HR Market Update
(3 minute read)
Canada’s unemployment rate edged down to 6.4% in July, its third straight monthly decline, and hiring looks steady on the surface. Underneath, the bigger changes are in what companies are hiring for, how they are building their next leaders, and what employees need to stay.
Based on labour market data, current research, and conversations with HR leaders across Canada, here are three observations shaping workforce decisions this month.
Recruitment is steady, but entry-level hiring is shifting
Hiring has not slowed. What companies hire for has. The youth unemployment rate held steady in July and is down nearly 2 points from a year ago, but the entry-level roles themselves are shifting. i4cp reports organizations moving quickly toward skills-based models, redesigning jobs around what AI can and cannot do.
At our recent CHRO Leadership Forum, senior HR leaders described the same thing – AI is restructuring entry-level work rather than eliminating it, and new graduates often arrive without the skills to work alongside it. The pressure point now is readiness, not headcount.
This shift is prompting many organizations to revisit how they define entry-level talent. Employers are weighing adaptability, learning agility, and the ability to work effectively alongside new technologies over years of experience. Recruitment strategies, assessment approaches, and onboarding programs are all evolving as a result.
Helping managers build stronger coaching habits
If the entry level is where leaders start, the manager layer is where they grow, and that layer is thinning. i4cp names leadership development a top priority for CHROs in 2026, with high-performing organizations leaning on senior leaders to teach and mentor the next tier.
During our July CHRO Leadership Forum, HR leaders described a clear decline in managers’ ability to coach and traced much of it to remote work. The informal, over-the-shoulder moments where new managers used to learn how to give feedback largely disappeared, and they have not come back. The skills that make a good manager were learned by watching, and remote work removed a lot of the watching.
Left alone, that gap shows up as weaker feedback, engagement, and development across the team. Organizations that are seeing success are making coaching more intentional through structured leadership development, peer learning, and regular feedback conversations. Rather than assuming managers will develop these skills over time, they’re creating opportunities to build them deliberately.
Building leadership bench strength
The clearest signal from client conversations is that senior people are heading for the exit, CHROs included, through retirement and role changes. The timing is hard. i4cp reports that executive turnover is still climbing while only a minority of organizations believe they have ready successors for critical roles.
When these leaders go, their knowledge goes with them, and whoever is next is often underprepared. During our August CHRO Leadership Forum, HR leaders named change management as one of the biggest gaps over the next three to five years. That is turning attention back to succession planning and leadership development, usually on a shorter timeline than current systems can support.
Preparing future leaders is becoming less about identifying successors and more about building leadership capability across the organization. Leading organizations are pairing succession planning with stronger knowledge transfer, leadership development, and internal mobility to build resilience over the long term and ensure the capability is there before a key person leaves.
Looking Ahead
The themes in this month’s update are closely connected. As organizations adapt to changing skill needs, strengthen leadership capabilities, and prepare for future workforce transitions, the importance of thoughtful workforce planning becomes increasingly clear. Every organization is at a different stage in this journey, but those investing in their people and capabilities today will be better positioned to navigate what comes next.
Questions to Consider
- Are we developing the leaders we’ll need, or preparing successors for the organization we have today?
- Do we know where the knowledge actually sits, or just what the org chart says?
- How are changing skill requirements influencing our hiring strategy?
- Are our managers equipped to coach and develop future leaders?
Continuing the Conversation
Every organization is responding to today’s workforce challenges differently. Whether you’re hiring, developing leaders, strengthening your HR function, or preparing for change, the right approach depends on your people, your priorities, and your business goals.
At The Talent Company, we partner with organizations across Canada to help solve workforce challenges through practical, flexible people solutions.