Digitising Human Capital: How AI is Transforming HR

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AI with HR

One of the first areas of your business that will see a significant impact by AI is recruitment and HR. Already, companies are using AI to help their HR departments improve efficiency, but also, support the more extensive strategic planning across the company.

What did it cost your business to hire your last employee? Is your business making the most of the human capital it contains? The time it takes to process applications and hold interviews can be a significant drain on even large corporations. And without a structured staff development plan, your business won’t be able to reap the benefits of a well-trained workforce. Developing an AI strategy for your HR function can support your business’s overall development.

There is a strong business case for using more AI across your HR function. Indeed, AI is impacting HR not only on a process level but as a strategic level too, allowing HR to help resolve core business challenges. Using AI to assess application forms quickly, has evolved into a business support mechanism, every enterprise can now make use of.

IBM in its report into the business case for AI in HR clearly states: “AI enables HR organizations to deliver new insights and services at scale without ballooning headcount or cost. Persistent challenges, like having the people resources to deliver on the business strategy and allocating financial resources, accordingly, can be addressed through the thoughtful application of AI solutions.”

For example, the global beauty brand L’Oréal receives over five million visits to its website each year just for job applications. Each vacancy gets an average of 134 applicants. Using AI and the algorithms it contains, the company has been able to accelerate its recruitment time a factor of ten and, 25% more candidates are interviewed resulting in a 25% increase in staff retention. Also, using AI, Unilever has cut 80,000 hours from their interview time. And now give unsuccessful candidates detailed feedback on why they were not successful – information they can use when they apply for their next job.

Robert Bolton, Head of People and Change Center of Excellence Partner KPMG in the UK, said: “Those that ‘get it’ are acting decisively, viewing HR as a new value driver and turning to data, predictive insights and AI. The rest are either limiting themselves to changes that show some progress, perhaps through data and analytics initiatives, or only clinging to a static approach that’s perilous.”

Adopting more AI technologies into your HR function isn’t just making cost savings and efficiency gains. AI can bring with it a change in company culture. This focus on culture is often cited as the core driver behind business transformation and digitisation. HR becomes an enabler of business strategy.

Matthew Buskell, Area Vice President at Skillsoft – a global provider of cloud-based learning and performance support resources, told Silicon: “AI is being used in pockets of the HR function and is still somewhat experimental. This means its primarily larger companies who have the time and budget to experiment. One of the most impactful areas is recruitment, where AI chatbots and AI Natural Language Processing is being used to uncover talent and skills in large volumes of unstructured data. This is especially useful when trying to find female talent. AI, like Textio, is capable of reviewing a job description and determining if it will appeal to a female or male audience with a very high degree of accuracy.”

Smart HR

Using AI across your HR function will mean CTOs and CIOs need to understand their goals for implementing these systems. Also, it’s vital to clearly define how the AI system will interface with other aspects of their businesses. Successfully applying AI in an HR environment can’t be done in isolation.

In their overview of AI in HR, Sage concludes: “Right now, 89% of HR teams are determined to be perceived as adding strategic value to their business. By championing advances in analytics, AI and the cloud, forward-thinking HR and People leaders can shape the future of their company—and demonstrate the ROI that can be derived by investing in people.”

One vital consideration when using AI with your business’s HR function is to ensure security and privacy are maintained. As the AI would be using what will be highly personal information about a member of staff or will collect personal information about potential new employees, appropriate governance must be in place across your AI deployments. This governance includes the data that a chatbot would base its responses upon.

PwC advises how HR should define its use of AI: “Such guidelines should address not only the overall technical and data-inputting processes but also a number of legal and ethical issues. Organizations must get proper consent to avoid additional issues due to the complexities of AI and the training data involved. In some instances, it may not be apparent to individuals that their data is being collected, and this lack of transparency can mean that businesses miss out on gaining employee trust.”

Mike Young, Group Chief Information Officer, Centrica, notes: “With our HR team, we looked at how we could help them in terms of talent recruitment, then unpicked how AI could work for them specifically. Our use of AI is disseminated across the group and across teams, so we’ve tried to illuminate its benefits and reinforce that it’s here to stay.”

The smart use of AI within your HR department can be used to remove much of their repetitive duties. This frees HR to support the wider strategic planning of your business. Today, this means developing the culture within your enterprise, which promotes training, skills development and wellbeing.

Automated AI recruitment

The use of AI within HR will clearly begin with recruitment. Bernard Marr, author of Artificial Intelligence in Practice outlined to Silicon how to build a case for using AI within HR: “Any business case should start with the customer (the person the HR team is providing a service to, be this an internal employee or an external job candidate). AI initiatives should improve the customer experience and reduce costs.

Marr continued: “I have seen many AI project fail because they only focused on the cost element and forgot the customer experience. If the AI project can improve the candidate experience (such as with Unilever), reduce bias, and significantly reduce costs, you have a winning business case. When I work with HR teams to help them identify their strategic use cases we start with their strategic HR and business goals and then explore where technology such as AI and machine learning could deliver the best improvements. We don’t start with the technology.”

One area of AI that CIOs and CTOs must pay close attention to is bias. Developing AI within HR can easily be prone to bias. This is often unintentional but must be mitigated.

Dean Sadler, CEO of TribePad – a leading recruitment software developer, explained to Silicon how potential bias should be managed: “AI can also help to remove unconscious biases that may be present during the application process. Just as with blind CV’s, these filters programmed into AI can ensure your workforce is diverse, inclusive, and that the employees can cohesively work together.

