The Benefits and Risks of Using Generative AI in HR: A Guide for Leaders
Recent breakthroughs in AI, and Generative AI in particular, have captured the public’s imagination and demonstrated the role AI can play in helping people do their work.
No longer wishful thinking, the potential for AI is high and HR technology vendors are taking steps to integrate GenAI into their solutions. For example, Workday has recently announced a new Gen AI capability for hiring managers and recruiters to generate job descriptions in minutes, freeing up time to search for quality candidates rather than on admin. 1
Indeed, these new capabilities could not be arriving at a better time. HR leaders are facing unprecedented challenges from decentralised work patterns, shifting workforce demographics & volatile demand. Most recently we see a paradox as new entrants to the workforce are demanding purposeful work while increasing automation is leaving many feeling underutilised. 2
What is the Generative AI/Foundation Model?
Unlike other types of AI that can only recognise and manipulate existing data, GenAI can generate new content, such as text, images, and music (see diagram below for definitions of AI to ChatGPT). A common example of this is OpenAI's ChatGPT, which can generate text often indistinguishable from human-written text and can engage in conversations with people in natural language.
In HR, the most common goals for using GenAI are to improve efficiency (77%), improve the employee experience (52%) and enhance decision-making (43%).3 In this context, the applications of GenAI in HR fall within the following use-case categories:
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Talent acquisition |
GenAI can be used to enhance the initial candidate selection process. It rapidly evaluates and interprets numerous resumes, extracting valuable information and aligning applicants with job requirements. Its capabilities in NLP and pattern recognition will enable the TA teams to efficiently pinpoint top candidates.
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HR services |
Used with chatbots, Gen AI can assist new employees during onboarding and their initial months by seamlessly integrating with backend employee systems. This helps new employees navigate common questions and specific training and shadowing procedures |
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Learning and development |
Within L&D, Gen AI can play a pivotal role in crafting customised training materials. By analysing individual learning preferences, performance data and knowledge gaps, it automatically produces personalised training content. This enables employees receive relevant and engaging learning experiences, enhancing their skills and knowledge |
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Performance management |
Gen AI can collect and analyse multiple sources of data, such as peer feedback, customer satisfaction, project outcomes, commercial management, enterprise social networks and behavioural indicators. |
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Employee wellbeing |
GenAI can help HR improve employee engagement, by providing personalised feedback, coaching, and recognition. AI can also enhance employee well-being, by monitoring stress levels, mood, and productivity, and offering suggestions for improvement. |
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Workforce planning |
Gen AI could optimise team scheduling by leveraging machine learning models to analyse multiple inputs, including employee preferences, shift patterns, workload distribution, and business priorities. |
The implications of Gen AI on HR strategy
The human-like capabilities of solutions such as ChatGPT may be seen, at least on the surface, by some to save time and effort for the HR team. But HR leaders must assess the technology’s risks and impacts before adding AI to any HR strategy.
Most notably, ethical concerns are at the forefront of GenAI risks, and 65% of HR leaders cite ethical and legal considerations as one of the top critical determinants in deciding whether to adopt GenAI. 4
These risks may arise because:
- Data privacy related to GenAI use within the HR space is a pertinent issue given the sensitivity of employee data, especially as solutions for HR are still being explored and have not fully matured.
- AI can inherit or amplify human biases in data or algorithms, which can lead to unfair or discriminatory outcomes.
- Text being generated is sometimes inaccurate and must be monitored.
Additionally, AI can create anxiety and resistance among employees who fear that their jobs will be replaced or changed by AI. Therefore, HR technology leaders must remain curious, yet cautious as failing to do so could result in legal and reputational consequences for the organisation while potentially creating a negative employee experience and company culture.
Recommendations for implementing Gen AI in HR safely
To embrace the opportunities created by Gen AI, HR professionals will need to have a basic understanding of what AI is, how it works, and what it can do. They also need to be aware of the limitations and challenges of AI, and how to overcome them. This will help them evaluate the potential and feasibility of AI solutions for their HR needs. When it comes to implementing Gen AI, HR should begin by;
- Experimenting incrementally: Work with key stakeholders to evaluate the technology's impact, benefits, and maturity for each use case, rather than rushing into large-scale adoption.
- Selecting low-risk use cases: Prioritise solutions that are mature, have vendor support, and address low-risk areas.
- Partnering with responsible vendors: Select vendors who advocate responsible deployment of models by publishing usage guidelines, enforcing those guidelines, and disclosing vulnerabilities and misuse scenarios.
- Establishing safe use policies: Implement policies and other governance mechanisms to address regulatory, legal, and ethical considerations.
If you want more tailored advice or to understand specific trends for your industry reach out to our team.
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