The Impact of AI in Modern Human Resources

Author
Khushi
Read time
4 minutes
Published
July 6, 2023

In a world where AI and HR are gradually becoming two sides of the same coin, HR professionals and employees alike need to embrace AI as an ally. Think of it as gaining a new teammate with superpowers that doesn’t need coffee breaks every hour or vacation time to escape burnout. As we look towards a future where AI is deeply woven into our daily lives, let’s make sure we’re not just surviving the wave but truly riding it.

The Impact of AI in the Workplace

In the report, “The Future of Work: Intelligent by Design,” by Eightfold AI, it is clear from the responses of 250 HR leaders that AI has already become integral to HR functions.

Some key areas where AI in Human Resources is implemented include employee records management (78%), payroll processing and benefits administration (77%), recruitment and hiring (73%), performance management (72%), and onboarding new employees (69%). Interestingly, future trends also seem positive, with 92% of HR leaders planning to increase their AI usage in at least one HR area within the next 12 to 18 months.

Interestingly, the top five areas of interest are performance management (43%), payroll processing and benefits administration (42%), recruitment and hiring (41%), onboarding new employees (40%), and employee records management (39%). This trend mirrors broader research indicating that AI’s role in HR is set to expand in the coming years.

A forecast from IDC’s Future of Work 2022 research predicts that this year, 60% of the Global 2000 companies will utilize AI and machine learning (ML) tools throughout the entire employee lifecycle. Furthermore, by 2024, it is anticipated that 80% of these organizations will deploy AI/ML “managers” for various tasks, including hiring, firing, and training employees. Already, we’ve seen such AI implementations in action; Amazon, for instance, used algorithms for certain workforce management tasks two years ago.

Things to keep in mind

Even though AI is getting more and more popular, it’s really important to be careful when we start using it in the world of Human Resources.

As we start using AI more, we need to think about how fair it is. For example, we need to make sure AI doesn’t favor some people over others when helping to pick who gets a job. In fact, this is so important that in New York City, they made a rule that says companies have to check their AI hiring programs for unfairness. If companies don’t do this, they could get in trouble and have to pay money. Now, let’s talk about the good and bad sides of using AI in HR.

The pros

AI’s versatility has broad implications for HR teams. Let’s delve deeper into some benefits that AI offers in HR:

Efficiency in Operations

AI can significantly streamline HR functions. Tasks like employee records management, payroll processing, leave tracking, and benefits administration, traditionally known for their time-consuming nature, can be expedited with AI. HR professionals can then focus more on creating strategic initiatives and fostering a positive work environment. Through automated scheduling, leave tracking or performance management, AI allows HR professionals to work smarter, not harder.

Improved Recruitment Process

Recruitment is a critical HR function that greatly benefits from AI. From analyzing resumes to pre-selecting potential candidates, AI not only accelerates the hiring process but also ensures a more effective selection. AI can automate repetitive tasks like sourcing candidates from LinkedIn or GitHub and even tailor communication sequences for each candidate, significantly improving engagement and response rates.

Advanced Onboarding Process

A smooth onboarding experience can significantly impact new hires’ productivity and retention. AI can automate various administrative tasks involved in the onboarding process like verifying employee documents and conducting induction training. AI-powered chatbots can also provide a personalized onboarding experience, guiding new employees through their first days at work, answering questions, and providing prompts in real-time.

Cost Reduction

One of the key advantages of AI in HR is its potential for cost reduction. AI-powered HR software can analyze vast amounts of data to identify patterns and trends, leading to cost-effective solutions. Whether it’s optimizing the allocation of your hiring budget based on the quality of applicants from different sources or dropping ineffective recruitment channels, AI helps save resources. Furthermore, automating various HR tasks reduces the need for manual intervention, leading to significant cost savings. For example, the use of AI in performance management and organization design has led to a cost reduction of up to 10% according to McKinsey’s Global AI Survey.

The cons

While the pros may seem exciting, it’s also essential to recognize that AI has certain limitations.

Potential for Biases

Even though their human creators or the datasets used to train them design AI systems to be objective, they can often carry inherent biases. If unchecked, these biases could seep into hiring decisions, performance evaluations, and other critical HR processes, leading to potential legal and reputational risks for organizations.

Security and Privacy Concerns

With AI storing and managing massive amounts of personal and professional data, there are valid concerns about data security and privacy. Any breach could lead to serious consequences, such as identity theft, financial loss, and reputational damage. Thus, companies need to ensure robust cybersecurity measures to protect sensitive employee data.’

Limits of Automation

AI and automation can simplify many routine tasks, but they aren’t perfect and can often miss the nuances that a human HR manager can understand. For example, an AI system might reject a highly qualified candidate due to minor discrepancies in their resume or the absence of certain keywords.

Employee Surveillance Issues

While AI can effectively monitor productivity and performance, it might create an environment of excessive surveillance, which can lower employee morale and trust. Tracking and analyzing every online movement can make employees feel that their privacy is being violated. Balancing productivity tracking with respect for employee privacy is a delicate matter that organizations must handle carefully.

Wrapping it up

To sum it up, there’s no denying it: AI is making a big splash in the HR world.

It’s helping speed up everyday tasks and providing useful, fact-based information for better decision-making. It’s changing the way businesses hire, train, and keep their employees. But it’s crucial for HR teams to remember: AI isn’t there to take over the human part of human resources. Ultimately, the real win comes from finding a sweet spot, balancing the high-tech help of AI with the personal touch of human interaction.