U.S. companies are adjusting staffing strategies after years of rapid hiring followed by a plateau—and AI is emerging as a major factor. New data from Chief Executive’s Financial Performance Benchmark Report shows that nearly 1 in 3 companies have already reduced headcount due to AI, even as 53% of firms plan to expand overall staffing in 2026.
In 2025, growth momentum faded. Just 35% of companies increased frontline staff. Meanwhile, 21% cut frontline roles, and 43% held staffing steady. Changes were largely tied to revenue: 71% of companies that added staff cited revenue growth as the key factor, while 59% of those reducing staff pointed to falling revenue. Cost-cutting initiatives followed closely for reductions.
AI was the third most common reason for workforce reductions in 2025, affecting almost a third of companies. Its influence now rivals traditional drivers like restructuring or M&A, signaling a structural shift in how executives plan their workforce.
Retention Stabilizes, Turnover Persists
After the pandemic-era churn, frontline retention is improving. In 2025, 43% of companies reported turnover under 5%, up from 42% in 2024 and far higher than 28% in 2023. However, the share of firms with turnover above 25% increased slightly to 12%, highlighting continued volatility in certain roles.
Looking ahead, 53% of companies plan to grow headcount in 2026. 18% expect reductions, and 29% anticipate no change. The influence of AI on these decisions remains uncertain, but its early impact suggests it will continue shaping workforce strategies in 2026 and beyond.
