New findings from the Lighthouse Research & Advisory and Insperity report, The AI balance gap: Why people strategy is the key to turning ai investment into business performance, reveal a growing disconnect in how many businesses are approaching artificial intelligence (AI). While AI adoption is accelerating rapidly, workforce readiness may not be keeping pace.
Business owners are facing growing pressure to determine how AI fits into their organizations. But many employers are prioritizing the technology itself over the people needed to sustain it and extract maximum value and return on investment (ROI) from it.
Consider this: The research found that 75% of small to midsize business leaders are currently using or experimenting with AI, yet only 40% feel prepared to manage organizational change and guide the people side of this transition. According to 26% of business leaders, balancing investment in AI with investment in people is their biggest leadership gap.
AI can be a significant driver of efficiency, productivity and cost reductions for businesses. However, like any technology, it’s only as good as the people supporting it.
In this blog, we’ll discuss:
Why are organizations struggling to extract value from AI adoption?
If there’s one big takeaway from this discussion, it’s this: AI implementation is not the same thing as workforce readiness.
Some business leaders fall into the trap of thinking that AI implementation leads to automatic adoption. This line of thinking goes something like: “If we have it, everyone will use it, it will work as intended and great things will happen as a result. It’s all ready to go out of the box – just plug and play.”
Here’s the reality.
You can invest in AI all day long, but if your organization isn’t teaching its workforce how to use this tool effectively or communicating with them about why it’s necessary and what the organization hopes to achieve with it, then it may be more difficult to realize the full value of your AI investment. In the process, you can inadvertently frustrate and alienate employees.
Like any technology, successful AI adoption is driven by employees – their acceptance of it, their understanding of it, their trust in it and their belief that it benefits them in their role and improves their work experience.
What causes the largest gaps in workforce readiness?
1. Lack of AI education and enablement
Companies are adopting AI, but they are not necessarily helping their people understand how to use it effectively in their roles, where it can add value and what the parameters are around its use. Employees need more than instruction on how to use AI tools. They need the knowledge and judgment to use AI as a thought partner, applying it thoughtfully to solve problems, explore ideas and make better-informed decisions.
At the same time, investments that support successful adoption, such as employee education and development, change communication and governance, may not be receiving the same level of attention.
The numbers back this up. The report found that over the next 12 months, 60% of employers plan to invest in AI while only 55% plan to invest in training, 42% in change communication and 39% in rules and safeguards.
Additionally, one in four workers reports uncertainty about how their employer expects them to use AI in their work. Employees notice when their employers treat their development as an afterthought, too. Only 21% of employees say their organization is investing more in employee development than in AI. Furthermore, nearly one-third of the workforce reports that their opportunities to learn new skills have stayed flat or gotten worse since their company started using AI.
The takeaway: Preparing employees to use AI effectively requires more than tool training. Organizations should help employees build the AI fluency, critical thinking and judgment to understand how AI can support their work, where human expertise matters most and how to use AI responsibly. This should be part of a broader commitment to upskilling employees, not a replacement for employee learning and development in areas that cannot or should not be automated.
2. No communication
With AI, there’s another hurdle to overcome. Many employees feel some degree of fear or hostility around its use in the workplace. They tend to view AI as “the robots taking over their job,” leading to headcount reductions.
Employees also report discomfort with AI replacing human judgement entirely – even influencing high-stakes decisions around pay, promotions and job security. 40% of employees say that this reduces their trust in leadership and 36% say it makes them feel undervalued.
The solution for leaders is to communicate regularly with employees about:
- Why AI adoptions matters.
- What the company’s goals and overall strategy are with AI.
- How, specifically, AI is being incorporated across the company and what types of employee-related decisions it will influence.
- How AI will positively impact their individual role.
- How AI will improve the employee experience.
- What preparation looks like and how you will train them to leverage this technology.
3. Little employee involvement
Telling employees about AI adoption is not the same thing as giving them a say in how AI impacts them. Just half of leaders tell employees when AI is involved in a decision that affects them, and just 43% allow employees to appeal or question that decision or even document decisions for an audit trail.
What employees don’t know, they can’t prepare for.
This lack of transparency and clarity can further erode trust between employees and their employers. And, as new laws are continually passed to govern how AI makes decisions about people, it also creates significant risk for companies lacking a plan for auditing or re-evaluating decisions made by AI tools.
What happens when AI adoption outpaces peoples’ readiness?
- Resistance from employees that slows the adoption of AI
- Frustration from employees, leading to reduced engagement and higher turnover
- Confusion over how to use AI and the rules around it, leading to inconsistent usage
- Increased security and privacy risks for companies related to lack of employee training and know-how (example: confidential information can be entered into public AI tools, creating potential privacy, security and compliance risks.)
- Introduction of unauthorized AI apps that employees may personally feel more comfortable with, leading to more security vulnerabilities for companies
- Increased risk for errors and reduced quality of work
- Missed productivity and efficiency gains
- Underutilized investments in technology
Frequently asked questions about AI and people strategy
Why is rapid adoption of AI putting stress on workforces?
Many organizations are implementing AI tools faster than they are preparing employees to use them effectively. When new technology is introduced without sufficient training, communication or support, employees may feel uncertain about expectations, how their jobs might change and how AI fits into their day-to-day work. As reflected in the report findings, this can slow adoption, reduce engagement and make it more difficult for organizations to realize the full value of their AI investments.
How is lack of employee training problematic for AI adoption?
How is lack of communication problematic for AI adoption?
What are the biggest risks for organizations with workforce readiness gaps around AI?
Key takeaways
- Companies aren’t doing anything “wrong” or failing with AI. However, many leaders are overly focused on the technology while underestimating the workforce readiness required to capture long-term value from AI.
- Organizations that generate the most value from AI won’t necessarily be the first adopters – it’ll be those companies that prepare employees to succeed alongside the technology. In fact, organizations that balance AI and people investment outperform unbalanced organizations by 2x across multiple outcomes.
- Organizations that don’t strike the right balance between AI and people investment can potentially transform a promising technology investment into a workforce challenge that ultimately reduces employee retention and productivity.
To learn more about AI in the workplace and its impacts on people, download our report co-created by Insperity and Lighthouse Research & Advisory: The AI balance gap: Why people strategy is the key to turning AI investment into business performance.