Instead, they are being more selective about where money goes.
Rather than tying themselves to long, inflexible and expensive leases, organisations are turning to hybrid and platform‑based working models in which employees use a network of flexible workspaces, alongside home and traditional offices.
Dixon argues that flexible work is now a financial as well as cultural lever, allowing companies to relieve pressure on property costs while preserving, and often enhancing, productivity and engagement.
For HR leaders, this unlocks an important opportunity. Savings from real estate and operational efficiencies can be redirected toward talent, development, wellbeing and culture – but only if HR is actively shaping how these new models are designed and implemented, rather than reacting to them after the fact.
From “the office” to “an office”: rebalancing where work happens
The way work is anchored in place is also undergoing a fundamental rethink. Dixon described 2026 as the year of “work from an office, not the office.” A large majority of CEOs already enable teams to work across multiple locations, whether that means a local workspace close to home, a central city office or a home office.
Looking ahead, many plan to rely more on shorter‑term leases and co‑working memberships instead of traditional long‑term headquarters.
What drives this shift goes beyond property strategy. Leaders are looking to shorten commutes, tap into wider talent pools beyond major cities, align work patterns with employee preferences, improve productivity and place teams in areas where the cost base is lower.
As Dixon put it, this is not just a change in how people work, but a rebalancing of where economic value is created. Advances in technology have removed the need for daily long and expensive commutes, breaking the old assumption that being near a central HQ is the hallmark of commitment or performance.
For HR, this has massive implications. Talent strategies can become genuinely location‑agnostic. Recruitment can reach into regional and suburban markets. Policies on commuting, allowances and relocation can be redesigned for a world where proximity to a single office matters less.
There is also a clear employee value proposition angle. IWG’s research suggests that workers can save a substantial amount each year by working closer to home in high‑quality local workspaces, which strengthens perceived reward without increasing fixed salary costs.
AI isn’t just an efficiency play
Alongside flexibility, AI is emerging as the central productivity engine in the C‑suite’s 2026 strategy. Senior leaders say they will prioritise investment in AI and automation in tandem with broader productivity initiatives, seeing the two as tightly linked.
Yet Dixon believes many organisations are still underestimating the scale of what is coming. In his view, AI is often being treated as a modest cost‑cutting tool, when it is in fact part of an exponential technological shift. Changes of this kind do not simply make processes cheaper or jobs slightly more efficient; they fundamentally alter the trajectory of the business.
Employees are already experiencing AI’s impact in everyday work. IWG’s previous research found that a large majority of workers report AI tools save them time, with an average gain of almost an hour per day – the equivalent of close to an extra day of productive capacity each week.
For HR leaders, this reality raises immediate questions about how roles are structured, how performance is measured and how workload expectations are set. As repetitive tasks are automated, roles will need to be redesigned around higher‑value human contributions: problem‑solving, creativity, relationship‑building and judgement.
The new talent equation: hire for AI, train for AI
This shift is already being reflected in hiring and development strategies. Dixon sees two strong trends emerging. First, many organisations are actively recruiting people with AI and technical skills because those capabilities are now critical to unlocking the full value of new technologies. Second, there is a concerted push to upskill and reskill existing employees so they can work productively with AI tools rather than feeling displaced by them.
CEOs understand that technology alone is not enough. The real value comes when people have the skills and confidence to deploy, adapt and scale AI in their day‑to‑day work.
That places HR at the centre of building an AI‑ready workforce. Competency frameworks will need to be refreshed to reflect data and AI literacy. Leadership development programmes must address how to manage AI‑enabled teams. Large‑scale learning initiatives will be required to help people at all levels integrate new tools into their roles.
Workforce planning also takes on a new urgency. As AI reshapes which activities are automated and which are augmented, HR will need to identify where new roles are emerging, where existing roles can evolve and how to create credible reskilling pathways that preserve employability rather than defaulting to job cuts.
Flexible work as a retention and performance strategy
The intersection of AI, flexibility and cost control is also putting fresh emphasis on management quality. Dixon is clear that “productivity and performance come down to good management of people.”
Leaders are trying to balance automation and savings with high retention, knowing that attrition is expensive and destabilising. The ability of managers to lead distributed, AI‑enabled teams – to set clear outcomes, build trust, coach effectively and maintain cohesion across locations – is fast becoming a defining capability.
Flexible work plays a central role in this equation. It is no longer framed primarily as a lifestyle perk or an emergency response to external shocks. Instead, it is increasingly understood as a mechanism for controlling fixed costs, widening talent access, improving wellbeing and unlocking productivity.
By reducing the need for daily commuting to distant offices and giving people more autonomy over where they work, organisations can create environments in which employees are more engaged, less fatigued and better able to perform.
What HR leaders should do now
For HR, the question is how to turn CEO optimism, technological change and new workplace models into tangible organisational outcomes.
That starts with reframing flexible work as a core business strategy rather than a standalone policy. HR can connect hybrid and distributed models directly to financial metrics, talent outcomes and engagement, making it easier for boards and executives to see the value of continued investment.
In parallel, HR must lead the effort to build an AI‑ready workforce. That means working with business leaders to anticipate which roles and processes will change, designing learning pathways that equip people to work alongside AI, and integrating AI literacy into leadership, early careers and specialist development programmes.
Finally, HR needs to ensure managers are prepared for a world in which teams are spread across locations and heavily supported by digital tools. Performance systems, communication norms and leadership expectations should be aligned with this new reality so that managers are judged and supported on their ability to create clarity, trust and results in a flexible, AI‑enabled environment.
The coming year will test whether organisations can convert strategic optimism into operational reality. With budgets tightening, AI accelerating and offices decentralising, HR’s influence over where and how work gets done – and how people experience that change – has never been more central to business performance.
