MESSAGE FROM OUR CEO’S DESK

This past weekend, the world felt heavy, and the intersection of technology and tragedy became impossible to ignore. As leaders in the People space, we often talk about values in the abstract, but sometimes, a moment comes where you have to put your money (and your tech stack) where your mouth is.

If you haven't been tracking the AI drama, here is the short version: Anthropic (the makers of Claude) just got blacklisted by the U.S. government because they refused to remove ethical guardrails. The Department of War demanded that their AI models be available for "any lawful use," including autonomous weapons and mass surveillance. Anthropic said no. In response, the administration labeled them a "supply chain risk,” a designation usually reserved for foreign adversaries, and ordered all federal agencies to stop using their tech.

Then, in a move that is honestly probably unsurprising if you read my newsletter from last week, OpenAI stepped in on Saturday and signed a deal with the Pentagon to fill that gap. While Sam Altman claims they’ve negotiated "red lines," the optics are jarring. One company is being punished for holding a line; the other is being rewarded for finding a way to walk it.

It’s easy to get lost in the "tech-bro" politics of Silicon Valley, but the reality of what this technology facilitates hit home this weekend. We are no longer just "on the cusp" of a conflict, we are witnessing a full-scale military escalation across the Middle East. And, as always, it is the civilians caught in the crossfire who pay the ultimate price.

In the first few hours of the conflict, there was a strike on the Shajare Tayyebeh girls' elementary school in Minab. Current reports now state that at least 165 people were killed, the majority of them young girls just starting their school week.

When we talk about "AI guardrails" and "autonomous weapons," we aren't talking about abstract code. We are talking about the tools that facilitate this kind of warfare. We are talking about the difference between a human being making a choice and a machine executing a command. If we lose the ability to draw ethical lines now, we lose the ability to protect the very humanity we claim to serve.

I’ve said before that consistency isn't just a strategy; it’s a value. And frankly, I’m tired of watching companies "shape-shift" (looking at you, SHRM and OpenAI) to chase political favor or massive government contracts at the expense of clear ethics.

As of yesterday, People Function is officially moving off ChatGPT.

We are transitioning our entire team to Gemini. No capitalist tech company is perfect, but we don't want to pay for a product that justifies this kind of pivot. More importantly, as we continue to build our own AI products at PFunc, we are working on building them to be independent of OpenAI’s ecosystem. We are moving away from the "move fast and break things" era and into an era of "move with intention and protect people."

If we are building the future of work, we cannot ignore the tools being used to tear that future down.

ASK THE EXPERTS 🧠

Over the next few issues of PFunc Pulse, we’ll tackle the most common compensation and review cycle questions with expert insights from our team.

Question: What are the typical salary increases for merits vs. promotions in 2026?

The numbers for this year’s increases are steady, but we’ll also look beyond the spreadsheet. According to Pave and Alpine Rewards’ 2026 Compensation Budgets & Trends Report, U.S. companies are hovering at a 5% overall salary budget increase, with merit budgets holding at 3.5%.

Meanwhile, promotional increases are the new premium. Median promotional raises have jumped to 9.7%, essentially offering three times the bump of a standard merit raise.

While these figures are normal, the environment they live in is not. With voluntary turnover sitting at 8%, per Payscale’s 2026 Compensation Best Practices Report, fewer employees are leaving, but don’t mistake that for loyalty.

Beyond the numbers, here’s what else to keep in mind:

• A 3.5% merit bump barely moves the needle for most. Organizations relying on market fear rather than genuine rewards risk harming culture through quiet disengagement.

• Differentiate for high performers. Top-tier talent is receiving a 5% increase, but even that is being overshadowed by a need for internal mobility. As a result, 76% of companies are shifting their budgets toward that and promotional jumps instead of flat merit raises.

• Career Pathing is crucial. Showing employees a visible, documented growth path is the primary reason high performers will stay when the paycheck feels static. If you can't move the base salary by 10%, you have to move the title or the responsibilities.

Have an HR- or operations-related question? Submit it here to see it answered in an upcoming issue!

THE BRIEFING 🗞️

HR NEWS TO KNOW

The latest HR headlines and stories, curated with our perspective.

Just 43% of employees trust their employers, and 2-out-of-3 have low confidence in leaders overall, a gap caused by continuous disruption and rapid integration of AI.

• ↪️ PFunc’s Perspective: C-suite success depends on prioritizing human-centric transparency over aggressive mandates, like rigid RTO, and automated oversight.

A couple other HR stories to check out:

• HR Morning: 5 steps to stop wasting time at your all-hands

• Monster: Workers are abandoning optimism for stability

WHAT’S HAPPENING IN AI

Here’s the latest AI news to know and why it’s important to HR.

