Business Owners Embrace AI and HR Involvement, but Strategic Gaps Persist

Owning and operating a business is becoming increasingly complex. According to isolved®’s Second-Annual Business Owners Report, 76% of business owners say running a business has become more complicated in the past year, up from 52% in 2024. As leaders navigate rising costs, shifting employee expectations, and economic uncertainty, many are turning to artificial intelligence (AI) and human resources (HR) as strategic levers for support—yet not all are equipped to maximize these investments.

The Business Owners Report, based on a survey of over 2,000 U.S. owners and executives, highlights how leaders are adapting to challenges, where they are investing for the future, and how they perceive HR’s role. While 94% of HR leaders report their department is viewed as strategic, only 41% of business owners agree, revealing a critical disconnect that must be addressed to unlock business performance and employee potential.

Click here to explore the full findings of isolved’s Second-Annual Business Owners Report.

Key Findings from the Report

AI is Viewed as a Growth Opportunity

  • 81% of business owners see AI as a business opportunity.
  • 84% say AI has already had a substantial impact, though most expect major gains to come in the future.
  • Top AI use cases include employee-facing chatbots and automation for learning, payroll, and benefits.

Cost Pressures Drive Workforce Decisions

  • 56% of business owners expect to reduce headcount in the next year, with mid-sized companies most likely to make cuts.
  • 81% are willing to offer flexible pay options, such as earned-wage access, to support employee financial wellness and retention.

HR Involvement Is High but Not Yet Strategic

  • 95% of business owners are heavily involved in HR, recruitment, payroll, and benefits operations.
  • Only 41% view HR as strategic, compared to 94% of HR leaders who report their department is strategic—highlighting a major perception gap.

Burnout and Skills Gaps Are Underestimated

  • Only 40% of business owners believe their workforce is burnt out, compared to 79% of employees.
  • 48% of HR leaders report skills gaps, but many owners are not investing quickly enough to address them.

Power Shift Toward Employers

  • 82% of business owners believe the balance of power is shifting back toward employers.
  • This shift is reducing flexibility and incentives for job seekers, while emphasizing efficiency.

Commitment to DEI&B Remains Strong

  • 83% plan to increase investment in diversity, equity, inclusion, and belonging over the next year.
  • Only 4% plan to eliminate DEI&B efforts, signaling continued commitment despite external pressures.

Business Owners Seek Better HR Data and Insights

Owners want strategic KPIs from HR, such as ROI on employee experience and the impact of each employee on business outcomes. However, few report receiving this level of insight currently.

“Business owners are navigating a more demanding environment and increasingly looking to HR and AI to help them adapt,” said Yutaka Takagi, Principal Product Evangelist at isolved. “But unless HR is empowered as a strategic partner and AI is deployed with clear, practical use cases, businesses will miss the opportunity to turn complexity into a competitive advantage. Aligning with HR, investing in technology, and focusing on employee experience will be key to thriving through uncertainty.”

Explore HRTech360hub News for the latest trends in human resources technology.