Protiviti’s 14th annual Executive Perspectives on Top Risks and Opportunities Survey, Unlocking Opportunity, hits squarely on two fronts for chief human resources officers (CHROs).
First, many of the report’s findings on strategic risks and investment opportunities center on human capital issues, including those that directly affect the organization’s artificial intelligence (AI) enablement. Second, the ways in which other C-suite occupants and board members prioritize human capital threats and opportunities converge and diverge with CHROs’ risk views in illuminating ways. These survey findings, alongside insights from our work with CHROs, shed fresh light on how HR strategy and execution must continue to evolve.
Most HR leaders aced the swift, innovative and highly effective response to a global pandemic that triggered the most sweeping workforce mobilization in modern business history. CHROs’ pandemic performance elevated their strategic profile, but today’s environment presents an even more complex challenge. AI advancements continue to accelerate while simultaneously empowering and destabilizing a workforce whose transformation will determine the organization’s ability to generate game-changing value from AI investments.
In light of this multifaceted challenge, boards and CEOs will expect judicious, forward-looking responses from senior HR leaders.
The current state of HR risks and opportunities
Major structural, investment and mindset overhauls are needed in most HR groups, where as much as 70% of budgets still fund operations, payroll and traditional hiring activities.
To avoid operating as a parking brake on innovation, larger portions of HR funding, effort and attention should be redirected from traditional, automatable functions to organizational design, reconfigurations of skill sets and roles, and recalibrations of compensation structures that reflect the rising value of human contributions in AI-driven organizations.
HR leaders, their C-suite colleagues and board members should keep the following points top of mind when assessing how to address current and future human capital management risks.
Boards and CEOs align with CHROs when prioritizing human capital risks and investments
In the Top Risks survey, overall respondents ranked human capital management and workforce skills just outside of their top five strategic investment priorities. Yet a strikingly different view of investment priorities emerges when examining responses across different executive positions.
Board and CEO respondents closely align with CHROs in prioritizing human capital management and workforce skills, ranking these investments among their top strategic priorities. This alignment extends across risk categories, with boards, CEOs and CHROs consistently elevating skills, talent acquisition and retention, and leadership development and succession, as leading near- and long-term enterprise risks.
These findings suggest that CHROs have an opportunity to leverage the board and CEO’s human capital management concerns when making the case for additional resource and supporting technology investments with CFOs and CIOs.
Talent and labor availability is really about skills availability
A sharp line divides general labor availability and an organization’s ability to recruit and retain specific high-demand skills. AI adoption and tight budgets have increased the supply of early-career generalists, while finding a chief AI ethics and compliance officer, an agentic product manager or a cloud infrastructure architect has become nearly impossible.
Reframing labor and talent needs as a skills-availability problem enables more effective responses, including skills-based workforce planning, dynamic role design, differentiated compensation structures, and targeted recruiting and development investments to better fill skills gaps.
AI adoption often exacerbates existing talent management challenges; it doesn’t have to
Multigenerational workforce demands and expectations, along with the impact of demographic changes, are of notably higher concern for CHRO respondents as compared to 2025. Employees are staying in the workforce longer, creating workforces where up to four generations work together while responding to AI enablement, career development, working arrangements and other changes in markedly different ways.
In response, HR groups must design engagement strategies, benefits structures, management practices and AI people-enablement approaches that work across generations. AI adoption comfort levels and training needs also vary across demographic groups. Research conducted by Protiviti and the London School of Economics shows that generationally diverse teams working on AI initiatives consistently outperform less diverse teams. To unlock AI’s full potential, HR leaders should invest in tailored AI upskilling and equitable participation across generations.
Early-career professionals face a unique AI-related challenge that has far-reaching talent management implications: They must develop increasingly valuable process and organizational knowledge and relational skills as AI adoption reconfigures and replaces traditional career and learning pathways. If larger portions of the workforce rise to manager level as AI performs more tasks previously assigned to junior staff, the per-employee cost of a workforce increases substantially. In organizations with large workforces, this float in labor costs poses financial risks that CHROs should proactively mitigate via new cost structures that account for a compressed, more senior human workforce.
