AI in the Workplace: What Employers Should Know

8 January 2026 ExtensisHR7 minute read

Quick look: Artificial intelligence (AI) has quickly evolved from an emerging technology into a core part of how modern organizations operate. What was once a nice-to-have experimental tool is now central to productivity, talent strategies, and competitive advantage. However, with rapid adoption comes both opportunities and challenges for employers to consider and plan for.

Artificial intelligence (AI) is arguably the most significant technological advancement since the rise of the World Wide Web. In just a few years, these tools went from a futuristic concept to a household staple used by the majority of Americans to do everything from generate a recipe at home to write code at work.

According to the Pew Research Center, over 20% of employees now say at least some of their work is completed with AI, a 31% year-over-year increase. As adoption continues to rise, it’s critical for employers to understand its potential impact on their workplace.

Let’s explore the ways AI is being used at work today, how it can benefit companies, and key considerations to stay productive and protected.

How is AI being used in the workplace?

The latest AI tools go beyond simple automation; they can create content, analyze trends, predict outcomes, and more. As a result, organizations are integrating AI across a wide range of business activities, including:

Streamlining repetitive tasks, like data entry and processing, scheduling, and document management
Enhancing decision-making by providing quicker access to forecasting analytics and business intelligence
Improving customer service through the use of chatbots and virtual assistants, personalized recommendations, etc.
Honing human resources and recruiting by assisting with candidate screening, tracking performance and employee engagement trends, and creating personalized learning programs
Optimizing operations, as some companies use AI to improve supply chain management, automate their internal processes, and identify opportunities to reduce waste and costs
Supporting innovation by analyzing market trends, generating first drafts of copy and creative assets, and helping design prototypes

The benefits of using AI at work

From raising productivity to improving customer experiences, AI offers a wide range of benefits for modern workplaces. Here’s why many companies are embracing it:

1. Boosts efficiency

By automating certain administrative tasks, employees can focus on more creative and strategic projects. Many organizations that leverage AI are seeing elevated productivity and better decision‑making, especially when it’s paired with human judgment. For instance, PwC found that in industries most affected by AI, productivity has quadrupled since the tools became widespread, up 27% from 2018 to 2024. Comparatively, those same industries saw only a 7% bump between 2018 and 2022.

2. Supports strategic planning

AI can quickly analyze complex datasets to uncover patterns humans might miss. With predictive analytics, businesses can forecast trends, identify risks, and make smarter, data-driven choices.

For example, manufacturers can test for supply chain disruptions before they occur, financial institutions can detect fraudulent transactions in milliseconds, and retailers can use AI to predict buying patterns and plan inventory more accurately.

3. Potentially reduces costs

Automation cuts down on labor-intensive work, and AI-driven insights optimize resource allocation and minimize errors, potentially lowering operational costs and increasing efficiency. According to McKinsey, 44% of companies that have deployed AI report cost savings.

4. Improves customer experience

AI-powered chatbots and virtual assistants can help handle routine questions and provide timely, around-the-clock assistance, allowing human teams to focus on more complex or personalized needs. At the same time, AI-driven insights can inform more tailored recommendations, supporting stronger relationships, higher satisfaction, and long-term loyalty.

5. Supports employee well-being

By offloading tedious tasks, AI reduces burnout and helps employees focus on more important work. Machine-driven systems can also support skill development through customized learning and performance feedback. Research from the University of Phoenix found that 89% of AI users say they’ve experienced reduced burnout, compared to 77% of those who use the tools less frequently.

6. Drives innovation

Businesses can use AI to identify market gaps, improve products, adapt quickly to changing trends, and stay ahead of competitors. Incredibly, one team of scientists compressed months of antibiotic research into one week using robotics.

7. Increases accuracy and security

AI minimizes human error in tasks like calculations and data management. It also strengthens security by detecting anomalies, fraud, and compliance issues in real time. Experian, a provider of fraud prevention solutions, says its AI-powered products have helped clients avoid roughly $20 billion in fraud losses in 2024 and 2025.

Key considerations for employers as they implement AI

AI can transform workplaces, but successful adoption requires careful planning. Here are some important reminders for business leaders as they prepare for deployment:

Define clear objectives

Identify the problems you want AI to solve in your business, whether it’s automating tasks, improving the customer experience, or supporting decision-making. Be sure to align AI use with specific organizational goals, not just technology trends.

Ensure data quality and privacy

Without accurate, clean data, AI-driven insights can be flawed. Additionally, organizations must comply with data privacy regulations like the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), and maintain transparency with employees and customers.

Train employees and manage the change

Provide training to help teams safely use AI tools and prepare staff for workflow changes to reduce resistance and ensure smooth integration. Additionally an AI usage policy outlining key guidelines can be included in the organization’s employee handbook to provide clarity and protect the business.

Address ethics and bias concerns

AI can unintentionally replicate biases from its training data, affecting hiring, promotions, or customer interactions. Businesses should follow ethical AI practices, regularly audit algorithms, and promote fairness.

Prioritize security and risk management

AI introduces new cybersecurity risks, such as data breaches and AI-driven fraud. Adopt robust security measures, like controlling access to data and encrypting or anonymizing sensitive information, and continuously monitor AI systems.

Assess costs and ROI

To determine AI’s true value, business leaders must first measure the total cost of AI implementation, including software, hardware, maintenance, and training. Then, determine return on investment (ROI) in terms of productivity gains, cost savings, and company growth.

Plan for scalability

When rolling out AI, organizations should design solutions that integrate smoothly with existing systems and can expand as business needs evolve. These decisions will determine whether AI remains a siloed experiment or becomes an enterprise-wide capability.

Comply with legal requirements

Stay updated on AI regulations and industry guidelines to avoid legal risks and ensure AI use aligns with company policies and employment regulations. At the time this blog was written, there were no federal laws governing AI in hiring, though several states and cities had introduced their own. For example, New York City requires employers using AI recruiting tools to conduct independent annual bias audits, share audit summaries publicly, and provide transparency notices to candidates.

Stepping into the next chapter with a PEO on your side

AI has the potential to help small and midsized businesses (SMBs) achieve more than ever before. However, the administrative burden associated with developing its usage policies and monitoring ever-changing employment laws can take a toll.

Partnering with a professional employer organization (PEO) can turn AI into a win-win, unlocking higher levels of productivity and innovation without the housekeeping stress. In addition to helping their customers access Fortune 500-level benefits and simplifying daily human resources (HR) tasks, PEOs also make it easier for them to take advantage of the latest tools and technology.

Here’s how ExtensisHR helps SMBs adopt AI in their workplaces:

AI usage policy development: Our HR experts help you create AI guidance for employees and update your company handbook accordingly.
Proactive compliance monitoring: Laws about AI are constantly changing, and our risk and compliance team stays informed and keeps you compliant.
AI-supported recruiting (at no additional cost): By combining AI efficiencies with human expertise, our complimentary recruiting services help you hire the right talent, while adhering to all applicable laws and regulations governing the use of AI in hiring.

AI is no longer a future possibility, it’s here and already impacting businesses of all kinds. Employers who embrace it carefully, protect human value, and invest in ethical and strategic use will see the greatest benefit. And by partnering with a PEO, you can more easily build a culture where AI and people succeed together.

Looking to future-proof your business? Take our quiz to see if PEO could be a good fit for your company, or contact us today to start a conversation.