With uncertainty expected to reign this year, employers feel increased stress from challenges, including stalled global economic growth, high interest rates, and labor and skills shortages. And according to a new survey, that uncertainty is especially acute for HR teams.
The recent HR Key Issues research from The Hackett Group, Inc., found that HR pros expect to face a growing workload plus a heightened need to enable stakeholder success. Yet, they increasingly believe the rise of generative artificial intelligence and other technologies could be key to bolstering the efficiency and effectiveness needed to meet those challenges head-on.
Bridging the HR productivity gap with gen AI
According to the survey, HR workload is expected to rise by 7%, while cost reduction is a simultaneous focus. The research found that HR operating budgets and staff capacity are expected to drop slightly in 2024, creating significant efficiency and productivity gaps. Technology spending, which is expected to rise by 4%, is one way HR organizations hope to bridge those gaps, says The Hackett Group Senior Research Director Tony DiRomualdo.
The Hackett Group research recommends that HR organizations explore gen AI as part of their HR digital transformation; although the tech is still maturing, generative AI offers huge promise, researchers wrote.
The research found, for instance, that gen AI could yield a 40% reduction in selling, general and administrative costs and a 40% reduction in SG&A staff over the next five to seven years. According to the study, 41% of HR organizations have implemented pilots or small-scale gen AI deployments, and a 7% growth rate is expected in 2024—higher than any other emerging technology.
See also: AI and humans: Not a competition, but a collaboration
The role of gen AI in post-pandemic HR
DiRomualdo explains that “doing more with less” has been a consistent challenge for HR. Workloads have increased by 7%- 11% annually over the last three or four years, which he notes has a cumulative impact.
“The pandemic was exhausting,” DiRomualdo says, adding that HR’s role was suddenly elevated, with new responsibilities, yet HR professionals needed to keep doing their regular day-to-day work.
“Just as things settled down, we had the Great Resignation, requiring HR to come to the fore with better retention strategies, reward policies and employee engagement overall,” he says.
That has left HR leaders likely feeling like they’re constantly “playing catch-up,” adds The Hackett Group Principal Franco Girimonte.
“After COVID, the talent markets became super hot. Since then, they’ve subsided a bit,” he says. With that, he adds, now’s the time for HR to invest in improving operations to build capacity for when the talent market turns hot again.
“It’s hard to take full advantage of generative AI unless you have the right operating model,” he says. “It’s time to standardize and streamline processes, policies and programs, and otherwise ‘clean house’ so you can take advantage of gen AI.”
Girimonte notes that many HR organizations are taking a measured approach to integrating gen AI and are waiting to see what leading HCM vendors will offer as built-in capabilities.
However, “it pays to be more proactive,” he says, such as by rolling out gen AI in “low-risk areas.”
“We’re seeing gen AI drive 10%-30% improvements in individual productivity across many HR different roles and functions,” he says.
For example, The Hackett Group has been working with a healthcare client that has used gen AI in talent acquisition, saving millions in agency fees by helping the client source candidates, customize outreach strategies, schedule interviews, set interview questions and more.
“It’s allowed them to double the rec load of each recruiter,” Girimonte says.
DiRomualdo says AI’s ability to generate data can also help HR gain insights on issues like productivity and costs.
HR is often not as “assertive” as needed to present the full picture of people challenges and opportunities to the business, he says. However, with the data derived from AI, they can make a more complete business case.
“Gen AI has tremendous potential here to drive HR organizations to become more data-savvy and to help them mine insights,” he says.
Learn how HR teams at global organizations are leveraging gen AI to do more with less at HRE‘s upcoming HR Technology Conference Europe, May 2-3 in Amsterdam. Click here to register.
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