An agile learning and development (L&D) capability is a powerful source of competitive differentiation
The gap between where most L&D functions are today and where they need to be is substantial. Most L&D capabilities remain organized around regulatory compliance and content delivery rather than surgically targeted upskilling. Business partners are desperate for AI skills and overall technological agility competencies, so HR groups must create better, faster ways to identify skills gaps, map development pathways and augment skills acquisition.
Four HR transformation actions
Supporting enterprise AI enablement is one part of the CHRO’s mandate. The other is embedding AI tools and new human technology skills into HR.
To date, HR groups have deployed AI to enhance recruiting, onboarding, lower tiers of shared-services support, learning and development, performance management, HR operations and administration. Innovative HR groups are experimenting with deploying AI agents that operate as digital twins of seasoned HR managers and leaders who provide mentoring to early-career HR professionals. More of these types of agentic use cases are needed.
HR’s AI advancements will help the function support the organization’s changing human capital needs. To that end, HR leaders should consider the following actions:
- Take control of the AI narrative: Organizations that took a “fire, ready, aim” approach to AI deployment generally have experienced underwhelming return on investment (ROI) and declines in employee engagement. Companies that addressed AI governance and change management up front have fared much better. When HR does not actively shape the organization’s AI-adoption narrative, employees tend to fill the vacuum with fear-driven assumptions. The distinction between human-in-the-loop (people reviewing and approving AI outputs) and human-in-the-lead (people defining AI’s purpose, setting its boundaries and interpreting its results) approaches is gaining traction and worth considering when developing messaging.
- Embrace a value-driven mindset: HR’s future value resides in organizational design, role redesign, workforce planning and advanced human capital analytics. These capabilities require different enabling skills and investments. HR leaders have been conditioned to accept budget cuts rather than advocate for reinvestment, which requires different muscles – and fortitude. It takes courage and a compelling data-driven narrative to make the case that half of the $10 million in HR costs savings AI delivered should be reinvested in HR to drive top-line growth and bottom-line performance. It requires humility to mothball longstanding HR processes and investments that do not contribute to organizational value. Operating less as “people people” and more as businesspeople will help secure HR a seat at the table with the CFO, COO and CIO as intelligent automation investments are evaluated and prioritized.
- Develop new metrics: To enhance organizational value, HR needs to measure how its activities boost revenue, increase profitability and enhance shareholder value. Rather than measures focused on compliance, cost containment and task completion (think time-to-fill), HR needs metrics that establish talent-to-value correlations (think time-to-full-proficiency). Skills-based agility measures are getting more attention because they quantify how well organizations can quickly identify and close skills gaps to meet changing business needs. Boards are less interested in hiring numbers than they are in whether the organization possesses the human-agentic skills needed to capture a $200 million market opportunity.
- Get busy on developing next-gen L&D capabilities and continual job and organization redesigns: Most job roles have been static for decades. The integration of agentic AI into workflows requires the ongoing or continuous redesign of roles, responsibilities (including agent management) and reporting structures. Tasks within existing workflows must be assessed for automation suitability and then reassigned to agents or given to humans with new roles. This is new territory for most HR groups, which traditionally defined human roles and then assigned tasks to those roles.
Lead with courage and humility
As CHROs assess board and C-suite risk concerns and their dual AI mandate, they may be surprised by the growing need for human skills.
As AI enablement takes root throughout the organization, employees will be called on more frequently to negotiate difficult trade-offs with other business groups, evaluate thorny ethical dilemmas and quickly exercise sound judgments concerning high-stakes decisions. For their part, CHROs will need to summon the humility required to make bold investments in HR’s future state.
These transformative actions are both difficult and crucial to perform. Ultimately, these decisions will enable HR to lead the company’s AI journey rather than react to it.
