C-Suite Survey Finds AI Already Cutting Jobs At One-Third Of Companies, Even As Hiring Rebounds 

After years of workforce volatility,new datafromChiefExecutive’s Financial Performance Benchmarks Reportshows headcount growth slowing sharply across frontline,salesand otherroles, with most organizations opting to hold staffing levels steady rather than expand aggressivelythrough 2025.Expectations for 2026 suggest thatthetrend won’tcontinue, witha majority ofcompanies projecting increases to overall headcount for the year ahead.

But beneath theoverallstabilization, a new factor is reshaping workforce decisions: artificial intelligence. Survey respondentsfromnearly one-third of companies—31 percent—said they had alreadyslimmedheadcountthanks to the use of AI in their organizations,making it the third most common reason for frontline workforce reductions in 2025.

Staffing trends over the past three years tell a clear story of expansion followed bya degree of easing back. In 2024, companies were still in growth mode. More than half (53.9 percent) reportedincreasingfrontline headcount, with 11.6 percent growing by more than 10 percent. Only 14.2 percent of firms reduced frontline staffing that year.

By 2025, thatgrowthmomentum had faded. Just 35.2 percent of companies reported any frontline headcount increase, and only 10.2 percent grew by more than 10 percent. At thesame time, reductions became more common: 21.3 percent of firms cut frontline headcount, while a plurality—43.4 percent—reported no change at all.

The shift suggests companiesincreased hiringamid demand and labor availability, then reassessed in 2025 as cost pressures,revenueconcernsand economic uncertainty reshaped priorities.In fact, when asked about the primary factors driving the change in headcount,regardless of whether the company increased or decreased the number of their frontline employees, a change in company revenue was the most popular response—selected by 71 percent of companies who increased frontline headcount in 2025 and 59 percent who decreased.

Investigatingsecond and third mostimpactful factors for each reason reveals even more information about company strategy. For those who increased frontline headcount, the next most popular factor was expansion—at only 31 percent—compared to 71 percent who selected a change in revenue.When looking at companies who decreased frontline headcount in 2025, cost-cutting initiativesfollowclosely behind revenue change at 52 percent.

The third most popular factor for reducing frontline workforce in 2025 was artificial intelligencereducing workforce numbers—already happening for almost one-third of companies, at 31 percent.

While AI’s impact on headcount is still emerging,it’salready matching or exceeding traditional drivers likerestructuring and M&Aas a force shaping workforce strategy.Nonetheless, revenue is the biggest driver of headcount change.The pattern becomes evenclearerwhen examining frontline employee headcount change by each company’s revenue growth rate.Companies with flat or negative revenue growth in 2025 are overwhelmingly reporting higher proportions of decreasing their frontline headcount, whilecompanies with increasing revenue are reporting growing their headcount.

For example,43 percent of companies with revenue declines up to 5 percent report reducing frontline headcount.When looking at companies with revenue growth up to 5percentthat number shrinks to only one quarter.For companies with even faster-growing revenue, up 5 to 10 percent, half of the proportion (12 percent) reportreducing frontline headcount compared to companies with growth up to 5 percent.

When examining the frontline employee turnover, we seea relatedstory.It’sno secret that churn and turnover hit record levels around the pandemic and took some time to even out. Data from thereportshowsclear growth in frontline employee retention from 2022and onward.In 2025, 43 percent of companies reported frontline employee turnover under 5 percent, this is up from 42 percent in 2024, and much higher than the 28 percent who reported the same in 2023.Despite this, the proportion of companies reportinghigh turnover rates (25 percent+) climbed slightly in 2025 to 12 percent, from 10 percent in 2024.

Looking ahead, data from the January CEO Confidence Index shows that 53 percent of companies plan to increase their overall employee headcount in 2026, with 47 percent of the increases concentrated below 10 percent. 18 percent of companies reported planned reductions to headcount, while 29 percent plan no changes.

This is a clearchangefrom 2025, when cost-cutting, agility and reactionary measures were top-of-mindand onlysome 35percent of companies ramped up headcounts.Whether AI will accelerate or moderate these hiring plans remains to be seen, but withnearlyathird of companies already experiencing AI-driven headcount reductions, the technology’s influence on 2026 workforce decisionsmaybe significant.Earlydata is showingthat 2026 may shape up to be a year of growth and hiring,although it may be too soon to tell.

For a detailed breakdown ofemployeetrends by company size,industryandrevenue growth rate, +5 morebreakouts,and to benchmark your own business performance,refer tothe2025–26 Financial Benchmarks Report for U.S. Companiesfrom Chief Executive Group.Additionally, keep updated with monthly updates to ourCEO Confidence Indexfor afirst-lookatstrategic moves.