<img height="1" width="1" style="display:none;" alt="" src="https://px.ads.linkedin.com/collect/?pid=231787&amp;fmt=gif">

    What Is the Impact of AI on HR?

    November 2, 2023

    Stay Updated

    What Is the Impact of AI on HR?
    Darwinbox
    Written By
    Darwinbox
    Topic
    AI in HR

    HR technology has a role to play in digitalization, productivity, and trends like hybrid work. This article provides an overview of the current and emerging HR technologies, as well as the impact of artificial intelligence on the HR function. 

    The impact of AI in HR is multifaceted and far-reaching. AI can process very large datasets at unprecedented velocity to arrive at human-like insights. Alongside automation, it has the potential to simplify the majority of routine HR tasks and augment the capabilities of human HR practitioners. Further, this trend isn’t too many years away into the future; AI adoption in HR is already soaring.  

    HR technology centers around digitalization and workflow management. The focus is on maximizing workforce productivity with innovative technologies. Key trends include workplace transformation, hybrid work, digital L&D, hyper-personalization, and diversity, equity, & inclusion (DEI) initiatives – all powered by the ever-expanding impact of digitization.  

    Also, artificial intelligence and machine learning (ML) are enabling HR managers to automate tasks and increase productivity. HR leaders can now focus on attracting and retaining top talent, fostering a culture of innovation and agility, and investing in the right resources to support remote and hybrid teams. 

    Overall, HR technology is transforming the way organizations manage their human resources function, making it more efficient, error-free, and cost-effective. 

    What Are Some Key HR Technologies? 7 Key Trends 

    Artificial intelligence is among the top technologies in HR in 2023, but it is not the only notable trend. The impact of AI in HR is being felt along with the emergence of several new technologies. These include: 

    • Robotic process automation (RPA): RPA automates repetitive and time-consuming tasks, such as data entry, payroll processing, and benefits administration. By eliminating manual work, HR teams can focus on strategic initiatives. Bear in mind that, unlike AI, RPA can only use fixed rules. 
    • Virtual reality (VR) and augmented reality (AR): VR and AR are revolutionizing the way HR teams handle training and development programs. They offer immersive and interactive experiences, letting employees emulate real-life scenarios, enhance skills, and promote knowledge retention. 
    • People analytics: People analytics leverages advanced data analysis techniques to extract insights from employee data as well as organizational data. This enables companies to make data-driven decisions. You can use people analytics to identify talent gaps, predict attrition rates, and optimize workforce planning and performance. 
    • Chatbots and AI-powered assistants: Chatbots and virtual assistants are transforming HR service delivery. They can provide instant responses to employee queries, assist with onboarding processes, and even help with benefits enrollment. These technologies enhance employee experience by providing quick and accurate support. 
    • Blockchain: Blockchain technology ensures secure and transparent management of employee data, such as educational backgrounds, certifications, and work history. It eliminates the need for intermediaries and reduces the risk of data breaches or fraud. 
    • Web3: Web3 is a new technology that can transform HR by decentralizing data storage and enabling secure identity verification. It can also facilitate seamless collaboration within and between organizations, since it’s a decentralized web. Additionally, smart contracts on Web3 can automate HR tasks, improving transparency. 
    • The cloud: The cloud offers a scalable platform for data storage, collaboration, and accessibility. HR professionals can integrate new features more easily and access real-time information from anywhere. Cloud-based HR systems also facilitate efficient remote work, increasing the productivity of both HR teams and employees. 

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

    What Is the Future of HR Automation? 

    One of the foremost trends in HR technology is the use of technology to automate tactical tasks, especially high-volume, iterative ones. The future of HR automation holds tremendous potential, as AI is now being incorporated into HR processes in several ways.  

    In the next few years, we will see even more advanced automations, particularly in tasks that are still performed by humans, such as interviewing candidates. Here are a few glimpses from the future of HR automation: 

    1. Recruitment becomes more intelligent and intuitive

    In the future, you’ll be able to automate the entire recruitment process almost entirely. From candidate screening using natural language processing (NLP) to conducting virtual interviews with emotion recognition, these futuristic systems will identify the best candidates correctly, even in highly skilled white-collar roles. 

    1. Predictive analytics will guarantee employee success

    By using intelligent automation systems like ML and predictive analytics, you can ingest massive amounts of data. This will help identify trends and patterns to make informed decisions about employee success drivers. For example, you may be able to predict performance, retention, and the most optimal career development opportunities, including a ready-to-action flowchart for each employee. 

    1. Virtual HR assistants will make your worklife simpler

    Imagine having your very own virtual HR assistant available 24/7. These intelligent assistants, powered by conversational AI, can assist employees with onboarding, training, benefits enrollment, and policy inquiries. While basic chatbots like these do exist, in the future, they will better understand human language, cadence, tone, and tenor. They will also be able to support HR in their queries, such as complex legal and policy matters.  

