What HR Professionals Need to Know Before Investing in AI
Nearly 25% of organizations use automation or AI to support HR-related activities, according to a 2022 SHRM report.
Among the activities HR leaders use AI for, the report lists:
- Recruitment and hiring (79%)
- Learning and development (41%)
- Performance management (38%)
- Productivity monitoring (18%)
- Succession planning (8%)
- Promotion decisions (4%)
And the space is still evolving: 20% to 25% of organizations said they plan to expand their use of AI over the next five years, specifically for recruitment, hiring and performance management.
Despite the technology’s growing popularity, HR leaders shouldn’t precipitate their AI investment. Before jumping in, it may be wise to first ask the right questions, scrutinize vendors and plan for looming challenges.
Determining the Best AI Use Cases for Your Organization
There are steps to conducting any project, and AI implementation is no different.
HR leaders who want to invest in AI should start by conducting a needs analysis. Consider processes that are time-consuming, labor-intensive or error-prone. Then, determine if AI could streamline or improve those processes.
“One of the benefits of AI is when it’s used in conjunction with humans to automate mundane tasks so that humans can focus on the things we are uniquely good at,” said Dr. Lindsey Zuloaga, chief data scientist at HireVue.
While a number of AI technologies have broad use cases across industries, Zuloaga says there can be interesting results for candidates and recruiters who tap into generative AI platforms such as ChatGPT.
“For recruiters, first drafts of offer letters and job descriptions come to mind as areas where ChatGPT could save time,” she said.
HR leaders should pick out prime use cases and identify which AI technologies and tools will have the most impact on the organization. For example, improving the candidate selection process or enhancing employee engagement might impact the entire organization instead of a single department.
More questions HR leaders should ask when identifying AI use cases include:
- Does the HR team have the required skills to use and maintain AI tools?
- Does the AI solution comply with laws and regulations (industry and governmental)?
- Does the AI solution adhere to company culture and values?
- Does the AI solution make sense fiscally?
Addressing all these angles will help narrow down the right tools for the organization as well as the level of investment needed.
Related Article: Everyone Wants to Get Schooled in AI
Potential Challenges of AI in HR
AI comes with a lot of benefits, but it’s not without its drawbacks.
One big risk, said Marc Miller, president and founder of Marc S. Miller Associates, professor at New York University and author of “The Death of HR,” is built-in bias. It’s a topic he’s writing about in his upcoming book, “Immortal HR.”
“The HRIS giant vendor Workday is being sued by a gentleman claiming the bias built into their ATS [applicant tracking system] prevented him from being offered jobs in over 80 companies — all of whom implemented Workday’s HRIS product,” Miller said.
The court documents claim that Workday’s AI systems and screening tools rely on algorithms and inputs created by humans who often have personal motivations, both conscious and unconscious, to discriminate.
In light of this, one question an organization should be asking, said Miller, is how do we ensure our AI platforms and tools have no built-in bias?
Another concern, said Zuloaga, is the proliferation of disinformation, especially with generative AI, which can spout inaccuracies confidently.
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“Frankly, innovation has outpaced safeguards, and it's important that researchers and technologists are asking critical questions and rapidly trying to build in safeguards. Any powerful tool requires constant and rigorous oversight and generative AI is no exception,” she said.
Related Article: When AI Discriminates, Who’s to Blame?
What to Look for in an AI HR Vendor
The risks highlighted above — and they’re not the only ones — bring up important considerations for choosing the right AI platform and vendor for an organization.
Once the decision to invest in AI for HR is made, HR leaders should carve out time to scrutinize the list of vendors to make sure they pick the best option.
Some elements to keep in mind that vendors should have include:
- Expertise in HR. Can they specifically address HR needs? Do they understand HR processes, practices and challenges?
- Ethics policies. HR leaders should ask about the vendor’s approach to ethical considerations such as bias, fairness and privacy. Clear policies should be in place.
- Transparency and accountability. Vendors should be transparent about data sources, algorithms and decision-making processes.
- Third-party algorithmic audits. “Make sure you are working with a vendor that deploys rigorous testing,” said Zuloaga. “The bedrock of any product strategy and every powerful tool should undergo testing before it’s deployed, as well as after.”
- AI explainability statements. The decision should include “a valuable third-party process that documents to the public, customers and users how a given technology is developed and tested,” explained Zuloaga.
- Compatibility with existing systems. Is the AI solution compatible with existing HR systems and processes? Do the vendors provide support with assistance and integration?
- Scalability. Can the vendor demonstrate how their AI solution can be scaled to meet the needs of the organization as it grows?
Stay clear of vendors that: lack transparency, make unrealistic promises to solve all of your organization’s HR challenges, don’t prioritize ethics, lack third-party review, have a poor track record with other organizations (seek out references!) and don’t offer support or assistance.
Related Article: Ready to Roll out Generative AI at Work? Use These Tips to Reduce Risk
Best Practices for Implementing AI in HR
No matter how tempting, companies and HR managers should not rush to condemn or embrace AI in HR, Miller said. With generative AI specifically, he recommends rolling out pilot programs using the technology as a tool (not as the ultimate answer) and seeing what happens.
Some companies are seeking out “prompt engineers” at high-salaried full-time positions, he said. “I would suggest they wait on that… and rather seek ‘gig workers’ who have proven expertise and use them to create their own use cases and watch the outcomes carefully over time.”
He says HR leaders who choose to invest in AI should manage expectations, write a policy about use in the corporate setting and not allow ChatGPT (or other AI bots) to generate anything without human oversight before distribution.
A Responsible Approach to AI in HR
AI has the potential to upend organizations’ average HR processes, from talent recruitment to employee engagement and performance management. And there’s little doubt the technology is here to stay.
Still, HR leaders must approach AI adoption, no matter the platform or tool, with caution and careful consideration. They need to navigate substantial challenges like bias and inaccuracy while still keeping a finger on the pulse of their organization’s needs, thoughts and perceptions surrounding AI.
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