Small businesses risk falling behind in the AI revolution as one in three never use AI tools in their jobs

New research reveals that small and medium-sized enterprises (SMEs) are significantly lagging in AI adoption, putting their productivity, innovation and long-term competitiveness at risk.

According to Employment Hero’s Work That Works report – a study into SME workplace productivity with insights from 1,000 business leaders and 1,200 employees across the UK – more than half of small and medium businesses (54%) report using AI tools less than once a month and 38% say they’ve never used them at all.

This slow uptake is stark in an economy increasingly shaped by automation and digital acceleration.

Despite this, the research of small business leaders and employees reveals individuals who are embracing AI are already seeing tangible benefits.

Among those who use AI in work, two-thirds (66%) say AI improves the quality of their work while 62% feel more creative and less overwhelmed. Over half (57%) say they procrastinate less and 51% even report working fewer hours thanks to AI, suggesting that the technology isn’t just a productivity booster, but a wellbeing enhancer too.

Yet despite these gains, only 24% of professionals feel their organisation is meaningfully investing in AI tools or training, highlighting a growing gap between AI’s potential and its real-world implementation, particularly within the SME landscape.

Employment Hero’s research also uncovered a deeper divide in adoption rates generationally. Millennials are leading the way, with 39% using AI tools daily or several times a week – more than double the rate of Gen X (17%) and triple that of Boomers (13%).

Kevin Fitzgerald, Managing Director at Employment Hero, said, “For technology to drive meaningful change, it needs to be in the hands of everyone. That means investing not just in access to tools, but in the training, support and confidence people need to actually use them.

“Closing the AI advantage gap is essential – not just for the success of individual companies, but for improving productivity across the UK economy. We need a trickle-down, human-centred approach to AI adoption. One that starts with leadership, but quickly and intentionally reaches every corner of the business.”

As larger organisations move ahead with automation strategies and upskilling programs, the data suggests smaller businesses need urgent support to catch up – or risk being outpaced by more tech-enabled competitors.