Owning and operating businesses is becoming more and more complicated. According to Isoveved's second year Business Owner Report76% of business owners said they have been running their businesses over the past year, a significant increase from 52% in 2024.
As business leaders navigate rising costs and shift employee expectations and economic uncertainty, many look to artificial intelligence (AI) and HR as strategic levers of support, but not all are equipped to maximize these investments.
Business Owner Reportbased on a survey of more than 2,000 US owners and executives, we will reveal how business leaders today are adapting to the challenges, how they are future investments and how they view the role of HR. 94% of HR leaders say the department is considered strategic, according to Isolved's fifth year. HR Leader reportsonly 41% of business owners share their views. This disconnection must be addressed to completely unlock business performance and employee potential.
Click to find out the full findings of Isolved's second year business owner report
Additional important findings from business owner reports
- AI is seen as an opportunity for growth
- 81% of employers see AI as a business opportunity
- 84% say AI is already having a major impact on your business, but most people expect the biggest profits to be several years away
- Top AI use cases include chatbots for employees and automation for learning, pay, and perks
- Cost pressures drive tough workforce decisions
- 56% of employers are hoping to reduce staffing next year, with mid-sized companies most likely to cut
- At the same time, 81% are willing to offer flexible pay options such as earning wage access to support employees' financial wellness and improve retention.
- HR involvement is high, but not yet strategic
- 95% of employers say they are deeply involved in HR, hiring, pay and benefits work
- Only 41% consider HR function to be strategic
- In contrast, 94% of HR leaders describe their division as strategic, pointing out key perception gaps
- The gap between burnout and skills is underestimated
- Only 40% of business owners think their workforce is burned out compared to 79% of employees
- 48% of HR leaders report workforce skills gaps, but many business owners aren't investing quickly enough to close these gaps
- Employers feel that the power is coming back to them in a positive way
- 82% of employers believe that the balance of power is shifting towards employers
- This shift leads to reduced flexibility and incentives for job seekers, and has a strong emphasis on efficiency.
- Most business owners still invest in diversity, equity, inclusion and affiliation (DEI&B)
- 83% of business owners plan to increase investment in diversity, equity, inclusion and affiliation over the next year
- Only 4% to completely eliminate DEI&B's efforts plan and signal ongoing commitment despite external pressure
- Owners want more from HR data and insights
- Business owners say they want strategic KPIs from HR, such as ROIs on employee experience.
- However, few believe they are currently receiving this level of insight
“Business owners are navigating more demanding environments and are increasingly adapting to HR and AI, which helps them adapt,” said Yutaka Takagi, Isoveved's leading product evangelist. “However, unless HR is empowered as a strategic partner and AI is deployed in clear and practical use cases, companies will miss the opportunity to turn complexity into a competitive advantage. The message from this year's research is clear. Collaboration with HR, investment in technology, and focus on employee experience will be key to maintaining uncertainty.”
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