The Role of AI in Changing HRM

Artificial intelligence won’t change the core goals of human resource management—companies will still need to recruit, retain, and develop effective employees who can help meet overall business objectives. But within HRM, there are many manual tasks that soak up too much of HR professionals’ time, and artificial intelligence offers ways to reduce that workload. These routine activities prevent HR teams from spending time on the more creative side of HRM, such as finding new talent pools for recruiting, upskilling employees to meet changing work demands, and training managers on how to do more meaningful performance reviews. By providing time-saving capabilities directly in everyday HRM workflows, AI can help free up HR teams to focus on this more strategic work.

What Is Human Resource Management (HRM)?

Human resource management (HRM) is the strategic approach of hiring, supporting, and motivating employees to help achieve the company’s business goals. HRM includes all the practical, process-oriented steps needed to bring people into a company and help them thrive—tasks such as recruiting, hiring, training, compensating, and developing employees. It also includes monitoring outcomes such as performance, productivity, satisfaction, and retention so the company can understand how the investments it makes in its employees impact results.

Why Is AI Important in HRM?

AI is important in HRM because of its potential to provide employees with a better experience and give HR professionals more time to spend on more valuable, less repetitive work. AI can help automate repetitive tasks, such as answering common questions from employees during onboarding. It can help improve employee development by gathering work performance data and colleague feedback throughout the year, compiling a performance review draft, and creating customized learning plans for employees. With generative AI, HR departments can save time on manual tasks such as drafting job descriptions or email responses to job candidates. Human capital management software has long been used to improve the effectiveness of HRM, and AI provides new opportunities for efficiency and effectiveness. By using AI to save time, HR professionals can focus more on activities such as developing staffing strategies with business unit leaders, analyzing employee performance and satisfaction trends, and implementing new strategies to enhance the employee experience and help meet the organization’s goals.

Benefits and Challenges of AI in HRM

Benefits of AI in HRM

With so many crucial responsibilities, an HRM team’s time is precious. AI can provide meaningful ways to lighten their workload by supporting repetitive tasks such as drafting candidate replies and other content, leaving more time for AI-supported analysis and high-value activities.

• Time savings in administrative tasks: AI can assist with the manual and repetitive aspects of HR, such as writing a new job posting or pinpointing the best candidates for an open role. AI’s ability to collect information about your company’s culture and the skills needed for an open role allows it to draft job descriptions that HR can review and finalize to make sure they’re accurate and appealing to top talent.
• More data-driven decision-making: Your HR department can make more informed decisions with the help of AI, which can gather data on employee performance and engagement. This data can give your HR team valuable insights that can help them identify the specific issues affecting your workforce and take the right actions to remedy them. For instance, when an HR department does a skills audit of their company’s workforce, AI can help document the existing skills using information in employee profiles and compare them with the most sought-after skills based on current job postings or market trends. HR professionals can then use that data to identify any skills gaps in their organization and develop upskilling or hiring programs to address those needs.
• Improved employee engagement: AI’s data aggregation capabilities make it a valuable tool in providing the personalized experiences that make employees feel valued and engaged. For example, it can track employee accomplishments throughout the year, their learning patterns, and performance metrics. This data can then be used to create development plans that are tailored to individual employees.

Challenges of AI in HRM

Embracing new technology will always pose challenges. Knowing what to expect will help you mitigate potential downsides.

• Cybersecurity and data breach risks: HR departments constantly work with sensitive employee information, such as Social Security numbers, pay information, and bank account details. Without rigorous data protection policies and systems, this information can be vulnerable to unauthorized access and misuse. That holds true for HR data accessed by AI models for analysis or content generation.
• Lack of transparency: Some AI tools generate results without explaining how they arrived at them. HR professionals will want to know how AI models are making their recommendations and conclusions and continuously verify they’re on target.
• Costs: Deploying AI can be expensive if the business’s goals and technology strategy aren’t aligned. Building or tuning your own AI models is likely not the right path for most HRM use cases. A more practical approach is to use AI models and GenAI tools embedded in HRM systems, which eliminates the need to hire data scientists, train models, or move data to add-on AI tools.

Deploying AI in HR

When deploying AI for a human resources use case, make sure you’re relying on accurate and timely data. AI models need data to learn and generate relevant responses, so having a reliable data set is crucial to deploying AI effectively in your department.

There are two broad deployment options to consider when applying AI in HRM. The most common approach is to deploy AI as an embedded capability within an HR application—for example a GenAI tool embedded in recruiting software that a recruiter can use to help draft a job requisition. The advantage of AI embedded in applications is that it’s available in the moment of need, within the workflow, and doesn’t require extensive AI knowledge to deploy and use.

Alternatively, your organization might deploy AI models on a cloud-based infrastructure, which you can refine to address your organization’s specific needs or use cases. Cloud deployment allows you to scale your models and provides the capacity needed to train them. However, most HR organizations won’t go down the road of refining and training their own models, because it’s costly, requires deep AI knowledge, and is needed only when the company has a very specific AI use case that an application can’t support.

Another aspect to think about when deploying AI for your organization is whether your business needs are best addressed with “classic AI” or generative AI. Classic AI is capable of analyzing large data sets to make recommendations, spot variances, and look for trends. GenAI is equipped to produce new text, images, videos, audio, and other content in response to the prompts users provide. These capabilities can help with tasks such as creating summaries of employee feedback. Both classic AI and GenAI capabilities are available embedded within HRM applications.

After deployment, you need to ensure your newly implemented AI is delivering the desired outcomes. This means monitoring and updating it regularly by gathering data on the new technology’s user satisfaction, functionality, and accuracy.

