HR Ex-Machina – Is AI The Solution To Human Resources Issues?

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Of all traditional business functions — Sales, Marketing, Product, Growth, Operations, etc. — HR is typically seen as the most “Human”. Particularly in light of recent Silicon Valley HR scandals (think: the Google memo and the Uber engineer blog post), HR has become one of the most highly valued positions in tech. The need for robust, systematized, and equality focused HR teams has never been higher. So replacing it with AI can seem counterintuitive — after all, isn’t HR there to lend human support and guidance?

Not necessarily, according the the former global head of HR at a 60+ person Silicon Valley “workplace culture” company. “HR consists of more than just organizing team outings and training volatile leaders,” she said. “There are aspects of the job that are rote and can therefore be automated.”

Even some of the more human aspects — like diversity and inclusion — can actually be aided by the cold, hard, technical brain of AI. NewtonX created an ad hoc panel of 25 HR technologists to determine whether you should replace your HR team with AI.

How human is HR? What can and cannot be automated

“This is not the first time that HR has been disrupted by technology, and certainly not the last” recalls the former head of HR at a multi million dollar customer service SDK. In the early 2,000s a number of talent management, continued education, and performance management tools cropped up, prompting tech giants to shell out billions —  SAP paid $3.4 billion for SuccessFactors, Oracle paid $1.9 billion for Taleo, and IBM paid more than $1.1 billion for Kenexa. By 2007, the tech-enabled talent management market alone had grown to over $20 billion.

These tools enhanced productivity by streamlining enterprise talent management. Now, in 2018, HR is valued for more than payroll, hiring, and compliance — it’s also valued for diversity training, company culture, benefits, talent attraction, and even employer branding. “I go into early stage startups who have seen disasters like Uber happen, and help them make sure they go in the opposite direction,” explained the former global head of HR. “This means training leaders, conducting confidential one-on-ones, establishing company events to promote employee happiness, establishing guidelines for communication, etc.”

This change in the industry has opened it up to new and disruptive tools. The HR panel identified the most “human” aspects of the job (i.e. the roles that cannot be automated) as:

 

  • Management of hiring systems
  • Creative event planning
  • One-on-ones (although the panel also noted that employee satisfaction reports can and should be automated)
  • Liaison between leadership and junior employees
  • Employer branding (33% of the panel identified this as a marketing task, not an HR one. This is a key difference between companies smaller than 50 employees, and much larger enterprises.)
  • Strategic personnel operations (including establishing norms and rules around communication, organizing office layout, working with special needs, etc.)

This list bore a striking resemblance to the key areas that NewtonX researchers identified as emerging trends in HR — i.e. Moving away from rote administrative work into creative culture management.

This indicates that if businesses are not already automating the other aspects of HR, now is the time to do so. These areas include:

• Talent sourcing. AI can match jobs with candidates based on myriad factors, and numerous systems will automate the process of initial reach out and scheduling.

• Payroll

• Expense Reports

• Employee feedback. Startups like TINYpulse and Officevibe have gamified employee feedback to improve response rate give HR quantitative and qualitative feedback anonymously.

 

 

Numerous tools exist to automate each of these steps, from full-on HR suites to individual startups (Lever, Gusto, Expensify, Zero, etc.) that streamline processes.

$550B are lost yearly due to HR inefficiencies — and AI could help

HR leaders told NewtonX that the goals of the profession are changing. Today, the key metrics by which they judge success are softer than just numbers. When asked what their top priority for 2018 was, the top four areas of focus were:

  1. Employee engagement (41%)
  2. Culture development (36%)
  3. Feedback (15%)
  4. Agile and communicative organizational structure (8%)

It’s not surprising that engagement and feedback are top priorities: according to nation-wide Gallup reports, businesses lose up to $550B on unhappy, disengaged employees. In 2017, only 33% of employees were engaged at work, and only 21% of employees agreed that their performance was managed in a way that motivated them to do their best work. 51% of the American workforce is not engaged, and hasn’t been for years.

So how can AI improve employee engagement and productivity?

“AI has helped us identify candidates that are likely to be good culture fits (as well as skills and experience fits), and has also helped us pinpoint areas for improvement through identifying trends in employee feedback,” explained an HR veteran who has worked at Deloitte and, more recently, at Zenefits.

AI is not replacing HR — particularly not now, when the field’s goals and intentions are shifting, and demand for talented HR professionals is high. But it is subsidizing the field, enabling HR to meet its new priorities by providing efficiency gains, predictive insights, and predictive matching of companies and candidates.

Tools that tap into HR’s burgeoning needs will gain traction over the next five years, while those that automate aspects of the job such as employee feedback and talent sourcing will need to adopt to HR’s new goals. This means collecting data and matching based on factors that reflect company culture and employee satisfaction. At the end of the day, though, these systems will still need to be managed by talented HR personnel, who will be increasingly sought after during this moment of HR emphasis.

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Germain Chastel is the CEO and Founder of NewtonX.

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