The Workforce Decisions Defining HR

AI is high on the list. Its impact on the workforce ranks as HR leaders’ No. 1 organizational concern and its impact on their own jobs ranks first personally. Retaining top talent comes next on the organizational side, followed by upskilling employees and reducing HR or payroll errors.

What makes those priorities harder is that HR’s responsibilities aren’t narrowing as new ones emerge. Leaders are being asked to prepare for AI and changing skills while still delivering the reliable payroll, employee support and talent experience the workforce depends on.

AI is already part of HR for most organizations, with 82% of HR leaders saying they use it in HR processes. Payroll leads current use at 48%, followed by onboarding (45%), scheduling (43%) and recruiting (42%).

As adoption grows, the benchmark is shifting from whether HR uses AI to what it delivers. Leaders point to more time for HR strategy, stronger workforce decisions and less routine administration, making measurable outcomes an increasingly important part of evaluating AI’s value.

Employers are having to solve for talent on two fronts: finding qualified candidates and building the skills they need internally. Fifty-nine percent of HR leaders report a workforce skills gap, while a shortage of qualified candidates and AI-related skills gaps tie as the top talent acquisition threats. That helps explain why employers are putting team and individual training ahead of hiring as part of their talent management efforts.

Keeping talent brings another set of challenges. HR leaders point to rising employee expectations and burnout or workload as the biggest threats to retention, making development, manageable workloads and employee engagement important parts of keeping good people.

Rising costs are making employers more selective about where and how they add capacity. Benefits and healthcare costs (51%) and wage inflation or compensation (50%) are the biggest pressures HR leaders report.

Organizations are responding with a mix of targeted hiring, contractors and automation. For HR leaders, that requires more adaptability in workforce planning as they look beyond headcount and consider the best way to get the work done without creating new pressures elsewhere. Delaying a hire may control costs, for example, but it can also add to employee workloads and affect retention.

HR leaders want HCM technology that can keep up with changing business needs. Among those considering a switch, stronger AI capabilities and innovation lead the reasons for change (47%), followed by better reporting and data visibility (44%) and greater scalability (38%).

Those priorities are also influencing how HR leaders think about their workforce strategy and the technology needed to support it. Better integration across human resources, payroll and workforce systems ranks as the top HCM priority, followed by AI-powered automation and decision support, recruiting tools and stronger reporting, analytics and workforce planning.