Talent Management

From Automation to Transformation: How Employers Can Harness AI in HR

artificial intelligence

Much hype surrounds the potential of Artificial Intelligence (AI) to transform the workplace. But what is the reality for HR practitioners?

Fosway’s 2021-22 HR Realities Research shows that AI comes well down the list of HR priorities, with the ‘Adoption of AI, HR automation and chatbots’ ranking 15th out of a list of 31 priorities. And when asked about the drivers for changing HR systems, ‘Machine Learning and AI to enhance HR automation’ ranked 14th out of 20.

HR might not have prioritized AI and automation yet, but the research also shows that managing the impact of automation and AI is becoming a significant business challenge. That’s because organizations want to harness technology to support their transformation agendas.  So how can HR teams help transform organizational performance using AI technologies?

In this article, Sven Elbert, Senior Analyst at Fosway Group looks at the realities of Artificial Intelligence in HR and at transformational outcomes HR can achieve by harnessing AI.

The transformational forces of AI are posing significant business challenges

Significant hype surrounds the potential of AI to transform the workplace. While companies and entire industries are currently being transformed by digitalization, automation has already been a trend for more than 20 years.

Most companies have adopted automation in core value-creating processes. Where robotics have transformed the workplace for low-skill, low-wage work, organizations are now aiming to use AI to digitally transform the workplace for knowledge workers.

By moving a significant amount of decision-making under the remit of artificial rather than human intelligence, organizations want to accelerate decisions, reduce errors, and save cost. About 70% of HR leaders see managing the impact of automation, robotics, and AI now as a business challenge, as it causes an increasing number of existing roles to become redundant and generates the need for new roles (HR Realitites 2021-22, Fosway Group).

For HR this requires reaching deep into their business transformation toolbox and revising their skills agendas to support reskilling and upskilling of knowledge workers in a more impactful and agile way.

Is the rise of AI already transforming HR?

artificial intelligence
Figure 1: Priority of adopting AI, HR automation, and chatbots for HR ©Fosway

When talking about the transformation of knowledge work, we must also include the transformation of HR.

In Fosway Analyst briefings, most HR vendors talk to us about how AI helps to automate HR in a number of areas, including auto-suggestions, auto-approvals or recommendations – to name a few. They also talk up the ability of AI to drive efficiency gains and cost savings. Historically, HR has been slow to digitize its own function but the pandemic has removed the barriers and given digital HR a significant push.

But has business transformation via AI already reached the HR function itself? The clear answer for 2021 is ‘No’.

The infusion of AI into HR technology to automate and transform the HR function itself is still not top of mind for HR leaders. Fosway’s 2021-22 HR Realities Research shows that AI for automation is buried deep in the list of HR’s priorities (see Figure 1) and is only a very minor factor in changing HR systems (see Figure 2).

HR has not yet prioritized the automation of its own function. HR is currently looking at AI predominantly to help transform the business and improve business agility, but not to automate its own function. So how can AI help with that?

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Figure 2: Machine Learning and AI as a driver for changing HR ©Fosway

Organizations need a reskilling revolution to transform

A modern transformation- and agility-agenda is centered around skills. While, in the past, HR focused on roles, headcount, cost, and social criteria when planning or executing business transformation, the pandemic has put a spotlight on skills, reskilling, upskilling as well as talent mobility to build a more adaptable workforce (see Figure 3).

Figure 3: The impact of COVID on skills, the skills agenda and talent mobility ©Fosway

But even beyond the pandemic, skills are at the heart of some of the biggest business challenges – whether that is reskilling and upskilling to respond to government policies and regulations around climate change, the need to better filter high volumes of applicant profiles in recruiting or the potential productivity gains in distributing work via talent marketplaces.

Yet, skills are a difficult animal – 65% of organizations think they have significant skill gaps, and they struggle to buy, borrow or build skills. And only 45% believe they do a good job of understanding the current skills profiles of their organizations, let alone predicting their future needs.

This is a problem that machine learning and artificial intelligence can help solve.

How can HR harness AI to drive transformation?

