Canadian chief executives are making artificial intelligence their top investment priority as they seek to improve productivity, but most say their organizations are not equipped to train employees to use the technology effectively.
Seventy-eight per cent of Canadian CEOs identified AI as their primary investment focus, according to KPMG in Canada’s 2025 CEO Outlook released Oct. 15. The survey found 73 per cent plan to spend between 10 and 20 per cent of their budgets on AI over the next 12 months.
However, only 17 per cent say their organization is equipped to upskill employees to fully use AI’s benefits. Just 16 per cent expressed confidence in their employees’ ability to leverage AI effectively.
“Canadian CEOs are turning to new tools to redefine success and transform their business at a time when stickhandling through heightened uncertainty becomes increasingly more difficult,” said Benjie Thomas, chief executive officer and senior partner at KPMG in Canada. “The challenge is, being disciplined in their capital deployment to ensure AI aligns with their business strategy, implemented appropriately and integrated into their operations to ensure material productivity gains. This can’t be done without employee buy-in, training, and literacy.”
Productivity concerns drive investment
The focus on AI comes as Canadian productivity continues to decline. Labour productivity and overall business investment both fell in the second quarter, Statistics Canada recently reported.
“It’s impossible to move the dial on productivity without addressing business investment, which is why it’s encouraging to see CEOs invest in AI tools that can reverse productivity declines,” said Thomas.
Understanding and implementing AI ranked as the top operational priority for Canadian CEOs over the next three years. Global CEOs ranked it second behind advancing digitization and connectivity, with 69 per cent planning to spend between 10 and 20 per cent of their budget on AI over the next year.
Training gap poses challenge for HR leaders
While 78 per cent of Canadian CEOs are rethinking how employees are trained and developed in the AI era, the gap between intention and readiness presents a significant challenge for human resources departments.
A separate KPMG survey of 753 business leaders at predominantly medium-sized Canadian companies found similar results. Eighty-six per cent said they are rethinking employee training, but only 38 per cent believe their company is equipped to upskill employees to use AI effectively.
“The most-successful integrations of AI start with your employees,” said Timothy Prince, Canadian managing partner for clients and markets at KPMG in Canada. “By embracing the possibilities rather than fearing the unknown, business leaders can position AI as more than just a productivity tool – it can help transform the organization by enhancing and expanding the abilities, creativity and impact of employees and driving innovation.”
Leadership qualities for uncertain times
Canadian CEOs identified several leadership qualities as essential for navigating geopolitical instability and weak economic growth. These include the ability to lead transformation and culture change, greater agility and faster decision-making under pressure, stronger strategic foresight and scenario planning capabilities, and ensuring AI understanding and literacy among employees.
“Canada is entering a pivotal time as it rewires its economy and AI transforms business,” said Thomas. “CEOs recognize that to build a prosperous and vibrant country starts in their own organization at the very top with their ability to lead and inspire their teams to accelerate innovation and growth. The time for complacency is over.”
Supply chain and cybersecurity top concerns
Supply chain resilience emerged as the top pressure driving short-term decisions for both Canadian and global CEOs. For Canadian executives, regulatory pressures, cybersecurity, AI ethics and governance, and AI integration into organizational processes also rank as key challenges.
To address these risks, Canadian CEOs are increasing investments over the next three years in cybersecurity and digital resilience, regulatory compliance and reporting, technology innovation, AI integration and governance, and supply chain resilience.
“It’s a tough environment, with a lot of uncertainty for businesses whether it’s from trade relations to the next cyberattack to emerging technologies like AI and quantum computing to new regulations,” said Prince. “The natural reaction to uncertainty is to pause investments but what we’re hearing from our clients and what the surveys bear out is that they are continuing to invest in areas that will make them stronger, more agile and ultimately more resilient.”
Survey methodology
KPMG conducted its CEO Outlook survey with 1,350 chief executives between Aug. 5 and Sept. 10. All respondents oversee companies with annual revenues over $500 million US. The survey included CEOs from 11 key markets and 12 industry sectors.
The separate business leader survey included 753 respondents from Canadian companies between Aug. 15 and Sept. 3. Thirty per cent reported annual revenue over $1 billion.
