More than half of businesses that made employees redundant due to AI deployment now admit those decisions were poorly thought-out, according to new research.
The latest annual survey by organisational design and planning software platform Orgvue, based on feedback from 1,000 C-suite executives and senior decision makers at medium and large organisations, shows that 39 percent of leaders made redundancies after introducing AI. Of these, 55 percent acknowledged they had made mistakes in their redundancy choices.
First conducted in 2024, Orgvue’s research notes a shift in attitudes as businesses become more cautious about AI implementation and recognise the need to reskill employees. Despite some regret over past decisions, fewer leaders are concerned that AI will replace human roles, with 48 percent expressing concern compared to 54 percent in 2024.
At the same time, a smaller proportion of leaders feel responsible for protecting their workforce from redundancy risks (62 percent compared to 70 percent last year), while 34 percent of businesses reported employee resignations directly linked to the introduction of AI.
 |
Get our essential weekday HR news and updates.
|
Skills and workforce transformation remain key challenges
The findings reveal that unregulated use of AI by employees is a significant fear among leaders, cited by 47 percent of respondents. In response, 80 percent of businesses plan to reskill employees to use AI effectively and 51 percent are introducing internal policies to guide AI usage. Half of business leaders consider reskilling to be strategically important for AI readiness, and 41 percent have increased learning and development budgets to provide employees with the necessary training.
Oliver Shaw, CEO of Orgvue, said that businesses are “learning the hard way” that replacing people with AI can go “badly wrong”.
“We’re facing the worst global skills shortage in a generation and dismissing employees without a clear plan for workforce transformation is reckless,” he said. “Some leaders are waking up to the fact that partnership between people and machines requires an intentional upskilling program if they’re to see the productivity gains that AI promises.”
Skills shortages remain a major barrier to AI success, with 35 percent of organisations acknowledging a lack of AI expertise within their teams. One in four businesses admit they are unsure which roles could benefit most from AI, and 30 percent do not know which roles are most at risk of automation. To address these gaps, 43 percent are now working with third-party AI specialists, an increase of 6 percent from 2024.
Growing investment in AI
Despite challenges, AI continues to be a major driver of workforce transformation. Seventy-two percent of business leaders believe AI will remain the dominant force shaping their organisations over the next three years, a slight increase from 2024. Investment in AI remains strong, with four in five businesses that invested in AI last year planning to increase their investment in 2025.
Confidence in the technology’s potential also remains high, with 76 percent of leaders stating they expect their organisations to be taking full advantage of AI by the end of 2025. However, 27 percent of leaders admit they do not have a clearly defined AI roadmap, and 38 percent say they do not fully understand the impact AI will have on their business.
Shaw added, “As in 2024, businesses remain confident that AI will solve their biggest business challenges and will define how they structure their organisation and workforce in the future. But our research suggests this confidence could be misplaced.
“While it’s encouraging to see investment in AI continue to grow, businesses need a better understanding of how the technology will change their workforce in the coming months and years. Questions remain unanswered over whether AI will yield enough return on investment in the near term to justify the costs associated with lost talent and downturn in productivity.”
Alessandra Pacelli is a journalist and author contributing to HRreview, an HR news and opinion publication, where she covers topics including labour market trends, employment costs, and workplace issues. She is a journalism graduate and self-described lifelong dog lover who has also written for Dogs Today magazine since 2014.
- Alessandra Pacelli
- Alessandra Pacelli
- Alessandra Pacelli
- Alessandra Pacelli
