AI in HR: Benefits, Challenges, Best Practices, Trends

Artificial Intelligence (AI) in HR refers to the use of cognitive technologies to mimic human decision-making and action at key stages of the employee lifecycle, like recruitment, engagement, performance management, time & attendance, and HR analytics. Learn about the benefits of AI in HR and how you can unlock the potential of AI for HR service delivery.  

The adoption of AI in HR is growing dramatically. 82% of HR professionals believe their teams will incorporate more AI tools into workflows over the next few years. As this and other similar AI in HR statistics illustrate, companies need to be prepared to deploy and tap into the power of AI as part of their HR practices. What does this entail? What does artificial intelligence mean for HR, and what are its pros and cons?

Read on for all the insight you need.  

What is AI in HR? 

Artificial intelligence (AI) is a subfield of computer science that focuses on the development of intelligent machines that function and respond in a manner that is similar to human HR executives. And, machine learning (ML) is a subset of artificial intelligence that focuses on how computer systems read and learn from data. Rather than depending on a human to write a program to carry out a task, ML can identify trends and generate predictions that could assist AI in HR. 

Another way AI in HR works is through digital assistants. AI-powered digital assistants are built using ML algorithms to comprehend natural language and the purpose of an employee's inquiry, respond accordingly, and offer intelligent direction to complete essential actions. 

AI comprises all the ways in which computer programs make intelligent judgments. Its integration within HR processes will improve organizational performance, since AI applications can help evaluate, anticipate, and analyze,  thus improving HR teams' decision-making. 

This spans nearly every area of HR operations, from recruitment to HR analytics. 

Learn more: The Future of AI in HR: How HR Tech is Evolving 

The Use of AI in HR 

AI opens the doorway to better HR process efficiency in a number of different ways. 

Essentially, the incorporation of artificial intelligence reimagines how you interact with your workforce and your capacity to evaluate data, foresee situations, and take necessary action. This is particularly important in the field of recruitment and analytics. 

Eventually, artificial intelligence will be able  to manage all low-value HR functions, including benefits administration, employee concerns regarding regulations and protocols, and the administration of leave applications.  HR practitioners will then have more time to concentrate on high-value activities and achieve organizational change. 

Managers can devote more time to mentoring, providing constructive criticism, inspiring and empowering employees, and fostering strong workplace connections. 

Let us now explore the key uses of AI in HR, in more detail. 

The role of AI in HR and recruitment 

One of the major applications of AI in HR is the process of talent acquisition. AI can minimize the effort and time necessary to complete routine tasks and improve the efficiency and effectiveness of the recruiting process. It allows the HR department to concentrate on sourcing, general administration, recruitment promotions and branding, and other relevant areas. 

Notably, AI helps develop a predictive and efficacious recruiting framework by bringing intelligence to evaluate a candidate's suitability and talent mapping, predicting patterns in the offer-to-join percentage, and updating the database of all applicants across the numerous levels/aspects of hiring. This helps in improved and faster decision-making. 

Organizations can also use AI to scan applicant resumes,fill out digital forms, and perform other tasks. This makes it easier for applicants to complete their paperwork, thus providing them with a better and even personalized employee experience. After the recruiting stage, AI also assists in the development and implementation of effective onboarding procedures and forecasting the employee’s level of engagement with the organization. 

 This allows the HR team to save effort and time — and build a recruitment process  powered by data. 

The role of AI in HR analytics 

The future of AI in HR analytics is more scalable, effective, and precise. . 

AI can enhance an organization's capacity to use HR analytics and large data sources to uncover business insights. Big data will also be examined by artificial intelligence to discover the activity patterns of an organization's workforce. This might help you forecast the sentiments of employees and take action as necessary. 

This is just one example of AI in HR analytics.  Organizations will be able to use the power that artificial intelligence brings, in sorting through the massive human resources databases in order to tackle business challenges. 

If an organization has trouble retaining its best employees, these next-generation analytics will reveal why and how to fix it. If sales in certain stores are lower compared to other locations, AI-led analytics will pinpoint the problem's origins in employee engagement, enabling the company to modify its management strategies. The possibilities are endless. 