“For example, at TribePad, we work with our clients to host anonymous video interviews. The candidate will take part in a recorded video interview, which the recruiter won’t see. All they will be given is the audio transcript and their personality profile from it. AI has been built into the personality profiling process, helping us to find candidates that are the perfect cultural fit, without any of the unconscious bias that may be present during a physical interview. If the recruiter likes the look of the candidate, it’s only then that they can review the video itself.”

What is vital as HR expands its use of AI technologies is to remember that the ultimate goal is not an exercise in data analysis but using AI as supporting services for staff and their broader goals within your business.

The ‘human’ in HR’s function should never be forgotten. AI techniques can remove much of the repetitive tasks that have defined HR for decades. HR then becomes a critical component of your enterprise’s broader business strategy – a strategy that is ultimately delivered by your people.

Silicon in Focus

Andi Britt, Vice President, IBM Talent & Engagement Europe.
Andi Britt, Vice President, IBM Talent & Engagement Europe.

Andi Britt, Vice President, IBM Talent & Engagement Europe.

Andi Britt leads IBM’s Talent and Engagement Practice for Europe – covering all aspects of Cloud, Cognitive and Digital HR Transformation, Organisational Change Management and Learning.

What is the business case for using AI across the HR function?

“Like all industries, HR is undergoing a transformation as a result of the current digital revolution. AI is changing the way businesses operate and the way people work within them. It will redefine jobs, enhance employee productivity and accelerate workforce development. In fact, skills and culture – not technology – are the most significant barriers to business growth in the AI era. This means CEOs are looking to their CHRO (Chief Human Resources Officer) to lead culture change, manage talent and drive down costs. The three main business cases we see are:

  • AI has the potential to reduce the cost of running HR
    Routine employee queries that are traditionally answered by HR agents in a Shared Service Centre can now be handled 24/7 by virtual assistants. In some cases, up to 80% of the queries can promptly be answered by AI, freeing up HR resources to focus on more strategic workforce planning issues.
  • AI has the potential to make employees and managers more productive and effective
    AI can help select the optimum candidates for a role; it can help new joiners onboard faster, it can recommend learning that will help staff perform better, it can help managers make better salary and reward decisions to incentivise and retain top performers.
  • AI has the potential to surface hidden insights into workforce performance
    AI can identify what makes a high performer, or what makes an employee likely to leave; it can identify what skills are most likely to help someone succeed and progress, and what skills are in decline or obsolete.

How can good ROI with AI investment be shown by HR as they build their case for using this technology?

“Smart CHROs see AI is a fundamental ally. That’s because it absorbs huge amounts of data at speed to make objective recommendations based on the data to supplement human instinct. From automating basic transactions – which frees up HR teams to think strategically, finding and recruiting the best talent for a role while addressing unconscious bias, to AI-enabled apps that enhance employee performance, there are very few aspects of the employee experience that won’t be touched by technological innovation.

“One example of where we are seeing this today is with a major global client who introduced a new employee chatbot to help with onboarding and performance management. In the first 28 days of operation, the chatbot answered 500,000 questions and achieved a return on investment in one week.”

What are the current pressure points when designing and implementing an AI function in the HR process?

“It’s essential to see AI as an enabler, not as a threat to the HR function. This kind of transformative technology works best when designed and implemented with humans at the centre. For most organisations, it is the fear of the unknown and how their employees will react to the application of AI. However, used smartly, AI will empower HR people to drive business decisions. It will complement and inform human decision-making, but it cannot replace human emotional intelligence and judgement. Great AI harnesses data analytics and predictive capabilities to make work processes more efficient.

“When designing and implementing AI, it is important to keep the scope realistic – while it is tempting to start with a chatbot that will answer employee queries, most organisations start with a defined and limited scope, such as answering questions on ‘Performance Management’ or ‘Travel & Expenses’. Starting with a Minimal Viable Proposition (MVP) and piloting fast, is the most effective means of proving the use case and testing out the solution with your employee and manager community.”

How should different department across a company support the use of more AI within the HR function?

“Increasingly, organisations start the cognification of their back office in the HR function; HR processes lend themselves to early reinvention with AI. As a result, other functions can learn from HR’s journey with AI, not just the experimentation with new AI technology, like IBM Watson, and the integration with existing IT platforms but also with the behavioural elements, including staff responses and user adoption.”

How are businesses funding their development of AI within their HR processes?

“The good news is that AI investments have the potential to be self-funding, often within a financial year. Employee support assistants or chatbots have a concise payback period and deliver long term savings by reducing the need for HR agents or admin assistants. Unlike many of the larger investments HR has had to make, e.g. implementing enterprise-wide Cloud HR and Talent platforms, most AI investments are relatively small-scale MVPs (minimal viable propositions).”

Who are the key players that must drive the business case for using AI in HR?

“We’re at the start of a long journey with AI in the workplace, and it’s impossible to predict where we will end up. But one thing is for sure: The CHRO plays a crucial role in enabling people and processes that embrace new technology and business models. No longer head of a back-office function, the CHRO must step up to become a critical member of the board, responsible for driving the success of the business, as well as the guardian of the employee experience.

“With the HR Function more likely to change fundamentally in the next three years than it has in the last 30 – the CHRO must emerge as a strategic, growth-focused leader and implement an HR strategy that incorporates future-facing technology, to attract, retain and engage people critical to the organisation’s growth.

“Cutting costs while upping revenue and productivity are a fact of life for most business leaders today. AI is merely raising the stakes: demanding the right type of leadership skills, creative vision, strategic mindset and empathy to get the best out of intelligent machines. The winners in this new era will be those who embrace data to introduce efficiencies and respond predictively, not reactively, to the need to attract, retain and engage people with the skills to drive the business into the future.

“This is no longer a future, what-if scenario: it’s happening now.”

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