To understand the skills of an employee, corporates are already able to use AI and machine learning. When pre-screening candidates, AI helps to identify skills on candidate documents, providing recruiters with an overview of skills gained during work and project experience, education, and any explicit skills and proficiency ratings.

Further on in the selection process, interviews and any formal skills assessment can provide deeper insights into skills maturity. By attributing skills to a specific work or project experience, or a specific interview assessment, all stakeholders get an understanding of where a certain skill was developed.

Once a new hire joins the organization, they are being onboarded and build organization- and role-related skills. Each interaction with mentors, every task, project, or work assignment, and each learning initiative helps apply existing skills and build new ones, but many organizations are ineffective at tracking these.

However, many HR systems store this information. By linking and assessing skills against these specific events and activities, employees and organizations can see where, when, and how new skills are being built or existing ones applied.

Unfortunately, this sounds like a lot of work, and it is. If it is not embedded in the processes of how work and learning are distributed and assessed, collecting this data will be seen as a significant issue by managers and employees.

Therefore, it is a key idea to use an opportunity marketplace to allocate gigs, tasks, projects, and roles. Ideally, this marketplace is linked to the learning, talent, and career progression solution of the organization, to allow employees to prepare for these work assignments via learning, practicing, mentoring, and coaching.

With an integrated approach next-gen HR solutions apply machine learning to identify which skills are being developed by whom, when, and how, and can recommend similar learning activities or work opportunities to other employees with similar needs and interests. Here, the AI backbone of an integrated solution allows organizations, managers, and employees to better track skills development and start to proactively develop the skills they need in the future.

Other than the usual hire-and-fire re-/ upskilling mantra, this approach works gradually in a more agile work environment and builds skills in smaller increments, leverages employee ambitions and motivations, and reduces organizational slack along the way.

But AI is not the sole answer to making transformation a success

Of course, AI is a key ingredient, but it is not the only ingredient. On the technology side, you need a joined-up approach so integrated solutions have clear visibility of skills across HR silos.

If you think about HR and its solutions as a bridge between people, their skills, their personal development and work, it’s easy to see how any breaks in the bridge make the employee’s journey and the employee experience harder. If work is not consistently connected to skills recognition, learning and identifying where skills exist, and linking them to opportunities to work in projects or new roles, the skills experience fails.

Organizations’ ability to connect skills across solutions is often where things break down when executing a transformative skills strategy. Connection and consistency are key. Best of breed solutions and core Talent and Could HR systems have a poor track record in enabling that cross-platform connection well.

Figure 4: Skills strategies are often too siloed to be effective – connect the bridges! ©Fosway

But technology is probably not even the most important ingredient here. To execute your transformation agenda really well, you need to take your people with you.

Managers might not want to work by being allocated to their team members through an opportunity marketplace and might show significant resistance to change. Employees might want to stay in their comfort zone and prefer to keep doing the things they have been doing for a while.

Here, HR needs a clear approach to managing this change as well as buy-in from top management. It did work during the pandemic for many organisations. Why shouldn’t it work now?

Webinar with Talentsoft, A Cegid Company, and Fosway experts

Want to learn more about AI and digital transformation in the workplace? Join Talentsoft, A Cegid Company, and Fosway experts for a panel discussion on why Artificial Intelligence in HR is important and how HR leaders can harness it to transform organizations and create value.

For more information and to register for the event, click here 👇

About Fosway

Fosway Group is Europe’s #1 HR Industry Analyst focused on Next Gen HR, Talent, and Learning. Founded in 1996, we are known for our unique European research, our independence, and our integrity. And just like the Roman road we draw our name from, you’ll find that we’re unusually direct. We don’t have a vested interest in your supplier or consulting choices.

So, whether you’re looking for independent research, specific advice, or a critical friend to cut through the market hype, we can tell you what you need to know to succeed.

Talk to us today on +44 (0) 207 917 1870 or via info@fosway.com, or visit us at www.fosway.com

Sven Elbert,  Senior Analyst, HCM and Talent at Fosway Group