Learn More: 23 Crucial People Analytics Metrics HR Leaders Must Track  

The uses of AI in HR for Employee engagement 

Employee engagement is the evaluation and analysis of employee attitudes on a daily basis. The use of AI-powered chatbots may allow both the employee and HR experts to continue the engagement dialogue at regular intervals. These chatbots offer a genuine, human-like, always-available communications platform that engages users in personalized interactions. 

These discussions are then examined and used to address the employee's individual issues, aspirations, and objectives. However, it does not stop there. 

The action taken following the chat is equally important as seeking feedback. AI-supported chatbots enable HR managers grasp sentiment shifts so that they may solve possible bottlenecks via actions and let workers feel that their opinion matters. Ultimately, this increases employee engagement and decreases turnover. 

Learn More: Top 11 Employee Engagement Tools for HR Leaders 

The uses of AI in HR for Learning and development (L&D) 

Using AI, you can reimagine learning and development, and talent management as a whole, ensuring that your programs are adaptable, personalized, and include employee-specific material. 

AI enables L&D executives to develop individualized learning paths that reflect employee roles, skill sets, future objectives, and other pertinent aspects. It can offer learning opportunities based on the requirements of specific workers and provide immediate solutions to basic inquiries that employees have. 

In addition, AI can develop learner profiles by merging diverse data sources, a task that would need weeks to complete manually. It can quickly and automatically identify the skills that your employees are missing. 

Learn more: How More Retail created a talent management & learning ecosystem for 12,000+ future leaders 

Applications of AI in HR Tech 

Today, AI is used in HR to make products more powerful, intuitive and differentiated. Here are a few real-world examples of AI in HR tech that you can use at your organization: 

• Employee lifecycle optimization: AI and machine learning features can be embedded across the employee journey . For example, Darwinbox’s employee lifecycle management platform uses cognitive technologies to help HR manage the entire employee lifecycle, from hiring to exit interviews. Using AI helps make smarter, data-driven decisions across employee lifecycle journey. Considering the vast amounts of data generated, the AI-driven systems will only get smarter and more precise over time.
• AI voice bots: Chatbots are now extremely popular, but AI in HR can power even voice-enabled bots that work as smoothly as consumer programs such as Siri or Alexa. Voice bots can be used with FAQs and helpdesks,  replacing a text-based UI with text as well as voice support. 
• Facial recognition system: Another example of AI in HR is the use of facial recognition technology in an attendance management system. Darwinbox, for example, applies this technology to allow employees to clock in from any location, using geotagging and geofencing along with facial recognition using AI to ensure security and compliance. 
• Prediction engines: AI in HR analytics can reveal hidden patterns in organizational data using a predictive analytics engine. For example, AI-driven predictive analytics can be used to analyze employee behavior and other parameters to drive the correct action across the employee lifecycle. The AI will automatically nudge employees and managers to take corrective action. 

• Document scanning: Optical character recognition (OCR) can help scan employee and HR documents without the need for manual effort. For instance, you can simplify expense management by capturing expenses on the go with AI-powered bill scanning software  . This also applies to the verification of candidate/new employee ID proof and documents. 
• Candidate selection and ranking: AI makes it possible to evaluate resumes faster using multi-format resume parsing and stack ranking. You can even program it to utilize an exhaustive skill taxonomy using. The system will rank candidates automatically based on the best-fit analysis. 

The Benefits of Using AI in HR 

Using artificial intelligence to automate human resource management tasks, make HR decisions, and analyze HR data can unlock the following benefits: 

1. Stay ahead of the curve

Today, staying ahead of competition is a tough proposition. You require a  combination of smart, data-driven strategy, and powerful tools and processes. To increase your chances of success in a market where thousands of businesses compete for a few people, you must be aware of the strategies you employ to engage, attract, and recruit the right and the best) talent. To achieve this, you need powerful AI models to crunch HR data and perform people analytics. 

2. More efficient use of resources

In HR, artificial intelligence will allow you to simultaneously save both money and time. It can significantly improve operations and increase employee productivity continuously. There are already dozens of AI-based HR technologies on the marketto help enhance the way you interact and oversee your workforce and applicants. 

