The AI challenge is a skills challenge

The biggest workforce challenge being faced by businesses is addressing skills gaps, according to KPMG’s 2026 CEO Outlook. That’s followed by upskilling and training employees in AI systems, attracting and retaining talent, and maintaining productivity and performance.

AI is both a challenge and a solution. Organisations are looking to AI to fill skills gaps and improve productivity. But the impact of AI on how work gets done is forcing organisations to rethink the skills they need in the workforce – especially for entry-level roles most impacted by AI. Employees need reskilling to create effective prompts, to challenge hallucinations, to lead AI rather than simply be in the loop.

The good news is that, in CEOs’ eyes at least, their people are open to using AI. Workforce resistance ranked low on a list of 13 challenges to implementing AI. That said, 30% of UK CEOs said it was very or mostly challenging. So, there’s still much work to be done to take employees on the AI journey.

That takes having a compelling story that shows employees, in terms they can relate to, how AI will make their lives easier. Half of UK CEOs (50%) are communicating openly with employees about the potential impact of AI on their roles.

Almost half (45%) of UK CEOs are providing tailored role-specific training over the next 12 months on how AI can support people in their jobs. This sort of training can help win over naysayers and get employees using AI more effectively, improving productivity.

Every UK CEO who responded to our survey said that they’re adapting their longer-term (2-5 years) workforce strategy in response to AI. And they’ve stepped up activity since 2025 as AI becomes more deeply engrained into their operations.

Some 85% of UK CEOs say they’re redesigning roles and career paths to reflect a future of work where people work alongside AI colleagues. That compares to 71% in 2025. The same proportion (85%) say they’re focusing on retaining and re-training existing high-potential talent (67% in 2025).

The skills challenge isn’t just about upskilling those people who’ll be working with AI though. Organisations need people with the skills to develop AI and lead the necessary transformation programmes. Over three-quarters of CEOs (77%) are hiring in new talent with AI and tech capabilities. It was 58% just a year ago.