    1. AI-powered automation will make adaptive learning truly universal

    HR teams will leverage adaptive learning platforms to improve employee experiences. These are powerful tools that use AI-driven automation to personalize training sessions based on individual employee strengths, weaknesses, and learning styles. These platforms will dynamically adjust content and even create new content through generative AI. They will autonomously conduct assessments and share feedback to optimize skill development. 

    1. Sentiment analysis will make employee well-being part of everyday culture

    AI algorithms will be able to monitor and process employee sentiment across a range of different viewpoints, based on communication data, social media interactions, and facial recognition. You can gauge employee well-being, detect signs of burnout or disengagement, and take proactive measures to foster a positive work environment. AI tools can even automatically generate these recommendations for you. 

    Learn More: Realizing Return on Investment in AI-Powered HR Technology  

    What Is the Impact of Automation and AI on HRM? 

    Automation and AI have a significant impact on human resource management (HRM), transforming the way organizations manage their human resources. 

    Automation streamlines repetitive, time-consuming tasks such as resume screening, scheduling, and payroll processing, freeing up HR professionals to focus on strategic initiatives. AI enhances decision-making by analyzing large volumes of data, enabling predictive analytics for talent management, workforce planning, and performance optimization. 

    Recently, SHRM (the Society for Human Resource Management) conducted a survey exploring the impact of automation and AI on HRM. According to the report, nearly one-quarter of organizations use automation or AI to facilitate HR tasks.  

    85% of employers who use automation or AI indicate it saves them time and/or enhances their productivity. 64% of HR professionals claim that their company's automation or AI tools instantly eliminate unqualified applicants. 

    In a similar vein, McKinsey discovered that 27% of HR interviewees reported their AI adoption led to cost savings of up to 10%. 23% stated an average rise in revenue between 6% and 10%. 

    By leveraging AI and automation in HR, organizations can improve their processes, increase efficiency, and save costs. 

    However, there are also potential risks, including the possibility of bias and discrimination in algorithms, job loss, employee displacement, and threats to privacy and data security, which need to be navigated when considering the full impacts of automation and AI on HR.  

    What Is the Impact of AI on Employees? 

    AI will have – and, indeed, is already having – a significant impact on employees. It’s automating repetitive and mundane tasks, freeing up time and also improving work experience. Employees’ work-life balance also gets better as they spend less time on tedious tasks and more on more meaningful and strategic activities. 

    However, AI can lead to a certain degree of job displacement as roles become automated. Employees will need to reskill and adapt to new job requirements to stay relevant in the evolving workplace. 

    An AI-first organizational culture can also blur the boundaries between the workplace and personal life, as employees can feel pressured to remain available around the clock with an unrelenting focus on productivity and efficiency.  

    Despite these challenges, AI also creates new opportunities. It can augment human capabilities, enabling employees to turbocharge their unique skill sets – like analyzing data and solving problems. This collaboration between humans and machines can lead to improved efficiency and innovation in the workplace. 

    Importantly, HR teams play a vital role in helping employees prepare for this AI-driven future. They must prioritize continuous learning – offering training and development programs, particularly in the areas that have obvious possibilities for AI implementation. HR must also build open communication channels to address concerns and ensure transparency.  

    Learn More: Importance of Data Quality in AI — Maintaining HR Data Integrity to Make Right Decisions   

    What will HR look like in 2025? 

    Given that next-gen systems like blockchain, Web3, automation, and AI are already reshaping the field of HR, what could a typical day in an HR professional’s life look like in 2025? 

    Imagine this scenario: As HR manager Lesley begins the day, they open an AI-powered virtual assistant, which provides a succinct summary of the day's schedule and tasks. The assistant has already screened and filtered through a vast pool of job applications, presenting Lesley with a shortlist of highly qualified candidates for further assessment. 

    During team meetings, Lesley consults an AI-driven analytics platform, which provides real-time data and insights on the engagement, performance, and satisfaction levels of workers. This information helps identify trends and areas of improvement, which they can discuss in the meetings. 

    To address common queries, Lesley leverages a chatbot equipped with natural language processing capabilities. The tool accurately responds to common questions and concerns, reducing the number of meetings across the day. 

    Lesley can now devote some time to developing AR-based training sessions, which will provide immersive learning experiences and better outcomes. They can test an AR simulation that overlays digital information onto the real world. A predictive analytics tool displays how effectively the simulation could enhance training effectiveness and learner engagement. 

    After lunch, Lesley moves on to performance evaluations. Here too, an AI platform analyzes performance metrics, removing biases and adding to Lesley’s own insights. These algorithms adapt the score to factors like individual goals, team contributions, and company objectives. 

    At the end of the day, Lesley reviews AI-generated reports on workforce analytics, which visualizes talent development, succession planning, and diversity initiatives in an easy-to-understand manner. They might even put on a pair of VR glasses to conduct a detailed deep-dive into the data before logging off for the day. 

    What Are the Threats of AI in HRM? 

    Despite the attractive benefits of automation and AI that we just explored, in certain scenarios, AI might be perceived as a threat to HR professionals. AI's ability to automate various HR tasks, such as candidate screening or performance evaluations, may raise concerns about job displacement. 

