The Impact of Generative AI in HR: Trends and Use Cases

Generative artificial intelligence (gen AI for short) is the biggest topic in technology right now – and it’s here to stay. The lightning-fast rise of AI tools like ChatGPT has created huge excitement throughout the business world. But there are also many questions about how these technologies can best be deployed and concerns about the wider impact they might have on the future of work.

One thing is for certain: Companies must undergo organizational shifts to adapt to this transformation. Human resources teams are likely to play a strategic role in orchestrating these changes. On the one hand, AI is posing difficult questions for business leaders to answer. On the other, it can facilitate the work of HR professionals, aiding in their decision-making, providing them with more precise analytics, and automating repetitive processes.

In this article, we explore some of the essential shifts that organizations need to embrace and take a closer look at the role of generative AI tools in HR.

Organizational Shifts – How AI Is Transforming Operations

Generative AI is a cutting-edge technology that uses algorithms to analyze large datasets and create new content. Based on prompts, gen AI automatically generates detailed responses in seconds. Thanks to the sheer amount of data being analyzed, the output can resemble human creativity and thought processes.

There are countless use cases for gen AI, including content creation, intelligent customer service chatbots, and digital assistants like Salesforce’s Einstein Copilot. It’s this versatility that has propelled AI solutions fully into the mainstream. However, while one in three organizations say they are using generative AI in a least one area of business, McKinsey reports that only three percent are using gen AI in their HR function.

In order to get the most out of AI tech, organizations need to be able to transform their operations in several ways.

1. Transitioning to Project-Based Work

To increase operational efficiency, the majority of businesses have structures that favor standardized, repetitive processes. While this approach has worked for many years, generative AI marks a major turning point. As gen AI automates recurring tasks, there is considerable opportunity in switching the focus to a flexible, project-based way of working. McKinsey refers to this as “turning the unusual into business as usual”.

This shift will demand a new approach from HR leaders. To begin with, they must have a clear overview of the skills present within their current workforce. They then need to be able to match these skills with projects to assemble effective teams and identify hiring priorities. HR technology can help managers to build the necessary skills profiles for each employee. Once skills gaps have been identified, the recruitment process can be refined to target the talent that is needed most urgently.

According to 81% of business executives, employees are already performing work that spans functional boundaries. This underlines the need to focus more on skills and less on job titles.

2. Demanding Reskilling and Upskilling

Talent acquisition is becoming an ever greater challenge as almost every industry faces a skills and labor shortage. According to McKinsey research, labor markets in major economies are the tightest they’ve been in two decades, resulting in 0.5-1.5% lost GDP. This is making talent retention a priority for companies.

At the same time, the advent of AI is drastically changing the skills needed. One the one hand, AI can be a solution to the skills gap – on the other, it is likely to contribute to it. According to IBM, an estimated 40% of the workforce will need to reskill within the next three years due to AI and automation. HR teams will be expected to support reskilling (learning new skills for a different role) and upskilling (developing existing skills), while priorititizing employee experience and retention.

25% of companies are turning to AI to address skills shortages.*

*Source: IBM report cited by Forbes

3. Prioritizing Empowerment Over Control

AI could make rigid hierarchies and micromanagement a thing of the past. AI is enabling companies to give their employees more autonomy. In order to do so, HR departments need to create a culture of trust and accountability and find the balance between employee independence and prescriptive management.

By automating routine tasks, AI will free up employees to do more valuable work. The prerequisite for this is to have clear objectives in place. Using OKRs can be an effective approach, placing more focus on what the organization wants to achieve but giving employees the freedom to decide how they will get there.

HR teams should support this initiative by establishing regular performance reviews and providing opportunities for employee development. Performance metrics and analytics dashboards enable managers and employees to monitor impact and progression.

A McKinsey analysis found that enhanced talent management processes represent 20% of generative AI’s value potential for the HR function.*

*Source: McKinsey

4. Increasing Democratization of Knowledge

AI makes access to information and knowledge easier than ever before. Organizations that leverage AI for this purpose will become more data driven and benefit from significantly improved decision-making. Instead of relying on specialist teams to access, analyze, and provide data, everyone within the organization will be able to access real-time insights. This is known as data democratization.

Generative AI can also be used to create self-service knowledge bases, improving employee onboarding and streamlining many processes that rely on data. AI chatbots and co-pilots can also be used to handle support requests, answer queries, and analyze large datasets. This results in huge time savings throughout the organization.

Use Cases of Generative AI in HR

AI is set to shape the future of HR. While it may necessitate some challenging changes in organizations, it will also be hugely beneficial to HR departments. By automating many repetitive HR tasks, it will enable HR leaders to take on a more strategic role within the company, providing more value.

Recruitment and Hiring

One of the areas with the most potential for AI is recruitment. Traditional recruiting processes can be time-consuming, but generative AI is set to change this. For example, it can be used to generate job descriptions and employment documents, saving time in these repetitive tasks.

AI can also be used in candidate screening, analyzing resumes, matching candidates to jobs, and presenting hiring managers with a list of suitable candidates. Vast numbers of applications can be analyzed in seconds, helping hiring managers to prioritize the most promising candidates and reduce time-to-hire. There are also hopes that AI, when implemented properly, could reduce unconscious bias in the hiring process and facilitate skills-based recruiting.

Streamline Your Recruiting With AI

At flair, we see great potential in combining AI with human experience and judgement. Our solution includes a range of AI-powered features that can decrease the time and costs associated with hiring, including candidate screening and scoring, job description generation, and document generation. Book a meeting with our team to find out more.

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Employee Onboarding

The onboarding process is one of the most important contributors to a positive employee experience. Here, generative AI can be used to tailor onboarding plans to specific employees, helping them acclimate more quickly. It can assist in developing interactive onboarding content and answering queries from new hires via chatbots. It can also save HR teams time by generating personalized documents and paperwork for incoming employees.

Performance Management

Another HR process AI can assist with is performance management. By analyzing performance data, it can make performance reviews more objective and data-driven, giving managers a better foundation for assessing employees and suggesting employee development plans.

Employee Engagement

Generative AI can play a pivotal role in improving employee engagement. By analyzing survey responses and engagement metrics, it can help HR managers to identify trends in employee morale, well-being, and job satisfaction. It also has the potential to suggest possible improvements to remedy any issues before they become a driver of employee turnover.

Embracing Gen AI in the Future of HR

While it can’t be denied that AI will pose some difficult ethical and organizational questions, there is a vast potential in using AI technology in HR. By automating repetitive HR tasks and streamlining processes, it will not only save time for HR teams, but also help to deliver a better employee experience throughout the organization.

At flair, we have integrated AI into several of our features, providing an HR solution that runs on the powerful Salesforce platform. From talent acquisition to performance management, flair streamlines HR processes and allows companies to benefit from AI, without replacing the all-important human touch.

Book a meeting with our product experts to find out how flair can benefit your organization.

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