HR’s scope is evolving into that of a strategic business partner. No longer limited to processing applications and answering benefits questions, HR is now a proactive contributor to the overall success of the business. HR’s toolset is evolving, too, with artificial intelligence (AI) being the most notable development in its ongoing digital transformation. In fact, 38% of HR leaders have explored or implemented AI solutions to improve process efficiency within their organisation.

When deployed effectively, AI technology can speed up HR processes and improve employee interactions. Yet many professionals and leaders don’t fully understand how beneficial AI can be in HR strategy. Learn the definition of AI in HR, how it improves HR functions, and what challenges to avoid when implementing it.

What is AI in HR?

Artificial intelligence (AI) is technology that enables machines to demonstrate human-like reasoning and capabilities such as autonomous decision making. Through the assimilation of vast amounts of training data, AI learns to recognise speech, spot patterns and trends, proactively solve problems, and predict future conditions and occurrences.

For human resource management—sometimes referred to as human capital management (HCM)—AI involves using a fast-growing array of tools to automate routine, structured, and process-oriented duties. It’s changing how companies attract, hire, retain, and skill their employees.

AI technologies for HR tasks

The best place to start is by understanding the different types of AI technologies that drive business AI for HR. Although many discussions treat AI as a single, holistic tool, there are in fact several separate technologies, each suited for particular HR tasks.

Applications of AI in HR

Implementing AI in HR can improve many HR functions, from recruiting and training to increasing employee engagement and retention. The use cases for AI, particularly generative AI, to optimise HR functions continue to grow. Here are a few examples of how HR professionals can use artificial intelligence in HR to address top workforce challenges.

Streamline recruitment

Nearly the entire hiring process can be augmented with AI, helping attract and hire the right talent whilst reducing overall recruitment time by weeks:

• Use a common skills framework to attract, source, and hire talent on a global scale with automated processes, personalised communications, and cross-suite workflows

• Simplify the hiring process for recruiters and hiring managers with AI recruiting software that automates repetitive tasks, including generating unbiased interview questions and job descriptions tailored to the position

• Go beyond CV and profile keyword matching with smart recruiting analytics that identify the relevant skills a recruiter is seeking and bring suitable CVs forward

• Administer skills and aptitude tests to rank potential hires for job suitability

• Provide impartial interview feedback after evaluating an applicant

• Deploy conversational interfaces, such as recruiting chatbots, to communicate directly with candidates 24/7 and keep them engaged throughout the recruitment process

• Discover the “hidden workforce” with AI tools that search a variety of external data sources such as job boards, social media, and professional networks to infer potential candidates’ skills and invite them to apply for open roles

Automate onboarding

After candidates are recruited, HR can use AI to pave the way for a smooth onboarding process—especially for today’s highly remote and contingent workforce that can’t do traditional, in-person sessions:

• Provide 24/7 onboarding services across the globe using HR chatbots, reducing the need for human staff to field calls, emails, and meetings

• Create personalised, engaging new-hire encounters

• Automate data and workflows across the onboarding process through automated delivery of hiring documents, company policies, login information, and job-specific permissions

Tailor talent management

Keeping employee development and company recruitment strategy on track is essential so that employees want to stay and grow alongside the business. But with hundreds or even thousands of workers, it’s nearly impossible for HR teams to understand each individual’s whole self in terms of capabilities and aspirations.

Here's how AI helps HR with the talent management processes that support a future-ready workforce:

• Skills frameworks: Compile comprehensive skills frameworks (known as skills ontologies) that identify employee skill sets, match them to job requirements, and pinpoint adjacent skills to develop

• Precise skills assessments: Use machine learning and natural language processing to assess complex human skills such as creativity and emotional intelligence more objectively

• Personalised growth opportunities: Map tailored learning, mentors, assignments, and career paths based on an employee’s specific skills, interests, and aspirations

• Upskilling and reskilling: Recommend individualised training programmes to prepare employees for new opportunities and enable anytime, anywhere learning

