AI and Recruitment Top Challenges for SMBs
A new report on the state of HR for Canadian small and medium-sized businesses identifies key trends and challenges for 2026. The study, which surveyed over 400 businesses, highlights recruitment difficulties, the adoption of AI and other technologies, and the overall employee experience as primary areas of focus. The findings point to a competitive and technologically evolving landscape for HR departments.
- One-third of Canadian professionals intend to seek a new job in the first half of 2026, an increase from 26% in July 2025, signaling rising staff turnover challenges. For the second time, better benefits and perks have surpassed competitive pay as the primary motivator for those considering a job change. - Despite 78% of Canadian small and medium-sized businesses (SMBs) seeking to adopt AI, significant barriers remain, including the cost of implementation and a lack of internal expertise. In fact, 27% of Canadian small business owners were found to be using AI-powered tools without even realizing it. - A notable skills gap complicates the hiring landscape, with 53% of hiring managers reporting that finding qualified professionals is more difficult now than it was a year ago. This has led 55% of employers to plan for an increase in permanent hiring and 50% to anticipate bringing on more contract talent in the first half of 2026. - Many Canadian businesses are struggling with AI readiness; 44% of employees who use AI tools have received no formal training. This skills gap is a primary concern, with 41% of medium-sized firms citing a lack of internal expertise as a key difficulty in digital transformation. - Employee expectations are shifting, with a growing demand for well-defined career pathways and opportunities for upskilling. Research shows that employees who receive meaningful feedback from their managers are 5.7 times more likely to feel supported in their career advancement goals. - While many SMBs are investing in digital tools to improve the employee experience, some report issues with the integration capabilities of new HR technologies. Positive coworker relationships remain a strong driver of engagement, with 78% of employees reporting them as such.
