Falling expectation among business leaders that AI will replace people

Annual research released by Orgvue, the organisational design and planning software platform, reveals that 39% of business leaders made employees redundant as a result of deploying AI. Of those, 55% admit they made wrong decisions about those redundancies.

Orgvue first conducted its international survey of 1,000 C-suite and senior decision makers at medium and large organisations in 2024. This year, the research highlights growing caution in deploying AI and acknowledgment that businesses need to reskill people to work with the technology.

Although the findings suggest leaders regret questionable redundancy decisions, fewer leaders are concerned that AI will replace people in their organisation (48% compared to 54% in 2024). Yet business leaders also report feeling less responsibility to protect their workforce from redundancies (62% compared to 70% in 2024), while 34% admit they have had employees quit as a direct result of AI.

Almost half (47%) say that employees using AI without proper controls is one of their biggest fears, such that 80% of business leaders plan to reskill employees to use AI effectively and 51% say they are introducing internal policies to inform how AI is used in the workplace. 51% of leaders also believe reskilling is strategically important in preparing their workforce for AI and 41% say they have increased their L&D budgets to ensure employees have the right training.

Oliver Shaw, CEO of Orgvue, commented:

“While 2024 was the year of investment and optimism, businesses are learning the hard way that replacing people with AI without fully understanding the impact on their workforce 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. 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 is a clear theme in this year’s research. More than a third (35%) of organisations acknowledge a lack of AI expertise as one of the biggest barriers to successful deployment. One in four (25%) admit they don’t know which roles can benefit most from AI and 30% don’t know which are most at risk from automation. As a result, 43% say they are working with third parties that specialise in AI to help prepare their workforce (up 6% from 2024).

Nevertheless, AI remains the dominant driver of workforce transformation, with 72% of leaders saying they believe it will remain so for the next three years (up 3% from 2024). Investment in AI also remains strong, with 2025 likely to see continued growth. Four in five (80%) of businesses that invested in AI in 2024 said they plan to increase their investments in 2025.

Similarly, 76% of business leaders are confident that their organisation will be taking full advantage of AI by the end of 2025. Yet this is in stark contrast to the 27% of leaders who admit they don’t have a clearly defined roadmap for AI, and the 38% that say they still don’t understand the impact that AI will have on their business.

Shaw concludes:

“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.”