• Talent mobility: Identify and develop internal talent by recognising employees’ transferable skills and suggesting new roles or projects, fuelling internal career mobility

• Real-time performance analytics: Conduct performance evaluations that provide continuous, data-based feedback to help managers and employees improve in real time

• Strategic talent planning: Use powerful predictive analytics to forecast future talent needs, helping HR plan for the skills acquisition required to meet future business challenges

Enhance employee experience

The ability to retain and engage top talent is a source of competitive advantage for every company, but there’s more to it than just helping employees discover career progression opportunities. HR can use AI to deliver satisfying interactions in several ways.

• Personalised employee journeys: Customise support and resources based on each individual’s preferences, needs, and work patterns, making workers feel valued and supported at every stage of their career
• Improved accessibility and efficiency: Deploy tools like AI copilots to help employees access information, complete tasks, and resolve issues quickly—by reducing the friction in day-to-day work life, employees can focus on more meaningful and satisfying tasks
• Proactive workforce wellness support: Use IoT sensors to monitor patterns of stress, emotional state, and workload to promote mental and physical employee wellbeing—this can reduce burnout, absenteeism, and health-related issues

• Real-time feedback and support: Conduct continuous feedback loops that supply employees with real-time guidance and encouragement to stay on track with their goals

• Satisfying self-service options: Reduce the need for manual human responses with self-service capabilities that can access and manage core HR information in real time. Workers can self-initiate simple activities such as changing employee data; viewing information on other employees’ profiles; and interacting with time, payroll, and rewards/recognition functions.

Generative AI assists workers with more complex self-service tasks. It can ingest company policy and procedure documents, then answer HR questions in conversational language, such as using a copilot or chatbot to answer a benefits query or explain a payslip. It can help managers write job descriptions and create new roles.

Benefits of using AI in HR

As AI technology continues to mature, it’s becoming a more sophisticated tool for HR organisations, significantly changing the way HR teams work and serve the business.

Here are a few ways human resources AI tools are adding value for employers and employees:

• Accelerating HR processes, freeing resources by reducing the time and effort required for tasks such as recruitment, onboarding, and performance appraisals

• Increasing efficiency and productivity by automating low-value or manually intensive work

• Removing unconscious biases in HR text for job postings/descriptions, interview questions, performance evaluations, and remuneration analysis

• Improving overall employee and candidate experiences with highly personalised interactions

• Empowering employees and managers to work faster and more intelligently with generative AI capabilities that can assimilate and summarise complex information and then quickly report results or output content

• Quickly making sense of large volumes of input, enabling HR to make data-driven decisions with confidence

• Connecting with other systems and combining people and operational data to make broader decisions

• Anticipating and preparing for business-driven workforce change with skills analysis and scenario planning

Challenges and concerns with AI in HR

Both HR teams and employees like the idea of using AI for tasks such as new skill acquisition, development opportunities, and self-service options. They’re less comfortable using it for tasks such as handling sensitive data, conducting performance evaluations, or monitoring employee activity.

Employees are also concerned about transparency. They want to know how the AI technology their employer uses works, the accuracy and fairness of the suggestions it generates, and the sources and outputs of data the AI tool works with.

Here are some of the challenges companies using AI-enabled HR technology may encounter, as well as tips on how to address them.

AI governance and AI adoption

Recent research indicates that AI governance is a key factor holding back companies—and HR professionals—from adopting AI. Two-thirds (67%) of organisations interviewed had no governance model at all. While most of these organisations were taking steps to develop one, some organisations were less proactive, planning to govern AI like any other technology purchase or relying on regional- or federal-level external governance.

Yet, AI is not just any other technology and requires a unique approach. A dedicated AI governance model is crucial to ensuring businesses are developing, selecting, deploying, and using AI responsibly and ethically, as discussed further below. The good news: there is guidance available. The detailed report on AI adoption identifies 10 of the top interventions to consider when encouraging a workforce to start using new AI tools.

