Not long ago, labour costs were the elephant in every boardroom. Rising wages, shrinking talent pools – it was the same story in nearly every conversation.
But the conversation is changing fast.
Labour costs have quietly slipped down the list of things keeping middle market leaders awake at night, according to the latest Business Radar survey from Pitcher Partners.
While labour costs remain a significant focus, inflation and increased operating costs are the leading negative influences on business confidence, the survey revealed.
The labour market is more settled than it was in 2023 and 2024, but artificial intelligence is also changing the way leaders think about people, productivity, and performance.
Where once AI was approached with caution, with any potential benefits outweighed by the risks of getting it wrong, it’s now being seen as a serious business tool.
Business leaders have now had time to understand and appreciate the suite of AI-powered business tools available, and they are starting to see them as viable alternatives to adding more FTEs to the payroll.
This conversation isn’t about slashing jobs. After fighting a war for talent in recent years, business leaders are not about to rush out to automate their business just for the sake of it and reverse those hard-won gains.
Instead, they’re asking better prompts.
Where do our people really add value? Where does it make sense to deploy AI and lift productivity? Are they opposing forces, or can the two work together to create a more resilient operation?
Most people think founders immediately focus on the doomsday scenario, with AI cutting overall headcount and (by extension) lining the pockets of the executives.
But the truth is, after the turmoil of recent years, business leaders are simply focused on building leaner, sharper, more resilient businesses.
Middle market leaders now understand the possibilities associated with AI, and are starting to see AI as an alternative to simply hiring more people.
But it’s not just about replacing employees. They are getting clarity on what roles are actually necessary for growth, where people remain important to the business, where we need our people to reskill, and where automation can give us a strategic edge.
This is helping to drive a quiet confidence among middle market business leaders, born of resilience and driven by smarter decision-making.
The Business Radar results reflect this trend – 87% of respondents said they were staying the course or proactively investing in growth, and 78% were reporting an appetite for high or moderate risk.
Business leaders are better armed with the tools, such as AI knowledge, and the confidence to make important decisions about reskilling, redesigning roles, and adapting to a changing operating environment.
The successful leaders are those using AI not just to do more with less, but to rethink what’s possible.
Whether it’s finding efficiencies in back-end processes, using data to inform workforce planning, or freeing up teams to focus on what really matters, AI is proving to be more than a cost-saving tool. It’s a strategic lever.
The future of work isn’t AI versus people. It’s AI plus people — with every role, every hire, every tool earning its place.
