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Research Report
The ROI of Employee Experience
Companies are outsourcing their human resources functions to artificial intelligence, believing that AI is “going to fix everything,” said human resources and disability-compliance strategist Rachel Shaw. She's seen this firsthand with the organizations she works with.
While AI can be beneficial for HR, saving organizations time and improving efficiency, she said, it can also create problems for employees if it’s not done well.
“I’m seeing a ton of work friction in terms of employers doing a really poor job of getting too excited about AI and outsourcing, and how that’s impacting employee experience, retention, engagement and really the bottom line,” she said.
When organizations layer AI over broken systems, it can make things worse. But with the right approach, AI might hold the solution.
How Dysfunction Shows Up at Work
Workplace dysfunction surfaces in many areas — in processes, policies, leadership and individual employee work — and often leads to communication and productivity problems, said Diane Dye, founder and CEO of People Risk Consulting.
Heavy workloads, micromanagement and unclear expectations, for instance, may cause anxiety, poor performance and weakened psychological safety for employees, added Ian Bell, senior vice president of global talent management at Sedgwick, a risk and claims administration firm. Jumbled processes pull focus from meaningful work, potentially causing declines in energy, purpose, and effort, and creating toxic work environments.
“There is no easy solution to these challenges, but meeting the needs of today’s workforce requires that organizations at least pause to examine where friction exists and how it can be intentionally reduced,” Bell said.
This matters more than ever, he noted, as these points of friction affects how people experience work, their sense of purpose and their decision to stay and grow within an organization.
Why AI Doesn't Fix Bad Processes
Most employees are excited to use AI, but many don’t grasp how to use it to improve their work, according to Gartner. However, those who understand how AI can help are five times more likely to be major AI users.
This highlights some of the “mixed messages” about AI, said Justin Berg, an associate professor of management and organizations at the University of Michigan, who researches creativity and innovation.
On one hand, AI is discussed as a productivity booster and essential for companies to stay ahead of the curve, he said. On the other hand, AI-produced work is often perceived as subpar.
And, when AI is layered on top of broken processes, it can compound friction, Shaw said.
For example, she said she’s seen companies without well-defined systems for handling employee leave try to use AI tools to manage the process. This has resulted in employees struggling to get the information they need and not having a human to connect with.
“You're getting employees who are upset, not being supported, and you're losing that engagement, you're losing that trust,” Shaw said.
Some friction exists regardless of AI, Berg said. “The challenges of coordination and working towards common goals together and making sure that everyone’s working efficiently — that’s not new. That’s been around forever, but there’s just a lot of confusion around AI. I think that's a novel source of friction.”
How to Get AI Implementation Right
AI may contribute to workplace dysfunction in some instances, but the technology also offers opportunities to ease it, Berg said. However, organizations must take care to implement AI strategically, Shaw added. Here are some tips:
Identify What's Broken First
What processes or workflows cause bottlenecks? Where are employees spending most of their time? Companies should ask these questions to understand where AI can help, Dye said.
“You need to look at what’s causing the most organizational pain,” she said, and tackle one problem at a time.
Map out your existing workflows, including where AI and humans fit in, and identify gaps and pitfalls within the system, Shaw explained. “A lot of employers have blind spots.”
AI can also analyze data to reveal an organization’s bottlenecks. Bell said AI helped Sedgwick uncover strengths and new areas of opportunity.
Decide Where to Implement AI
Once you understand your problem areas, Shaw said, organizations can implement AI strategically — augmenting broken systems with AI will only create more issues.
AI often works well to minimize “overload and overwhelm of employees doing rote tasks,” such as email management or scheduling meetings, for example, Dye said.
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However, “Good old-fashioned management, including ensuring employees' roles and workflows are clearly defined,” remains important in the AI age, Berg said. This approach can reduce some problem areas before the introduction of AI, but also ensures that AI adoption solves the problem.
“Clear goals, roles, structure to make sure that everyone's coordinated: These things are more important when everyone is equipped with AI because they could all be going off in their own directions in a much faster way,” he said.
Experiment, Learn, Adjust
Company leaders should remove barriers, provide employees with resources to experiment with AI, and encourage them to share best practices, Berg said.
“Allow people to do their own explorations,” he said. This can enable employees to develop new skills and potentially solve business problems in unique ways.
AI is “a pair of glasses you put on to look at things differently,” Dye said. Experimentation helps employees and leaders develop strategies that reduce friction and improve productivity.
“It’s a path of understanding because you have to be willing to iterate and to change along the way, which means you have to have experiments that fail that you learn from,” she said.
Keep Humans in the Loop
While AI is beneficial for automating HR processes and improving efficiency, humans must ensure the technology is working and improving the employee experience, Shaw said. “The key is you have to ensure that you’re keeping critical, high-level human judgment within organizations.”
She suggested establishing a human point of contact so employees feel supported, can get their questions answered, and know where to turn when an issue arises. Humans should also be around to handle situations that require nuance.
This demonstrates that someone is accountable and creates consistency, ultimately leading to a low-friction workplace, Shaw explained.
“When you're dealing with a complex human workforce, you have to make sure that you've got people in that workforce that are trained, prepared and understand that their job is to bridge the gap that you're going to have between cold technology that's efficient and cost effective and what employees want, which is engagement, connection and that their employer cares about them,” she said.
Editor's Note: How else should HR get involved in AI implementations?
- If We Want AI to Help HR, HR Has to Join the Conversation — Engineers are designing AI systems to address problems that are rooted in the very systems HR understands best.
- From Tool to Teammate: How AI Is Rewiring People Strategy and What HR Can Do to Adjust — HR leaders see AI transforming work beyond automation — reshaping teams, culture and people strategy. The future is “human-engaged” work, not human-replaced.
- Why AI Hiring Discrimination Lawsuits Are About to Explode — AI is reshaping hiring — and the courtroom. Job seekers are suing over biased screening tools, and experts say a wave of lawsuits is just beginning.