AI literacy at work

Employees' understanding of AI varies significantly. New research conducted by SAP, which surveyed over 4,000 managers and employees globally, indicates that employee AI literacy significantly impacts their perceptions of the technology and those who use it at work. Additionally, survey participants expressed mixed attitudes regarding the role of AI usage in important personnel decisions.

To address this, organisations must prioritise and invest in AI literacy to ensure employees fully understand and can effectively navigate this new technology.

Ethical considerations and bias

When not used responsibly, the algorithms in AI deep learning models can sometimes perpetuate bias. Organisations must seek out technology vendors that ground their human resources AI tools in the principles of transparency, explainability, and fairness.

For example, in talent acquisition, a responsibly managed AI tool will have built-in bias checks that identify and remove subjective language, ensuring that job descriptions are fairly written and based on job-relevant evaluation criteria.

Data accuracy, privacy, and security issues

Like all data-driven tools, AI is subject to the principle of “rubbish in, rubbish out.” If the data used by the model is flawed, incomplete, or nonsensical, the accuracy of what it generates will be the same. Companies hoping to harness the power of HR AI will need tools that leverage their own high-quality internal data to ensure that the system outputs are relevant to the specific context.

There’s also the issue of data privacy and security when it comes to HR and AI. Mainstream AI bots have already been involved in several data breaches thanks to code vulnerabilities, particularly in open-source tools. These concerns are especially nerve-wracking for employees who must share personal data with HR AI tools, such as when a chatbot asks about personal circumstances to assist with benefits queries. Avoid this risk by using an AI provider for HR functions who doesn’t share company data with outside large language models (LLMs).

Risks of over-reliance

Human resources is, by its very name, all about people. Relying on AI to perform too many HR functions can result in a robotic experience that is devoid of the human touch and leaves employees feeling disengaged. This is especially true in situations where a high degree of compassion is required, and deploying AI would reduce decision-making to a numbers game.

It could also leave the company open to legal consequences. Some governments/agencies have specific regulations, such as GDPR in the EU, that prohibit using machine intelligence to make decisions that impact hiring, promotion, or salary.

For example, using ChatGPT to help write a job description poses little risk. However, relying on it to conduct a job interview or performance review—where emotional intelligence and human sensitivity are key—would fail to provide the right information and likely alienate potential and current employees.

Concerns over job displacement for HR roles

The American Psychological Association’s (APA) 2024 Work in America survey reveals that 41% of U.S. workers are worried that AI will eventually make some or all of their job duties obsolete in the future.

HR leaders can help alleviate team apprehension by clearly delineating which tasks will be automated by AI. Typically, the routine, repetitive ones can go to AI, while the complex, strategic-thinking ones that are tied to business objectives will need to remain in the realm of human HR specialists.

The future of AI in HR

As the opportunities for AI in HR continue to evolve, the focus for HR professionals will move more and more towards strategic functions such as talent management, leadership development, employee wellbeing, and positive workplace culture. With AI handling routine tasks, HR teams are free to devote more time to these high-impact areas. Here are two key HR AI trends to expect in the coming years.

Shifting roles and redesigning jobs

AI will increasingly change the structure of roles within companies. As routine tasks are automated, roles will shift towards requiring more strategic thinking, creativity, and multi-skilled capabilities. HR leaders will need to redesign jobs, merging specialised tasks into broader, more flexible roles that leverage AI tools. This shift will also create a demand for new jobs that combine business knowledge with AI and technological expertise.

Empowering managers to use AI effectively

AI will also transform how managers oversee their teams, using data to make more informed decisions about employee development, goals, and workload. Managers will have to make decisions about incorporating AI tools into performance management—taking into consideration the unease employees have about being evaluated this way.

The challenge will be to ensure that managers understand the appropriate level of AI use and can effectively blend AI-driven insights with human judgement. As AI becomes integral to daily operations, training managers to use it responsibly and effectively will be crucial.

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