3. Better assess soft skills that traditional tests cannot capture

AI technology can assist hiring managers in evaluating nontechnical qualities such as diligence, collaboration, and attention to detail, and do so without bias This is done by using AI technologies for psychometric evaluation or assessing a candidate's reaction to tasks such as a simulated customer contact or sales presentation to determine how well they employ inductive reasoning, logic, or mental agility. These are skills traditionally tested by human recruiters (difficult to scale), as they cannot be quantified through technical tests. 

4. Personalize skill development

AI in HR can enable organizations to personalize the employment experience for every individual. It can be used to evaluate an employee’s current skills, match them with requirements, andoffer specialized programs to get employees up to speed. It could also be used to comb through performance indicators to determine whether individuals need more training and to aid in discovering potential career pathways. With the proper AI technologies, you can guarantee that every worker improves more quickly and enjoys an optimal employee experience. 

5. Eliminate manual work and simplify work

For Since AI technology is accessible 24 hours a day, seven days a week, and can remove human error from routine work, it makes life simpler for employees and supervisors.instance, you may automate the leaverequest system in your organization so employees don’t have to contact their HR business partners or managers to discuss taking time off. . This frees managers’ and HR leaders’ time, allowing them to focus on other crucial tasks that can’t be automated.  

6. Improve candidate experiences

The HR department is often overburdened with multiple responsibilities, resulting in slower response times and poor applicant engagement and experience. This is especially true for small and medium-sized businesses. AI-based tools such aschatbots and virtual assistants will be of great help here. By giving candidates easy access to information, you might be able to leave a good impression with them about your company, which could lead to their to choose your organization over the others.. 

7. Increase speed and accuracy

One of the greatest benefits of AI in HR  is that it can get work done faster than it can get done if done manually. The HR department will be able to manage more data, for instance, and employees will have fewer tasks to handle. Additionally, AI can help reduce human error. AI automates tasks such as data input – such as autofill forms. With this,  employees will not have to repeatedly copy, paste, or reenter identical or  repetitive data and introduce errors inadvertently. 

8. Strengthen the employer brand

In a tight talent market, it is essential for every company to build a strong, attractive  brand image to attract qualified candidates. Using AI-based technologies during recruiting, onboarding, and even benefits administration may have a significant influence on a candidate's perception of the organization. It not only presents your organization as creative, but also demonstrates that you value employee experience and satisfaction as much as job performance. 

9. Enhance mental health in the age of remote work

One of the applications of AI technology – sentiment analysis – can  predict how an employee feels. It could predict or gauge an employee's level of engagement, fatigue, depression, and anxiety, enabling early and individualized intervention so the employee’s mental health can be taken care of. These are insights that one would otherwise only  be able to gather in person, a big challenge in today’s remote/hybrid workplaces. . 

10. Provide personalized employee experiences

HR technology will be able to collate, organize, and analyze employee data, and provide people managers with the information and insight they might need to provide each employee with unique, personalized experiences. For instance, AI can be used to make note of patterns of employee behavior and enable the organization to work with the employee accordingly.

Learn more: Highlights from Darwinbox’s HR ChangeMakers Club Session: Digital Foundation For A Future-Ready Workforce  

The Challenges of AI in HR 

While using AI in HR can make life a lot easier and efficient for organizations, they must also be wary of the challenges surrounding AI in HR. Some areas of concern include: 

1. Risk of perpetuating human bias

AI is only as effective as the people who create it and the data it is trained on. Unfortunately, we live in a society plagued with inequities, so using current data to educate and train AI software and systems might actually result in the replication of pre-existing biases. Even if the creators of AI technologies have the right intentions to keep things neutral and not allow biases to seep in, growing research suggests that the usage of AI-based HR technologies may eventually end up perpetuating discrimination, unless tested rigorously. 

2. Data privacy risks surrounding AI in HR analytics

There are privacy problems and challenges associated with the use of artificial intelligence, particularly in the field of HR analytics. Based on the  sector you operate in, the use of AI might impede your compliance with privacy regulations. Companies employing AI in the workplace must carefully evaluate the collection, processing, and retention of data. 

