After the successes and challenges of 2025 in the world of Pay and Reward, which big-ticket items are set to keep HR teams most busy in 2026? We asked some of the senior members of our Innecto consultancy team.
“The year reward teams get their houses in order” - Justine Woolf, Director of Consulting
In 2026, I’m expecting to see more focus on managed flexibility in pay frameworks. Organisations and HR teams have been doing their level best to juggle many different factors - hybrid working, office attendance and locations, market premiums for rare skills, and pay progression.
Many have held off changing pay structures to see where the hybrid vs office debate lands, or how the job landscape evolves, and have ended up with a mixed bag of inconsistent practice, ad hoc allowances, overly complex and rigid structures, and pay ranges that don’t align with employee locations. With calls for transparency getting louder, I think 2026 will be the year reward teams look to get their houses in order, reviewing reward strategies and pay frameworks to ensure pay practice is consistent and fair. More on Justine >
Performance and the need to justify pay differentials - Holly Coe, Senior Reward Consultant
Looking into my crystal ball, I can’t help but see pay compression as an ongoing challenge. The National Living Wage is due to creep up again and employers are going to find it difficult to keep a realistic differential between roles.
From an HR perspective, the focus is likely to remain on performance and finding objective ways to justify differentials. More about Holly >
AI is important, but the human element remains critical - Sarah Lardner, Director of Business Innovation, Senior Principal Consultant
The reward landscape is evolving rapidly, with AI and automation reshaping the way organisations approach pay benchmarking, workforce analytics and personalised reward experiences.
While technology brings efficiency and predictive capability, the human element (ie ensuring fairness, transparency and engagement) remains critical. Innecto is committed to helping clients navigate this shift, combining advanced tech tools with strategic consultancy and face-to-face contact to deliver reward frameworks that are innovative and equitable.
We’ll be exploring all of this, and more, at our Pay Trends Event on 29 January 2026 at the Law Society. More about Sarah >
AI and the importance of Benefits - Simon Cook, Senior Consultant
I also see this as a key area. The conversation around AI isn’t about which jobs it will replace, but how roles at all levels can utilise advancements in tech. For businesses to fully realise this, they need to empower staff with the trust and accountability to seek those improvements in their role using AI-enabled technology.
The paradox is that despite the focus on digital/AI, employees will still need and look for the “human element”, reinforced through benefits that reflect the culture of the business. With small pay awards on the horizon, benefits and the wider package are likely to take centre stage. More about Simon >
Bonus schemes under the spotlight? – Spencer Hughes, Senior Consultant
Cost of living pressures aren’t going away, so pay decisions are going to stay under close review. The organisations that take time now to audit their reward frameworks (or have done so already) will be putting themselves in a much stronger position. A final thought on bonus schemes: where money is tight, I think they will be challenged more on whether they really drive the behaviours leaders want to see. More about Spencer >
Before they came to Innecto, our consultants worked in-house in a variety of sectors. Read more of their industry insights here.