Examples of AI in HRM

• Automating tasks in recruitment: AI can assist HR professionals in recruiting by helping to identify candidates with the right skills and experience to meet the job’s requirements. Using AI algorithms and machine learning, this technology can help recruiters identify their best candidates for a position from a large pool of applicants, saving your HR department time and money. In the recruiting process, HR professionals can also use GenAI to help create first drafts of job postings. GenAI can gather and highlight relevant information about the position and your company’s brand, culture, values, and benefits to create a draft that your HR team can review and revise.
• Onboarding new team members: After your organization has recruited top talent, AI can help onboard your new team members and alleviate the burden of time-consuming administrative tasks. For example, you can use AI-driven chatbots to help answer frequently asked questions, such as, “Does my health plan cover these things?” AI can also help suggest specific training for a role or recommend a new hire buddy based on the employee’s prior work experience. If a new hire has unique needs, AI can create a customized onboarding experience for them. This could include suggestions for 30-, 60-, or 90-day milestones based on their skill set or career goals within the organization. Personalized and efficient onboarding keeps your new employees engaged and makes the right first impression, helping them become productive faster. Reducing the human labor required for these tasks also means your HR team has more time to develop connections with new team members and help them acclimate to your organization.
• Delivering development opportunities: Companies that offer employees opportunities to learn and develop new skills are more likely to retain them. AI can support training and development by analyzing the individual learning patterns of employees and using that data to create customized training materials and adjust learning paths based on a person’s progress. It can also draft actionable advice for goals and next steps and generate other development recommendations by looking at an employee’s tenure, training, experiences, and performance metrics, including the goals they’ve achieved and performance feedback they’ve received. Investing in your workers’ professional growth can help them feel valued and increase employee engagement and retention.
• Enhancing employee engagement: Offering an employee experience that’s personal and responsive to your workforce’s needs will improve engagement, and AI can help. You can use AI tools to create customized development programs for employees based on information collected about their personal goals and the company’s current needs. On top of that, AI can also help identify and monitor workforce patterns, such as the level of employee participation in performance evaluations and company activities. Tracking this data can help your HR department anticipate disengagement, giving them enough time to find a solution—such as facilitating deeper conversations between managers and employees during performance evaluations—before disengaged employees decide to leave.
• Improving performance management: AI’s ability to constantly collect information can be used to gather employee performance data and peer and manager feedback throughout the year. AI can then use this information to create a complete summary of an individual’s work as a starting point for performance reviews. Using AI to help complete performance management tasks can help avoid the tendency to overemphasize the importance of the most recent experiences. Additionally, managers can start with bullet points about an employee’s performance and use GenAI to turn those notes into a performance review draft, which they can review and revise. This means managers can spend less time creating prose for performance reviews and more time having meaningful conversations with employees about their work, behaviors, and achievements.

Future of AI in HRM

While AI is still in early adoption, there are promising signs. In the 2024 Deloitte Generative AI survey, 70% of organizations with very high GenAI expertise said they have improved existing services and products, and 45% said they plan to reinvest savings from GenAI initiatives into more innovation opportunities. The presence of AI in today’s work environment presents the opportunity for more time-saving automation, personalization, and data insights. Professionals who have to engage in time-consuming human resource management tasks in areas such as recruiting and performance management can use GenAI to boost the speed and efficiency of many of those processes, freeing up time for more valuable work. AI-supported tools can also improve employees’ work lives. For example, chatbots can quickly answer simple questions, training modules can suggest development programs that can help them advance their careers, and performance review analyses can support more relevant discussions with their managers.

To set your HR team up for success with AI, it’s important to understand what the technology is capable of and how your HR professionals can adapt to the new capabilities and opportunities it brings to human resource management.

Improve Your HRM with Oracle

At all levels of HR, the leaders who make the biggest impact on their organization spend more time connecting with people—recruits, employees, and managers—and less time on rote tasks. You can steer your HR team away from grunt work and toward more meaningful work with the right human resource management software and embedded AI capabilities.

Oracle Fusion Cloud HCM is a complete cloud HR solution that helps you effectively manage your workforce with tools that can help speed up recruitment, personalize employee experiences, capture and analyze employee sentiment, offer skills training and development opportunities, and analyze and monitor workforce trends. With the AI capabilities built into Oracle’s HCM applications, HR professionals and employees can access AI tools directly in their workflow, whether they’re writing a job description or completing an onboarding checklist. With a single user experience and data model, in addition to embedded AI, Oracle Cloud HCM can help you plan, manage, and optimize global people processes and provide a richer employee experience. It can also help you monitor and analyze your company’s skills inventory, recommend learning opportunities for your employees, generate performance review summaries, and offer employees contextual support throughout different HR processes.

AI in HRM FAQs

How can the use of AI in HRM enhance a company's competitiveness?
AI can give a company’s HRM strategy a competitive edge by automating processes in areas such as talent acquisition and performance management, which can help reduce costs, improve efficiency, and allow HR leaders to perform at a high level because they’re not occupied with as many manual tasks.

What is responsible usage of AI in HR?
Examples of responsible use of AI in HR could include using AI to write job postings, draft performance reviews that a manager can then review and finalize, and analyze a company’s skills inventory and recommend training options to fill gaps.

How can AI help HR in decision-making?
AI can help gather and make sense of data on employee engagement and performance to deliver the kinds of insights HR professionals need to make fast, accurate, and effective decisions. For example, AI models can help them gather data on their company’s skills, compare it to sought-after skills in recent job postings for the company and others in the industry, identify skills gaps, and create career development programming to address those gaps.