Small and medium-sized businesses are using AI upskilling to attract and retain staff, according to new research from General Assembly. The survey of 526 Human Resources and learning and development leaders at companies with 50 to 999 employees in the US and UK found that 81% said lay-offs and benefit reductions at larger companies had made it easier to recruit and retain talent.
Nearly half of respondents (47%) said they had hired staff from larger firms in the past year. The findings suggest smaller employers are treating AI as a workforce issue rather than a cost-cutting tool: 66% said they had changed their talent strategies because of AI, and 30% said they were hiring more people due to opportunities linked to the technology.
AI skills now a hiring filter
The research, conducted in June and July, shows AI skills have become a factor in hiring decisions. Two in five respondents (40%) said they had passed over an otherwise qualified candidate because the person lacked AI skills. At the same time, 67% said they planned to hire for additional roles by the end of the year, and 72% said they now include AI training in onboarding for new recruits.
A skills shortage remains the main obstacle to wider adoption. Nearly a third of respondents (32%) said it was their biggest challenge in scaling AI use. Most companies are responding by training existing staff rather than relying mainly on external hiring: 64% are upskilling current employees, 25% are hiring new talent with AI skills, and 11% are using consultants or agencies.
For HR leaders, the findings point to a practical shift in how AI training should be delivered. The research found 51% of employers offer role-specific AI training for individual teams or departments, compared with 50% offering tool-specific training. Some 35% provide a stipend for training outside work, while 44% allow staff to experiment with AI during working hours. Only 3% said they offered no AI upskilling opportunities at all.
Role-specific training leads the way
When asked which method worked best, 35% chose role-specific training, compared with 26% for tool training, 21% for reimbursed external training, and 18% for experimentation on the job. Role-specific training means instruction tailored to how staff use AI in their own functions, such as campaign analysis and content generation in marketing, or recruiting workflows and talent analytics in HR.
"Growth-stage companies see AI adoption as a catalyst, not a cost-cutting exercise," said Daniele Grassi, Chief Executive Officer of General Assembly. "They're able to move faster to implement AI and scale it quickly, and they're upskilling their workforces accordingly. As talent sees daily headlines around layoffs and benefit reductions, they're increasingly looking for opportunities with organizations that see human talent as critical to AI transformation. SMBs are seizing the moment."
The data shows uneven adoption across different forms of AI. While 71% of respondents said their organisations use generative AI, fewer than half (46%) use AI-driven automation, and 30% use agentic AI. Spending patterns show more money still goes into technology than training: on average, respondents said 46% of AI spending went on tools, compared with 34.5% on employee training.
Why this matters for HR professionals
For HR teams, the practical takeaway is that AI upskilling is becoming a retention and recruiting lever, not just a productivity measure. More than half of respondents (53%) said employee satisfaction and retention were the main indicators that AI investments had worked, ahead of scaling ability at 43%, improved customer satisfaction at 41%, reduced costs at 41%, and employee usage volume at 32%.
The findings also point to a specific approach: investing in AI for Human Resources that maps to how your team actually works. General Assembly argues this leaves room for smaller businesses to deepen AI use through more targeted workforce investment. "It's great to let employees experiment and pursue learning opportunities that interest them, but what we really see, across companies of all sizes that we work with, is that role-specific training has the biggest impact on AI transformation," Grassi said.
"Company-wide role-specific training can help unlock more advanced use cases of AI, such as agentic workflow automation," Grassi said. "SMBs who invest more into training their workforces are poised to recruit and retain high-potential talent so they can grow and scale faster. In today's business landscape, the right AI skills are the competitive advantage that wins."
For HR leaders looking to act on this, a structured AI Learning Path for HR Managers can help apply these findings to recruiting workflows and talent analytics, rather than relying on general AI literacy. The data suggests that 60% of companies already offer professional development, education and training benefits, and 26% plan to increase investment in those benefits.
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