- The majority of HR leaders nowadays use AI across a wide range of tasks, like employee records management, payroll, recruitment, onboarding and performance management.
- In the future, AI may be able to hire and fire employees, as well as perform more complex tasks like answering HR-related employee queries and communicating salary details.
- Despite the benefits, some risks are also involved when incorporating AI in HR, such as the limitations of AI tools and how prone they are to cyberattacks.
- This article is for HR professionals and employers wanting to know how AI can improve current HR processes and considerations when purchasing AI-powered HR tools.
Progress in artificial intelligence (AI) technology has remade the human resources (HR) department, enabling HR professionals to leverage machine learning and algorithms to streamline their work processes, reduce their biases, and enhance their analysis and decision-making. However, current limitations and vulnerabilities have given some organizations pause when it comes to adopting AI for additional use cases. In this article, we’ll discuss some of the ways AI is changing HR, considerations when adopting it and how far the trend may go.
How HR teams are embracing AI
In Eightfold AI’s report The Future of Work: Intelligent by Design, the majority of the 250 HR leaders surveyed said they are already using AI across HR functions like employee records management (78 percent), payroll processing and benefits administration (77 percent), recruitment and hiring (73 percent), performance management (72 percent), and onboarding new employees (69 percent).
In terms of future use, 92 percent of HR leaders intend to increase their AI use in at least one area of HR. The top five areas are performance management (43 percent), payroll processing and benefits administration (42 percent), recruitment and hiring (41 percent), onboarding new employees (40 percent), and employee records management (39 percent). Most plan to increase their usage in the next 12 to 18 months.
That aligns with other research that suggests AI’s usage in HR is expected to grow in the coming years. IDC’s Future of Work 2022 research predicted that this year, 60 percent of global 2000 businesses will deploy AI and machine learning (ML) tools to support the entire employee life cycle experience. By 2024, the authors predict, 80 percent of the global 2000 organizations will use AI/ML-enabled “managers” to hire, fire and train employees. In fact, there was news of Amazon using algorithms or bots to fire people two years ago.
IDC’s research director, Amy Loomis, said this practice is already widely used in HR today via stack ranking. Stack ranking is a statistical approach that compares employees’ performance against each other. After analysis of staff performance, stack ranking software recommends that underperforming individuals take additional training, advise managers to do intervention or, worst case, lay off people who fall below the threshold of acceptable performance. It could be as big as terminating employees who fall into the bottom 10 percent of performers. To mitigate this trend, New York City passed a law that requires companies to audit their AI-powered recruitment software for biases. Companies violating this law face fines.
How HR teams are using AI
AI tools are versatile and offer HR teams a number of applications, helping them complete many important functions in a faster, more thorough way than ever before. Here’s a look at some of the ways HR teams are employing AI technology today.
Recruiting and hiring
Recruitment and talent acquisition are among the first HR tasks AI has been used to improve. From job posting to sending job offers, AI has significantly reduced the time spent recruiting new employees by automating manual tasks.
Aleksander Dolgov, co-founder and chief people officer of Skipp, a talent-as-a-service platform for tech professionals, has witnessed the power of AI in sourcing technical talent by automating repetitive tasks and providing valuable insights into employee performance and candidate outreach:
“Professionals who source IT developers, UI/UX designers and other technical roles often use tools such as LinkedIn and GitHub to find and engage with potential candidates,” Dolgov said. “With the help of AI, these professionals can generate customized sequences of messages and communications for each candidate, helping to improve engagement and response rates. Additionally, AI can be used to track and analyze conversion rates, allowing recruiters and hiring managers to identify and refine their most successful outreach strategies.”
Committed to AI for good, programmatic job advertising platform PandoLogic has most recently been exploring the potential of ChatGPT and generative AI to drive recruitment chatbots forward. Keisuke Inoue, lead algorithm data scientist, shares that PandoLogic already uses AI in such a manner, specifically for interview question generation and question answering through a proprietary domain-specific large language model (DSLLM).
“PandoLogic’s DSLLM is optimized for the recruitment domain, leveraging a large collection of job descriptions and relevant datasets,” Inoue said. “With this domain-specific knowledge, the DSLLM is able to produce safer and more reliable job interview questions that are suitable for incoming job descriptions than generally available AI tools. Compared with traditional approaches, PandoLogic’s generative AI is able to handle unforeseen questions through GPT4 and contextual data.”
AI can develop and automate onboarding new hires:
- Verifying employee documents
- Conducting induction training
- Handling administrative tasks like providing IDs and access to company hardware and software
“Onboarding is an essential part of HR, and AI can make the process smoother and more personalized. AI-powered chatbots can guide new employees through the onboarding process, answering questions and providing information and prompts,” said Nick Gallimore, managing director of people management at Advanced, a business software company.
“This ensures that at no part during the process will a candidate be ‘left hanging’ or ‘ghosted,’ which retains a positive image/reputation for the brand, which is vital in today’s very competitive talent market,” he added. “This frees up HR staff to focus on more complex tasks. AI can also help to personalize the onboarding process by analyzing data on each employee, such as their skills and preferences, and tailoring their training accordingly.”
Poor onboarding could result in unanticipated employee turnover. Companies spend approximately 20 percent of an employee’s pay to hire a replacement, and the total cost of turnover when factoring in onboarding, training and lost productivity could be between 100 percent and 300 percent of an employee’s salary.