3. Logical errors due to a lack of contextualized cognitive reasoning

AI technologies can reduce human error, but what the AI-driven system processes might be based on fundamentally erroneous ideas. For instance, technology that monitors facial expressions and conversational tonality assumes that these variables would provide pertinent insights into a candidate's eligibility for a position. However, these qualities may be exclusive to a person's culture or individual environment and may lead to bias against individuals who do not conform to a predetermined, even arbitrary, standard. 

4. Incorrect results due to poor coding/programming

Machines aren’t always the the best option for conducting analyses. For example, while using AI for recruiting, with features such as stack ranking, programming errors may lead to misunderstanding of data or inclusion of the incorrect factors while ranking candidates. HR professionals must be wary of entrusting vital reports to AI exclusively. 

5. Limitations in the language analysis model

Sometimes, AI used for recruiting might be too reliant on specific keywords. When the software analyzes the piles of submissions, it searches for terms and phrases that assist in determining the most qualified applicants for the position. Those who understand how AI operates, however, may simply outwit and deceive it by employing these keywords in their forms and making themselves seem qualified for tasks for which they are actually not qualified.  

6. Inability to spot high-potential outliers

This is a common challenge when using AI in HR, particularly for recruitment. HR professionals may end up ignoring candidates that may not meet all of an organization's stringent recruiting criteria but might still be outliers who can  contribute significantly to a business. These qualities and their potential might not always come through in a resume and if organizations depend entirely on AI-driven tools, they might miss out on such candidates because the AI technologies used to scan resumes wouldn’t pick them out as potential candidates. 

Although it's a good idea to employ AI, the HR department should keep a strict eye on the process in order to identify candidates with specific qualities. Set a time for both you and the team to individually evaluate each applicant, if required. 

7. Issues around AI ethics

Ethical responsibility is crucial for HR departments today, particularly when it comes to employing minorities, responding to sexual assaults, and addressing other such concerns.  AI lacks the finer, humane aspects of dealing with employees, particularly in cases of layoffs.  

For instance,  AI-based tools may be able to look purely at data ad recommend which employees a company should lay off, but HR teams must consider whether or not these solutions are appropriate for the organization.   

8. Skill gaps and other implementation hurdles

In order to integrate AI into the HR department, your team must acquire skills required to handle AI-based tools and software. Implementing AI requires time, money and resources, and this must be factored in while deciding to upgrade your software and processes. In addition, businesses require a certain level of operational and technological maturity to be able to plug AI-based tools into their existing processes.  To manage this, a company will have to work with an HR technology provider who will be able to guide them and help them integrate AI into their workflows smoothly and effectively.

AI in HR Statistics: Trends and Insights to Guide Your Strategy 

Statistics always add weight to any idea. Here are eight  AI in HR statistics that illustrate the benefits and challenges we just discussed, and also give us an insight into the future of AI in HR.  

• Growing preference for AI-generated recommendations: According to a survey by Oracle/Future Workplace, the majority of HR professionals welcome the use of AI in HR processes. According to the poll, 64% of respondents stated they would prefer a robot above their supervisor or manager for advice. 
• Widespread use of AI in recruitment: AI in HR statistics reveal the technology’s importance in recruitment, along with a few caveats. AI will free up a recruiter's time (44%), provide important insights throughout the recruiting process (41%), and simplify the recruiter's tasks (39%). However, respondents to the study also feel that incorporating artificial intelligence in the recruiting process might result in the overlooking of exceptional and unconventional talent (35%). 
• Growing investment in AI in HR and Diversity, Equity, and Inclusion (DEI): 92% of HR professionals want to increase their AI usage for talent acquisition and management, new employee training and onboarding, and payroll processing. In addition to assisting with talent acquisition and administration, 95% of HR leaders use AI for DEI initiatives, the study reveals. 

