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CHROs see skill and mindset barriers challenging AI implementation
Human resources leaders face mounting pressure to deliver on workforce transformation while addressing disruptions such as artificial intelligence (AI) and workforce shortages. Almost half (47%) of chief human resource officers (CHROs) put talent retention and skill shortages at the top of the list of barriers to delivering on their HR strategy, higher than any other challenge.
We analyzed how CHRO confidence levels align with the actions they’re taking. By grouping HR leaders as “less confident” and “more confident,” we found that the more confident group is more likely to advance bold, structural workforce changes, while the less confident group is more likely to push more traditional actions that are needed regardless of current conditions.
Many CHROs are addressing their immediate challenges while creating and executing the strategic vision for their future workforce. HR executives understand that deploying technologies like AI successfully requires more than just access to tools. It takes people who are equipped with both the digital skills and the confidence to use them more effectively, as well as a culture in which employees have permission to experiment.
Skills, employee readiness stand in the way of HR strategy
As HR leaders claim a more secure place at the executive table, they face challenges to executing on their own workforce strategy. While half (47%) cite retention and skills gap as a top-3 barrier, one in four (24%) rank it No. 1. Other top-3 obstacles include employee change management (42%) and resource constraints (39%).
Clearing these hurdles requires a shift toward skills-based workforce strategies, which involves approaching talent management with a priority on employee skills — rather than traditional job titles, degrees or roles — to drive how talent processes like workforce planning, hiring, employee development, internal mobility and targeted upskilling work. HR leaders should continue to embed skills strategy into transformation initiatives, guiding employees with the tools and the support they need to excel in new ways of working.
Confidence gap drives contrast in workforce strategies
We analyzed the extent to which CHRO confidence is correlated with the actions they've taken. We split the HR leaders into two groups based on self-reported confidence. The 60% who report being either mostly or very confident are what we refer to as the “more confident” group. The remaining 39% report being either not confident or somewhat confident (“less confident”).
Less confident CHROs are more likely to rely on familiar, incremental responses such as employee training, while more confident CHROs are pushing ahead with foundational changes in workforce structure and strategy.
- Sixty-one percent of less confident CHROs are investing in training existing employees compared to 56% of more confident CHROs.
- About half (52%) of more confident CHROs have taken action to develop future-of-work strategies, compared to 36% of their less confident peers.
- Forty-two percent of more confident CHROs have adjusted their workforce strategy because of tariffs, compared to only 30% of less confident CHROs.
The implications of this could be significant. Companies with less confident CHROs may struggle to keep up if their HR strategies are too reactive and incremental, while those led by more confident CHROs have the potential to gain a competitive edge because they can move faster.
What you can do
- Don’t be afraid to double down on AI. Focus on what you’ll need regardless of what plays out with tariffs, like establishing a future of work strategy and going beyond basic AI tools to seize opportunities for agentic AI, for HR and your entire workforce.
- Shore up your workforce balance sheet. Use this moment of economic and trade uncertainty to identify what skills, rewards, benefits and tax efficiencies can help free up capital for reinvestment in agentic automation.
- Match workforce ambition with resource reality. Prioritize scalable development programs and automation of routine tasks, which can free up budget and bandwidth to focus on strategic initiatives like AI integration and workforce redesign.
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About the survey
Our latest PwC Pulse Survey, fielded May 1 to May 8, 2025, surveyed 678 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 83 were CHROs.
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