The Impact of AI on HR processes: A Double-Edge Analysis

The Impact of AI on HR processes: A Double-Edge Analysis

In a world where AI dominates workplace conversations, the general talk centers around two main themes: potential benefits for humans and an undeniable fear of job replacement. At Techsquads, even our AI developers initially worried about job security. However, we encouraged our developers to let AI enhance their lives – improve error searches, aid in research, and brainstorming and make their work more efficient.

As the hype continues to grow with new devices and tools emerging, we are now exploring how AI can bring real value to HR processes. We've written this article to be useful for all general HR departments. Take a closer look at how AI can add value to HR processes, but also be aware of its risks. For example, AI might miss out on highly motivated and talented applicants because their strengths aren't always easy to put on paper.

Before we dive into the topic, it's important to realize that many of us were likely using or interacting with Artificial Intelligence tools without even knowing it. We've all become more aware of AI since the launch of ChatGPT, but the truth is, we were already using basic model languages to organize our photos by pets, names, or places long before AI became widely known. Moreover, companies have been using chatbots to manage incoming customer requests for over five years now. Remember those frustrating chatbots that tested our patience, making us type "operator" 5-10 times to finally get to a live human? It's way better now, although it's still not gone. That painful experience was just the beginning of AI integrating into our daily lives.

So, AI isn’t new. With that said, let’s begin our analysis of what AI is bringing to HR and whether it is worth including tools in HR processes. We will outline the potential advantages of using AI in HR, identify the processes we think are most impacted, and encourage you to always reflect on the risks if you are not using it consciously in your company.

HR Processes most impacted by AI

Human Resources is one of the departments most significantly affected by AI within companies. This is primarily because of the extensive list of administrative and repetitive tasks in each area, and the time-consuming nature of these tasks. Whoever must recruit for several positions at the same time will understand where we are going with this. AI is bringing numerous benefits that motivate organizations to expand its usage. Now, let's take a closer look at the processes or areas in HR that are most impacted.

Recruiting: According to findings from Eightfold AI*, 73% of employers leverage AI for recruiting and hiring, because it has the capability to streamline recruitment procedures by analyzing faster talent pools, identifying competencies and behaviors assessed by video interviews, and reducing manual processes.

Well-known companies like Amazon, PayPal, Google and Uber use InstaHyre for hiring employees, and iMocha is offering ‘AI Logic Box’, which can auto-score candidates for open-ended questions during tests.

Onboarding: When it comes to onboarding paperwork, AI can handle document verification and induction training, saving time and contributing to the 69% employee retention rate for those who have a great onboarding experience, according to SHRM. These tools can also tailor the onboarding journey by aligning it with employees' interests, skills, and responsibilities, or even creating personalized onboarding and training videos.

For instance, Electrolux, a global appliance company—maybe not the first that comes to mind in the realm of AI—has chosen to adopt a potent combination of a hyper-personalized external career site, internal talent marketplaces, an active talent community, and Talent CRM. This integration automates campaign functionality, nurturing leads by sending tailored content based on candidates' preferences, career goals, and interests. As a result, they've seen an impressive 84% increase in their application conversion rate.

Automating payroll processing: When handling tasks like calculating employee salaries and taxes, and time-off requests, AI-powered systems can automate these processes. They not only assist with the calculations but also identify potential errors in payroll such as duplicate payments or incorrect calculations.

Various Fintech and SaaS companies are developing software to streamline payroll processes in organizations. Payslip is one of the pioneering force behind the Global Payroll Control Platform and has already announced the integration of Artificial intelligence into its platform. Fidelma McGuirk, Founder & CEO of Payslip, expressed “The incorporation of AI in our global payroll platform marks a pivotal moment in simplifying payroll management for businesses around the world”.

The integration of AI in Human Resources is revolutionizing how organizations manage various areas of their operations. From optimizing recruitment processes to enhancing onboarding experiences and automating complex payroll tasks, AI is not just a passing trend; it represents a strategic shift toward efficiency, customization, and improved employee experiences. As the HR landscape continues evolving, we encourage companies to have a mindful use of them.

Advantages of Using AI in HR

Incorporating and implementing new technologies into our processes often comes with huge challenges. However, it also brings great advantages. Below, we will explore the benefits associated with the integration of AI into HR.

Efficiency: This word is paramount, especially in the post-pandemic era, emphasizing the need for cost-effectiveness by minimizing time spent on administrative tasks, analyzing large datasets, and responding to frequent questions from both customers and internal employees. AI plays a pivotal role in addressing all these challenges simultaneously. The right AI tool can save your organization both time and money.

However, it's crucial to note that at Techsquads, we do believe and always encourage a human-first approach. We do not advocate for employees to rely solely on chatbots to connect with HR. This should never be the case. Common sense dictates that employees can always pick up the phone and call HR. AI should make processes faster, not less personal. If an employee has specific details needed for their paycheck, and the AI system can efficiently, quickly, and accurately provide those answers, it benefits both the employee and the organization. The ultimate goal is for these tools to work so efficiently in favor of employees that they prefer using AI systems over calling HR for questions that can be better and more quickly addressed by it.

Analysis: With advanced data analysis, many organizations are leveraging artificial intelligence to gain insights into their teams, analyze the results of employee people surveys or helping to answer questions about KPIs (Key Performance Indicator) throughout the employee life cycle. As a result, companies can take faster decisions to improve the Employee Experience, ultimately reducing attrition or turnover rates.

Focus on High-value Tasks: As AI diminishes the burden of repetitive tasks, HR professionals can redirect their efforts towards solving high-level problems, creating space for creativity, and enhancing their data-driven decision-making. According to a recent report by Harris Interactive and Eightfold.ai, AI adopters are 19% more effective in reducing the time HR spends on administrative tasks.