The best employee monitoring software is now incorporating AI to identify bottlenecks in worker productivity by keeping tabs on their online movements. This can help administrators easily manage large workforces without manually monitoring activity, instead providing them with notifications and alerts when AI detects anomalies or violations of company policy.
“AI can monitor employees’ performance, behavior and engagement, providing HR teams with valuable insights. It can analyze employee data, such as emails, chats and work patterns, to detect signs of burnout, disengagement or even misconduct,” Gallimore said. “This valuable insight can help HR teams to address issues before they become more significant. AI-powered tools can also track employee productivity, providing data on how much time employees spend on specific tasks. This can help HR teams to optimize workflows and identify areas for improvement.”
Learning and development
AI in learning and development can help create personalized training to suit each employee. Anjela Mangrum, founder of manufacturing recruitment agency Mangrum Career Solutions, sees significant possibilities of AI in maximizing employees’ development.
“I … think there’s a lot of potential for AI to customize employee training, creating data-based career paths for each individual instead of the traditional generic focus on helping employees gain in-demand business skills,” Mangrum said. “By tracking the unique learning methods of professionals, AI can help develop your workforce by providing individualized recommendations for skills training.”
Promotion and career development of employees are made easier by using AI tools to source talent from within the organization.
“Streamlining your internal mobility processes can also be best done with AI,” Mangrum said. “Matchmaking employees and departments isn’t always the easiest, so many employers tend to simply post a job ad instead of considering their current team members for vacant positions. AI can handle that task, saving you precious dollars in recruiting and training external talent.”
How AI benefits HR departments
While change can be daunting, AI tools offer several key benefits to HR departments, streamlining their workflows and supporting improved decision-making. These benefits include the following:
AI can automate repetitive and time-consuming tasks so HR professionals can focus on creating strategies. Moreover, AI also improves decision-making with valuable insights via HR and predictive analytics.
For example, AI can enhance hiring efficiency by streamlining the screening and selection process. Algorithms can analyze resumes, determine the most qualified candidates and provide information to help recruiters make better hiring decisions.
AI-powered software can analyze large amounts of data to identify patterns and trends and suggest cost-effective solutions. For instance, AI gives information about your sources of hire that generate the highest quality of applicants so you can allocate your hiring budget accordingly or drop ineffective recruitment channels.
McKinsey’s Global AI Survey shows that 27 percent of HR respondents said their AI adoption resulted in a cost reduction of less than 10 percent, while 23 percent reported an average revenue increase of 6 percent to 10 percent. The HR areas involved in this survey were performance management and organization design, workforce deployment, and talent management optimization.
AI enables the collection and analysis of data in your HR processes to eliminate biases and guesswork to guarantee you are choosing the right candidate or offering the best compensation and benefits plan. For example, mining recruitment data helps uncover challenges so you can address them objectively. Looking at your recruitment analytics, you can:
- Focus on cost-associated metrics like job advertising performance and cost per hire to reduce hiring expenses
- Concentrate on speed-related key performance indicators (KPIs), like time to fill and time to hire, to expedite recruiting
- Pay attention to quality-related KPIs, like new-hire turnover and new-hire retention rate, to improve the quality of hires.
Adopting AI-powered tools can drastically improve efficiency, reduce costs and provide valuable information to your HR department.
Considerations when adopting AI tools
Beyond what AI can do and the benefits of using it in HR, here are some things to keep in mind when you decide to invest on AI-powered HR tools:
Remember that AI has limitations.
Harvard Business school performed a survey and found that 88 percent of HR executives learned that their tools reject qualified candidates. The job descriptions have too many qualifications, which created a long list of requirements for algorithms to check for in resumes. As a result, the algorithm rejected many qualified job seekers who may be missing just a few skills from the list. Another factor was a work gap in candidates’ resumes for more than six months. These gaps may represent legitimate life events, like pregnancy, military deployment or illness.
AI on its own cannot give the complete picture of the situation. HR professionals should dive deeper into the reasons behind the data to correctly understand and interpret outcomes. Use your intuition and experience to make the right business decisions.
Consider data privacy and cybersecurity risks.
With a growing number of organizations using AI to store business information, data security is critical now more than ever. HR must be able to reassure employees that their personal information, like Social Security numbers and bank details, is secure.
Organizations must establish robust cybersecurity guidelines to gain employees’ confidence and avoid data breaches that could result in lawsuits or hefty fines and damage company reputation.
Be wary of tools that “do it all.”
It could be tempting to purchase all-around, AI-powered software that “does it all.” However, Todd Raphael, Head of Content, SkyHive, advises HR management to have a healthy skepticism about tools that boast of doing everything better.
“It’s probably better to keep but enhance the systems you have through an AI tool. If the AI has sufficient data and works in real time – so [it] is always up to date – it can provide really valuable intelligence,” Raphael said. “It can make a lot of the HR systems you have even smarter, unlock a lot of valuable information from them. I’d just be wary of AI companies that promise to be better than every existing tool you have, rather than enhancing and augmenting every existing tool. No one product can be the best at everything.”
HR departments will increasingly adopt AI to benefit humans
There’s no doubt that AI is having a huge impact on HR. From automating routine tasks to delivering data-rich insights for more objective decision-making, AI continues to enhance how companies attract, develop and retain talent. However, it’s important for HR professionals to realize that AI shouldn’t replace the human touch in HR. Companies should be able to strike a balance between technology and human involvement to gain the greatest benefits.