• Expansion of AI-based HR tools: SHRM research shows that one-quarter of organizations studied expect to begin using or expanding their usage of automation or AI in recruiting and hiring over the next five years, while one-fifth of organizations plan to begin using or expand their use of these technologies for performance management. 
• Large companies are leading AI adoption in HR: The majority of small and medium-sized businesses do not use AI or automation to assist in HR-related tasks. SHRM also discovered that just 16% of organizations with less than 100 employees use automation or AI, compared to 42% of businesses with 5,000 or more employees. 
• Organizations see multiple tangible benefits of AI in HR: According to a poll, around 68% of organizations surveyed feel that the incorporation of AI in HR improves overall work accuracy. 72% of respondents agreed that adopting AI in HR processes increases productivity and helps to save time since it can automate numerous HR-related activities and improve the system's performance via chatbots. 
• Businesses are focusing on three core areas for the use of AI: All HR processes are ripe for AI implementation. However, the majority of businesses are focusing their AI efforts on three areas: HR operations (40% of businesses), talent acquisition (38%), and employee engagement monitoring (38%), according to Gartner. 
• AI in HR analytics driving industry growth: 53% of companies in the global HR technology sector are now eager to employ AI to discover patterns and trends in massive data sets. According to SkyQuest, this makes it a helpful instrument for detecting and resolving organizational challenges linked to performance evaluation, interviewing, and employee retention. With the AI revolution, the HR tech industry will reach $35.68 billion by 2028, SkyQuest’s research suggests.  

• Apprehension about the future: The bulk of job searchers (80%) think that AI will play a significant role in future application processes. However, the majority of candidates (67%) also feel unprepared for this change. Only 35% of respondents believe their organization is mature enough and prepared for the implementation of AI technologies, research suggests. 

Learn more: Top 11 Employee Engagement Tools for 2023  

Best Practices to Remember 

To unlock the full benefits of AI in HR and overcome its challenges, organizations need to follow seven best practices:  

1. Provide the right training data sets to the AI program

Understanding the data is extremely important when using AI applications, since the data fed into the AI  tool to train it might cause inconsistencies. If the management team in charge of the application is unable to distinguish between genuine and questionable data, it is the responsibility of the HR team to identify the right data and feed it to the system for better use of the tool. It’s also important to constantly update the data so the results from the AI system is accurate and up to date.  

2. Test the AI-based HR solution for bias before going live

It is critical to test the AI system for bias before it is implemented in an organization. The implementing team could run multiple tests to identifying data set defects that may be uncovered by testing for biases. For instance, a specific demographic variable, such as gender, might be omitted while training the AI system, and then  and explicitly included in the results This could be an indication that there’s systemic bais that requires fixing.  

3. Train and empower managers to work with AI in HR

The capacity to learn and adapt is among the most powerful aspects of AI and ML. The best companies enable team members and senior leaders to provide feedback and challenge AI findings, and iterate until the solution meets the specific requirements of each team. 

4. Keep tabs on the latest AI technology developments

Since artificial intelligence is a developing field, it is essential to continuously monitor and evaluate the tools and technologies in place to guarantee they are delivering the desired outcomes. To ensure the effective implementation of AI in HR, it is essential to coordinate with the IT department to ensure that the system is always fully integrated and updated. 

5. Ensure that your AI-based HR tech solution is the right fit for you

Before incorporating AI technology into HR processes, it is essential to identify your objectives and determine how AI may assist you in achieving them. There are several AI-based HR solutions in the market, but it is  essential to choose the one that best fits your organization's needs and objectives. HR professionals must be taught how to apply AI technologies and comprehend the data they're dealing with in order to maximize its potential. So, choose a solutioning partner that can help you with AI readiness and training. 

Learn More: Is the Metaverse Workplace the Future of Work? 

Conclusion 

The future of AI in HR is definitely promising, with intelligent technologies altering the HR ecosystem. Internal processes and other HR operations, including data acquisition, recruitment, hiring, evaluation, mentoring, and talent management, can be significantly enhanced by the use of AI in HR.  

Successful AI deployment in HR is sure to boost your company's overall efficiency and performance by attracting more talented, experienced, and qualified recruits and assisting existing employees in their professional growth. You simply need to plan the implementation journey alongside an experienced, AI-first HR tech partner.  

Darwinbox can help you incorporate AI-driven programs and tools in your HRMS. Schedule a demo today to learn more!