Your weekly briefing on the developments and trends shaping HR and HR technology, written for HR and people teams at European SMEs.
Big picture: AI in HR grows up
SHRM’s State of AI in HR 2026 report, drawing on 1,908 HR professionals, paints a picture of a field moving from hype to measured impact. Just over half of organisations (54%) still haven’t adopted any AI in HR and have no plans to this year, even though 92% of CHROs expect more of it. The biggest barrier isn’t the technology: 67% of teams simply lack awareness of what AI can do, and 87% point to HR customers preferring a human touch. In short, the conversation has matured from whether to use AI towards how to use it responsibly.
Why it matters: For SME HR teams, you don’t need to automate everything to see a return. Start with one or two well-understood tasks, keep a named person accountable for the decisions, and you’ll close the awareness gap that’s holding most teams back.
On the radar
Agentic AI enters the mainstream conversation. The 2026 debate has shifted from chatbots that answer a single question to agentic AI: systems that take multi-step actions such as scheduling interviews, flagging compliance issues or routing approvals. Adoption is uneven. Roughly 48% of large businesses, 25% of midsized businesses and only 4% of small businesses have adopted agentic tools, though CHROs project steep growth through 2027. The gap between big employers and small ones is worth watching.
EU pay transparency turns from theory into obligation. The Pay Transparency Directive’s transposition deadline of 7 June 2026 has passed with no extension, yet several member states including Germany, France, the Netherlands and Spain openly missed it. The obligations still apply: employers will need to publish salary ranges before or during recruitment, stop asking candidates about pay history and report gender pay gaps. Law firms are urging companies not to wait for national legislation before getting their pay data in order.
Skills-based hiring keeps climbing. Seventy per cent of employers now report using skills-based hiring, up from 65% a year earlier, according to NACE’s Job Outlook 2026. GPA as a screening tool has fallen from 73% of employers in 2019 to 42% this year. The emphasis is narrowing to the critical skills that drive growth, such as data literacy and AI fluency, rather than broad ambition.
Engagement stays stubbornly low. The Achievers Workforce Institute 2026 engagement and retention report, spanning 4,000 employees and HR professionals across eight countries, finds only 26% of employees engaged and just one in four feeling appreciated. A stable-looking labour market, with low quit rates, may be masking quiet disengagement rather than genuine loyalty.
HR tech watch
Skello raises €200m for European expansion. French frontline-workforce HR platform Skello secured €200m on 5 July 2026 in a round led by Bridgepoint, with founders and existing investors Partech and XAnge reinvesting. Skello serves around 30,000 businesses and passed €50m in annual recurring revenue after reaching profitability in 2025. It plans targeted acquisitions and roughly 100 new hires in 2026 to accelerate across Europe.
AI heads to the deskless workforce. Netchex launched Mesh on 20 July 2026, an AI HR system aimed at restaurants, hotels, dealerships and other deskless workplaces, with several AI “specialists” covering payroll, compliance and scheduling. It’s a sign that agentic tools are moving into the shift-based and frontline sectors where many SMEs operate.
European learning and work funding stays strong. Startups in the broader learning and work space, which includes HR tech, raised about €1.4bn in the first half of 2026, roughly 90% of the full-year 2025 total, according to Brighteye. Later-stage rounds outpaced seed and early-stage deals, a sign that more European HR tech companies are reaching the growth metrics investors want.
For SME HR teams
The through-line this week is pragmatism. You don’t need agentic AI across the whole function to benefit: pick one repetitive, well-understood task, automate it and keep a human accountable for the outcome. On compliance, treat EU pay transparency as live now, not next year, and start by documenting how you set and justify pay ranges. And remember that engaged people rarely leave: a simple, consistent habit of recognition costs little and addresses the appreciation gap the data keeps flagging.
Sources
- SHRM: The State of AI in HR 2026
- SHRM: AI in HR 2026, from hype to measured, human-centred impact
- SHRM: The Download, HR technology trends, July 2026
- Lewis Silkin: EU Pay Transparency Directive 2026 employer compliance update
- Ogletree: European Commission confirms the pay transparency deadline remains 7 June 2026
- NACE: Employer use of skills-based hiring practices grows
- Achievers Workforce Institute: 2026 engagement and retention report
- Consultancy.eu: French HR tech firm Skello targets European expansion after €200m investment
- Bridgepoint: Skello secures a new €200m investment to support its European growth
- Brighteye: H1 2026 European learning and work funding report
HR Radar is a weekly informational summary of publicly reported HR and HR technology developments and trends. It is not legal or professional advice.