    If not properly implemented, AI systems might leave out the human touch needed in areas like employee counseling or conflict resolution. Further, relying heavily on AI for decision-making could lead to biases and ethical dilemmas related to privacy and data protection. 

    While AI can enhance efficiency and productivity, HR experts have to be adaptive and ready for changes – when working collaboratively with AI. The key is to find a balance between technology and a person’s lived experience and expertise to address the complex nuances of the workplace.  

    In the end, this is the field of “human” resources, and any tool or technology will have to be gradually assimilated within regular, accepted practices and mindsets.  

    Learn More: Evaluating AI-Powered HR Technology Platforms for Increased ROI  

    What Are the 5 Benefits of Artificial Intelligence? 

    Now, despite these threats, AI adoption in HR is soaring. This is due to its ability to: 

    • Enhance process efficiency: AI automates repetitive tasks, enabling HR professionals to focus on strategic initiatives such as talent development, employee engagement, and culture-building. This increases overall HR efficiency. 
    • Make decision-making more data-driven at every step: AI-powered analytics provide HR with valuable insights into areas like employee performance, engagement, and retention. By leveraging AI to analyze vast amounts of data, HR can make informed decisions that drive organizational success. 
    • Improve candidate selection: AI-powered recruitment tools assist HR in screening resumes, assessing skills, and shortlisting candidates based on predetermined criteria. This reduces bias, enhances the quality of hires, and streamlines the hiring process. 
    • Personalize learning and development: AI-based learning platforms tailor training programs and content to individual employees' needs. This personalized approach allows HR to deliver targeted training, upskilling, and reskilling opportunities. 
    • Deliver high-quality employee experiences: Chatbots and virtual assistants help HR answer employees' queries promptly. This improves the employee experience by ensuring quick access to HR services while freeing HR professionals to focus on more complex tasks. 

    What Are the 5 Disadvantages of AI? 

    To understand the full impact of AI on human resource management, we also need to consider the disadvantages: 

    1. Cost implications

    Implementing AI technologies in HRM can be expensive, requiring significant investments in infrastructure, software development, and employee training. Organizations must carefully assess the cost-benefit analysis before implementing AI solutions.  

    1. Resistance to change

    Employees and HR professionals may resist embracing AI due to fear of job loss or concerns about the reliability of AI systems. There obviously exists a trust deficit. Organizations need to address these concerns by providing adequate information, training, and demonstrating the benefits of AI in HRM. 

    1. Skill gaps

    The adoption of AI may create a need for employees to upskill or reskill to adapt to new technologies and processes. Both HR professionals and employees must continuously update their skills to remain relevant in an AI-driven workplace. There also has to be a hiring plan in place to acquire AI-ready talent.  

    1. The absence of the human touch

    Over-reliance on AI can reduce personal interactions and the empathy often vital to HR tasks such as employee counseling, conflict resolution, or recognizing more nuanced situations. For this reason, you’ll always need a human in the loop so that employees don't feel alienated or unsupported in any situation. 

    1. Overdependence on technology

    Technical glitches or system failures can disrupt HR operations if there is no backup plan in place. Organizations need contingency measures to ensure continuity in the event that the  AI system malfunctions or there’s a downtime scenario. Choosing the right AI HR technology vendor is also crucial to address this challenge. 

    Learn More: Future of AI in HR: Latest Trends and Tools  

    What Are the 4 Risks of Artificial Intelligence? 

     As you ramp up AI adoption, it is important to be mindful of the following risks: 

    • The possibility of biased decision-making: AI algorithms learn from historical data, which can perpetuate biases if not carefully monitored and designed. This can result in discriminatory outcomes in areas such as hiring, performance evaluations, or promotions. 
    • The chance of a data breach: AI systems require access to employee data for analysis and decision-making. Organizations must prioritize data privacy and implement robust security measures to protect sensitive information from unauthorized access or breaches. 
    • The risk of causing an ethical violation: AI algorithms may face ethical challenges when making complex decisions related to issues like fair promotions, performance evaluations, or terminations. Human intervention and oversight are crucial to ensure ethical outcomes. 
    • Fear of job displacement: The automation of certain HR functions with AI can lead to job losses or reduced demand for roles traditionally performed by humans. This may require HR professionals to acquire new skills and transition into more strategic roles that can’t be easily automated. 

    Learn More: Top 5 Ways AI is Changing The HR Landscape 

    Conclusion  

    The era of AI in HR is imminent, and organizations need to prepare. The first step is to strengthen your HR technology infrastructure by digitizing processes, integrating data analytics capabilities, and centralizing workflows. This will pave the way for more effective AI and automation implementation.  

    At the same time, HR teams need to prepare their workforce for the change, investing in reskilling/upskilling, reimagining job roles, and addressing any possible downsides of AI. Your HR strategy over the next few months and the HR tech partner you choose will play a key role in your success in these dynamic conditions.  

    Find out how Darwinbox can ease AI adoption; schedule a demo with our experts now!  

    View all posts

    Stay Updated

    Speak Your Mind

    GartnerBlogStrip23

    Subscribe and stay up to date