AI literacy has become the second fastest-growing HR skill, trailing employment law, per LinkedIn.

• ↪️ PFunc’s Perspective: For founders and People leaders, this means if you aren’t using AI every day then you are falling behind. Companies are turning to their HR teams to lead their AI change management, and we need to be ready to step up to the plate.

COMPLIANCE CHECK

Stay ahead of HR compliance as these latest updates take effect.

• New York (effective 3/18/26) - All employers with 10 or more employees must now offer retirement benefits, and registration deadlines are staggered based on company size. 

• Ohio (effective 3/19/26) - Nonresidential contractors, subcontractors, and labor brokers that provide workers in the construction industry must use E-Verify to ensure employees are eligible to work.

• California (effective 3/23/26) - The state’s labor agency just proposed new PAGA rules that help small businesses fix mistakes and crack down on repeat filers, with public comments open until March 23, 2026.

THE OPPORTUNITY EXCHANGE 📈

ROLES ON OUR RADAR

The PFunc job board is packed with open roles across our client companies, making it easier than ever to tap into our network.

This week, we’re highlighting three of the latest roles to hit the PFunc job board.

• Allocate, Private Market Advisor - Grow and manage UHNW portfolios by blending technical investment expertise with relationship building.

• Coder, Senior Customer Success Manager - If you’re in the Eastern time zone and want  to guide engineering teams from onboarding to renewal, this is the role for you.

• RADAR, Systems Engineer - This data company is seeking a C++ expert to build better wireless systems.

See a role you’re interested in? Reply to this email and we’ll try to connect you with the hiring team. Hiring for an open role yourself? Reply to have your job featured in an upcoming PFunc Pulse issue.

RECOMMENDED RESOURCE💡

Our web developer is taking on new clients! Alex built our website and he can help you build yours too…

Alex Chaparro - Senior Frontend Engineer with 10+ years of experience building scalable, UX-focused web apps. Alex partners with startups as a fractional lead to ship everything from MVPs to robust React/TypeScript component libraries.

INSIDE PFUNC HQ ⋒

CLIENT CORNER

We’re pumped to welcome a new wave of companies across industries, stages, and cities to the PFunc Family.

• Redoxblox - This incredible startup turns renewable energy into long-term storage for industrial plants., Check them out to learn more!

• Ursa Consultants - If Ursa Consultants looks familiar, it’s because we recommended them last year, and now the tables have turned! After they helped us with our back office, they’ve now become our newest client.

WHERE TO NEXT?

Our team is always on the move, popping up at the HR events, conferences, and summits we actually love.

MARCH

• Don’t Shoot The Messenger: When HR Has to Deliver the Hard News (Webinar)—March 4

  • Emma will be joining HR execs from Ethena and LaRosa’s Inc.

• The State of Compliance: How HR Teams are Managing Risk in 2026 (Webinar)—March 5

  • Alyssa Melanson, PFunc’s HR Practice lead, will share the stage as a panelist.

• Transform 2026 Conference (Wynn Las Vegas)—March 23-25

  • Join the waitlist to attend the Wizard of Oz at The Sphere event, in collaboration with Justworks.

  • Let us know if you’ll be at the conference, we want you at our events! 🤩

APRIL

• Startup Leadership Salon (Fabrik NYC)—April 16 from 6 to 8 p.m.

  • Lindsay Glogower, PFunc’s Recruiting Practice Lead, will break down the strategy on who and how to hire.

CHRONICALLY ONLINE📱

For your enjoyment, to close out Black History Month, our social team shared Black creators you should know. Check them out at the post below!

Join 100,000+ followers across PFunc’s Instagram, TikTok, and LinkedIn, hailed as “one of the best HR accounts online today.” 😉

STAY IN TOUCH 💌

If you’re interested in fractional HR support for your team, reply to this email or contact us to learn more about our offerings, pricing, and how we can support your growing company.

Join the Talent Network here (it’s free!). Whether you’re actively exploring new opportunities or happily employed but open to the right fit, becoming part of our network ensures your profile is shared with recruiters when roles align with your experience, skills, and career goals.💡

🗣️ Thoughts, feedback, requests? Let us know! 🗣️

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Every Tuesday, the PFunc Pulse delivers the HR news and compliance shifts you actually need, without all the corporate fluff. Emma brings her unfiltered take on the trends keeping CEOs awake at night, served with the gritty, practical wisdom of a founder who’s seen it all. Real talk for better people decisions, week by week. (P.S. Do your work bestie a favor and forward this — because friends don't let friends do old school HR. 🫢)