Embracing AI in HR: A Strategic Advantage

There is so much talk around AI and, honestly, fear. It’s understandable. At a time when the job market is tight, it’s scary to think something could come in and replace people. Understanding AI, its power, and the consequences of not addressing its presence can have serious repercussions, especially since employees are already using it!

Organizations are constantly trying to optimize costs and reduce operating expenses, and AI is becoming a key tool for achieving these goals. According to McKinsey, AI has the potential to increase productivity by 20-30% in businesses that strategically adopt it. When implemented well, AI enables employees to work faster and elevate the quality of their output, ultimately enhancing engagement and work-life balance.

The What and The How of AI

At this point, for many professions requiring human intervention, AI will not replace people. Gartner reports that AI will be more augmentative than replacement-focused for roles that rely heavily on human creativity and decision-making. AI functions more like an advanced search engine, processing vast amounts of data, interpreting language, and delivering coherent responses. However, since the web contains a lot of misinformation, the effectiveness of AI depends on human oversight and expertise to critically evaluate and apply the results.

Important Considerations

When feeding information into AI, some tools may store or incorporate that data, potentially making it publicly accessible or part of its learning model. This poses risks if employees unknowingly share proprietary or sensitive information. Therefore, it is critical to establish clear policies and provide mandatory training on AI use. While Europe does not have a blanket requirement for AI training, GDPR laws emphasize data protection and AI transparency.

Companies face significant risks without proper measures—such as in the 2023 New York case where a lawyer cited AI-generated, inaccurate legal information in court, resulting in legal repercussions. To mitigate risks, developing AI use policies and ensuring employees understand how to use the tool responsibly is crucial.

AI in HR: Elevating HR with AI

Chief People Officers frequently leverage AI to enhance their productivity. AI serves as a valuable tool for gathering data and research from multiple sources to create a strong focus on tactical operations and strategic, business-oriented decision-making. Additionally, it functions as an administrative assistant, helping to craft clear and transparent communications while reducing the perception of the stereotypical ‘HR non-answer.’

Here are some key applications for AI in HR:

Communication: AI can help ensure clear and concise internal communications and effectively answer employees’ questions. It removes ambiguity, making messages easier to understand.

AI-Enabled Software Platforms: Software tools that leverage AI can further automate administrative work beyond legacy platforms, reducing the time HR teams spend using these tools and increasing the ROI. This is the next wave of HR technology.

Change Management: AI can review change management plans and generate FAQs, freeing up HR leaders to focus on leading the change.

Recruiting: AI assists in generating job descriptions, assessing skills, and generating interview questions. When teams are properly trained to use these tools, it also helps in unbiased candidate screening. Gartner suggests that 75% of companies will use AI-powered HR tools for recruiting by 2025.

Onboarding: AI can create 30/60/90-day plans, streamlining onboarding processes and setting clear expectations for new employees.

Research/Job Architecture: AI consolidates research on topics like career ladders, reducing the time spent on tedious tasks.

Engagement Surveys: AI analyzes survey responses quickly, delivering faster insights than manual analysis.

Performance Management: AI helps managers write clearer, actionable reviews and consolidates 360-degree feedback for tailored development plans.

Key Reminder: Everything AI generates needs human oversight. AI provides a starting point, but experienced professionals must refine and apply it.

In Summary

AI can elevate an organization by moving from reactive to proactive, increasing productivity and efficiency. However, AI’s productivity gains—often cited by McKinsey as up to 30%—depend on its thoughtful implementation and training. In startups, AI enables teams to do more with fewer resources, although cost savings materialize as the organization scales. In mature companies, strategic AI adoption can lead to long-term cost savings of 20-30%.