Improved Sense of Employee Experience: with reduced time spent on administrative tasks and a decrease in response delays, HR professionals have the opportunity to enhance the Employee Experience. This involves being more present, coaching employees, and designing activities that truly align with their preferences rather than simply following industry trends. The result is an increased sense of belonging and being heard among employees.

Source of Inspiration: Generative AI has the potential to transform the creative process for documents, policies, procedures, and content, making traditionally time-consuming tasks more efficient. While AI can be integrated into the initial stages of the process, it should not replace human input. It's essential to consider confidentiality and maintain the distinct voice of the company, its culture, and the individual crafting the content.

Risks Management including AI in HR

Once we decide to incorporate an AI-tool into our processes, it’s important to anticipate and address potential risks. Without a mindful approach, the advantages explored above will not be helpful and effective at all.

Biases Making Decisions in Recruitment: That’s something we at Techsquads are very aware of, and we approach it with great caution. According to Harvard News, 70% of companies are currently utilizing automated applicant tracking systems for talent acquisition. However, many of the algorithms employed by recruiters in their hiring processes have been shown to replicate and magnify biases and human errors. At Techsquads, our approach to automated pre-selection is limited to using knockout questions that candidates must answer. Beyond that, the entire recruitment process is handled by humans. We believe in recruiting with a human touch and valuing human intuition in the decision-making process. The risks of bias in recruiting algorithms are high and this can lead to the opposite of effectiveness, leading to longer search times for top talent and potentially causing candidates to withdraw from the process. Remember the mediocre chatbot experiences we discussed earlier? We don’t want our candidates to experience a similar frustration.

Fewer Qualified Candidates for a Job Position: While a significant amount of time in recruitment is spent on sourcing and attracting candidates, AI screening of CVs and analyzing recorded interviews may reduce the pool of potential candidates for a position. Those who understand how to navigate the algorithm may have an advantage, leaving out others who are not as familiar. For instance, not everyone on LinkedIn dedicates time to updating their profiles and aligning their descriptions with the often-undisclosed requirements and inputs from one Applicant Tracking System (ATS) to another. Additionally, as mentioned by Harvard News, poorly worded job descriptions can result in the exclusion of qualified candidates. It's not your fault as a recruiter if a candidate doesn't have an updated resume or isn't aligned with the Applicant Tracking System (ATS). However, do you want to miss out on great candidates because of these factors?

Increase Discrimination with AI Facial Recognition Models: In her TED Talk titled "AI is dangerous, but not for the reasons you think," Saha Luccioni highlights the risks associated with AI facial recognition. She gives a compelling example with Dr. Joy Buolamwini, who discovered that AI systems failed to detect her face unless she wore a white-colored mask. Furthermore, research has shown that facial recognition systems are significantly less accurate for women of color compared to white men.

Poor Candidate Experience: While AI can improve Employee Experience, the opposite is around the corner with Candidate Experience. Suppose a candidate discovers that their CV was reviewed by a machine, later the video, and was rejected by a biased tool, without having the opportunity to show their potential and explain their experience clearly with an interactive conversation. In that case, they will feel discrimination during the process, which will have huge and grave repercussions for the company. According to Stephen Roebuckhen Roebuck in an article on Human Resources Direction, “There have also been examples on the internet of AI models creating something out of nothing – essentially fabrication or hallucination of content. AI systems use association and connections between words, but they don’t actually ‘know’ anything and lack wisdom and human experience.”‍

Infringing Copyrights: emphasizing again, AI can be useful and very helpful as a source of inspiration, or even to correct a text if we are writing in our second language. However, as many people are using Generative AI for copywriting, it is easy to be caught using other people’s words, without giving them credit for it.

Conclusion

AI is changing the way we work. The tasks we used to do a few years ago are nothing compared to what we're doing now. As Sasha Luccioni says, "AI is moving quickly, but it’s not a done deal." There's still room for improvement to help AI tools reduce biases, avoid copyright issues, and prevent risks that can harm organizations.

At Techsquads, we empower organizations with individuals who understand our ever-changing world, bringing expertise and ethical thinking to their roles. We also manage our recruitment process, using automated tools carefully without losing human touch.

Integrating AI into HR processes has its advantages and risks. While it can make HR more efficient and help focus on important tasks, it also brings potential problems. We need to be mindful of how AI affects HR functions, from recruitment to payroll.

The benefits of AI in HR are clear—efficiency gains, better data analysis, and the ability to focus on important tasks. This improves the overall employee experience by reducing delays and administrative burdens, fostering a sense of belonging and better communication.

However, alongside these benefits, we must address potential risks. Biases in decision-making, especially in recruitment, are a big concern. AI algorithms could unintentionally favor certain candidates, limiting the pool of qualified individuals. This emphasizes the need for a thoughtful and human-centric approach to recruitment.

The risks also include potential discrimination with AI facial recognition models, as these systems may not be equally accurate across different demographic groups. Additionally, biased AI tools and the lack of human interaction can negatively impact the candidate experience, making it challenging for organizations to attract top talent.

Issues related to copyright infringement highlight ethical considerations in using AI for creative tasks. Balancing the benefits of AI with ethical and legal implications is crucial to maintain trust and integrity in HR processes.

In conclusion, while AI has the potential to transform HR processes, organizations must approach its integration carefully, considering both its benefits and risks. A thoughtful and human-first approach ensures that AI enhances efficiency without compromising fairness, inclusivity, and the human touch in HR practices. As the HR landscape evolves, a balanced and strategic use of AI will be key to unlocking its true value while avoiding potential pitfalls.