New report shows retention becoming an operational challenge
The use of artificial intelligence tools in the HR function remains limited, while extensive AI utilisation is still exclusive to a select few employers, according to a new report.
Findings from Gallagher's 2026 US Workforce Trends Report showed that adoption of AI tools in HR remains in the "early-stage."
More than half (51%) of the study's over 3,700 respondents reported limited AI use in the HR function, while a smaller three per cent reported using AI extensively.
The top use of AI in HR is on recruitment and talent acquisition, as cited by 49% of the respondents, followed by learning and development (41%).
The report pointed out that its findings reflected skill gaps, unclear ownership, and uneven change readiness in organisations.
Users of AI in HR operations reported a variety of gains, with the top benefit being improved efficiency. Other reported advantages from AI use include:
- Better decision-making
- Enhanced candidate experience
- Cost savings
- Reduced bias
"In HR, early adoption is concentrating in a few key functions," the report read. "Usage varies by employer size, particularly in benefits administration, where scale can make automation more practical."
The report, however, argued that realising the benefits of AI will require more than adoption for organisations.
"They depend on employees and managers knowing how to prompt AI tools, validate outputs, and recognise where human judgement should override machine-generated options," it read.
"Without shared standards for AI use and oversight, adoption becomes inconsistent — and work can move faster than accountability can keep up."
Overall, 45% of firms have implemented AI in parts of their businesses, with only 26% saying the technology is fully operationalised, according to the report.
Another 17% said they are currently pilot testing the technology in select use cases, while 10% are in the early stages of experimentation.
"As AI becomes more integrated into day-to-day work, organisations are recognising that technology alone isn't enough," said John Tournet, US CEO of Gallagher's Benefits & HR Consulting Division, in a statement.
"The focus is increasingly shifting from implementation to helping employees and managers use AI with confidence, strengthen decision-making and support more effective ways of working."
Mounting workforce pressures
The findings come in the wake of mounting workforce pressures facing organisations in the United States.
The same Gallagher report showed that retention has become the top HR priority for 57% of employers, and a top operational priority for 39% of firms.
"Retention has moved beyond an HR concern to become a broader business risk," the report read.
The findings follow reports of job hugging in the United States and the rest of the world in 2025, where many employees opted to remain with their current employer amid weak confidence in job opportunities.
But Gallagher's report found that 63% of firms still faced turnover rates of 10% or higher in 2025, while another 44% reported turnover rates of at least 15%.
"When turnover exceeds plan, the impact is immediate: unbudgeted cost, lost institutional knowledge, disruption that extends beyond the roles being replaced," the report read.
Tournet commented that the findings show how many organisations are navigating a "difficult balancing act."
"Business leaders are pursuing growth while managing cost pressures, workforce capacity constraints and retention challenges," Tournet said.
"Organisations that succeed will be the ones that focus on the fundamentals: helping managers lead effectively, creating realistic workloads and ensuring employees understand how their work contributes to organisational goals."
