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VC Firms Fund a Chatbot Revolution in HR

December 08, 2021 Talent Management
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By Sarah Fister Gale

Conversational AI is the future of HR.

That's according to human capital management market analyst George LaRocque. Automated chatbots use artificial intelligence and natural language processing to have intelligent human-like conversations, streamlining the engagement process for prospective and current employees.

LaRocque’s prediction is due in part to the flood of venture capital being invested in HR tech firms that have made conversational AI a core part of their offering. These include two recruiting platforms: Mya Systems, which secured $18.75 million last year and Paradox, which landed $40 million. Both companies use conversational chatbots to automate outreach and gather basic screening information as a way to streamline early job candidate engagement.

“Conversational AI for screening has been very successful,” said Josh Bersin, global HR industry analyst and CEO of research and advisory firm The Josh Bersin Company. These tools make it easy to capture information and quickly move candidates to the next phase of recruiting.

Conversational bots aren’t just improving the recruiting experience. In April 2021, Aisera secured $40 million (after netting $20 million in 2020) to support its conversational AI service management solution, and in September Leena AI raised $30 million to accelerate development of its automated HR help desk chatbot.

All of these technology products make it easier for recruits and employees to get the information they need quickly and reliably, and free HR teams from having to answer the same questions over and over.

Conversational AI and Employee Experience

The adoption of AI-driven chatbots for HR applications has been a long time coming, said Brian Ascher, partner at early stage investment firm Venrock, and member of the board for Socrates AI, a platform that uses conversational AI to enhance employee experience. He noted that consumer tech companies have spent years using AI to create more delightful and personalized customer experiences, while the employee experience has stagnated.

“If you need something from HR you are still expected to make a call, or post a trouble ticket or log into 10 different apps,” Ascher said. “There had to be a better way.”

Early generation chatbot tools were too clunky and inconsistent to provide reliable information. But the current generation of conversational bots are smart, engaging and capable of learning from every interaction to understand what questions are being asked and the best way to respond. With every successful interaction they hone their ability to respond, and can even interpret multiple ways someone might ask the same question, for example, asking about maternity leave vs. parental time off.

“Employees state their needs, and the technology does all the work behind the scenes,” Ascher said.

Related Article: Can Enterprise Workers Really Work Well With AI?

Automating HR Processes Leads to Insights

These AI bots can also help HR teams identify trends in what employees are asking so they can proactively update information or push messaging. If, for example, they see a flood of questions about COVID-19 booster shots, they can send out a company-wide email with corporate vaccine policies and links to local pharmacies. The demand for automated solutions like these grew during the pandemic when everyone was working remotely.

“You can’t just walk over to HR and ask a question any more,” Ascher said. For companies that embrace a hybrid workplace, having automated HR assistants can level the playing field going forward, making sure everyone has equal access to information.

This confluence of trends will cause more HR platforms to integrate conversational AI in the coming years as they recognize the value these tools bring to employees and HR leaders, Ascher said.

“It’s not a single solution, it’s a feature that can be used to automate access to any information,” he added.

Related Article: Artificial Intelligence in HR Remains a Work in Progress

Can Bots Talk to Each Other?

The challenge going forward will be enabling bots hosted on different HR platforms to work together to create a seamless communication environment. Right now, each automated bot is trained to answer questions and communicate about specific topics in the HR spectrum, like recruiting or benefits. But none are all-encompassing.

To avoid the risk of lots of bots operating in isolation, developers will need to consider how their conversational AI integrates with the broader suite of solutions. Ascher believes the most successful platforms will be designed to talk to each other, or that conversational AI will become an interface that sits on top of the entire enterprise system, tapping information from every system and providing it to end users.

“Employees don’t want to access 10 apps to talk to 10 different bots,” he said. “We need bot-to-bot synergy to create a single system of engagement.”

That end-to-end automated engagement is still years in the making, but it offers hope that in the near future, employees will be able to ask for HR information the same way they ask Alexa for music or Siri for directions.

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