AI in HR: Much ado about nothing?

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Note: This blog post was originally published in Finnish on HENRY Ry’s guest blog.

Recently, there has been considerable discussion among HR professionals about the changes AI is bringing to the workplace and future skill requirements for personnel. It has become clear that AI is not a trivial or fleeting technology trend among younger generations but will significantly shape organizational environments. However, less attention has been given to how well Finnish organizations are preparing for this major technological shift. In contrast, broader research has been conducted in the United States.

According to the Talent Trends Artificial Intelligence in HR survey conducted in January 2024, the use of AI in HR functions has significantly increased in the U.S. in recent years. The study reveals that one in four organizations in the U.S. now uses AI in their HR operations. One of the most interesting findings is that nearly two-thirds of these organizations began using AI only within the past year. This indicates a rapid growth in the use of AI in HR functions. Although this growth rate is notable, it is expected that many organizations still have a long way to go before fully leveraging AI.

Areas and impacts of AI usage

How is AI utilized in HR, and is it beneficial? The aforementioned study shows that AI usage in HR primarily focuses on recruitment, interviewing, and hiring (64%), learning and development (43%), and performance management (25%). AI is used for creating job postings, processing applications, and scheduling interviews, which helps save time and increase efficiency. AI also has the potential to enhance fairness and diversity in recruitment processes; about one-third of HR professionals report improvements in diversity with the use of AI. The study shows significant differences in the depth of AI usage. Using AI for creating job postings or other HR documents is quite different from using it as an integral part of a core process, such as employee evaluation and monitoring. One way to conceptualize the depth of AI usage could be a three-tiered approach:

Level 1: AI is used as an auxiliary tool, based on pre-existing AI applications, and is occasional. An example might be drafting a job posting.

Level 2: AI is integrated into a specific HR process. The AI application is tailored to the organization’s needs and used systematically. However, at this level, AI supports a human-centric task. An example is AI-assisted application screening and analysis.

Level 3: The process relies on AI and is largely automated. At this level, the AI application is tailored to the organization’s needs and used systematically and comprehensively. An example is an automated recruitment process where AI identifies the recruitment need, defines and creates job postings, analyzes applications, and suggests the best candidates.

In our view, about half of Finnish organizations have not yet even reached Level 1, though there are pioneers at Levels 2 and 3.

Challenges and concerns

While HR professionals see great potential in AI, there are also significant challenges associated with its use. According to the same U.S. research, one major concern is data security and privacy, with two-fifths of organizations using AI in HR expressing worries about these issues. Additionally, 42% of organizations not using AI mention that they are unsure which AI tools would best meet their needs. Concerns about the loss of human presence and touch in HR functions due to AI usage have also emerged. Perhaps the most significant concern is the lack of understanding and knowledge on how to start with AI.

The importance of training and continuous learning

A good and safe way to begin experimenting with AI is through training, development, and continuous learning. The U.S. research participants emphasize that leveraging AI in training and skill development is a key way to prepare for future staffing challenges and skill needs. Nearly half of the organizations using AI use it to create customized learning experiences, analyze skill gaps, and offer targeted training. This enables a more personalized, cost-effective, and impactful learning experience, supporting employee career development and enhancing organizational competitiveness. Additionally, one-fifth of organizations plan to start or expand their use of AI in training and development. They believe this will improve employee skills and better align them with organizational goals.

Finnish perspective

The authors have conducted a survey on AI in HR management in Finland. The survey explores Finnish HR professionals’ views on the current and future role of AI in HR, its benefits and challenges, and its impact on the workforce and skill requirements. You can still participate in the survey until September 11th via this link. Survey participants will receive a summary report of the research if desired.

The survey results will be presented in a webinar organized with HENRY ry on September 18, 2024, from 9:00 to 10:00. Join us to hear about the research findings and discuss them with us. You can register for the webinar through HENRY ry’s website.