How Gen AI is Reinventing Human Resources – Transcript

Amanda Newfield:

Generative AI is just one small emerging component of a broader set of intelligent automation and content creation capabilities that are continuously evolving. What we can do today is most likely going to be different even a month, two months, six months, or a year from now. HR needs to be prepared to be flexible enough to roll with, quickly upskill, and understand how the technology can make those impacts, and capable of flexing and moving.

Announcer:

Welcome to The Hackett Group’s “Business Excelleration Podcast.” Week after week, you’ll hear from top experts on how to achieve Digital World Class^® performance.

Tony DiRomualdo:         

Hello, I’m Tony DiRomualdo, your host for today’s “Business Excelleration Podcast,” and I’m joined by my colleagues, Amanda Newfield, associate principal and executive HR advisor, and Harry Osle, CHRO at The Hackett Group. Welcome Amanda, and welcome Harry.

Amanda Newfield:

Thanks.

Harry Osle:

Thank you, Tony.

Tony DiRomualdo:

Great to have you guys on board. We’re going to talk today about AI and in particular, generative AI or Gen AI as it’s known, and this new technology has taken the business world by storm. We see it progressing every day as discoveries of how to best use it across the business are being developed. HR organizations have had a dual focus regarding this technology. First is ensuring that it has a positive impact on both workforce productivity and well-being. And second is implementing the technology within HR itself to improve the quality of the HR function’s capability and services. So Harry, I want to start with you in getting the conversation going. Why is AI important for HR, and what do you believe CHROs should be doing about it?

Harry Osle:

Well, Tony, first and foremost, why AI is important for HR is because of its tremendous transformational aspects. It’s a very transformative tool in as much as it can assist in automating processes, eliminating manual work while defining content, and that last dimension is so important. It can define content – you can provide it a document, a policy or procedure – and it can provide content or advice on how to better operationalize that procedure or policy. So when I look at the transformative impact that a tool has, HR should not be second or third to any other function. They should be at the forefront of one – first and foremost – understanding what the tool is and what it can do. So my advice and my counsel to CHROs has been and will continue to be is read as much as you can on the impact of the tool, its transformative nature, and the use cases that can apply to the HR environment and HR world.

Tony DiRomualdo:

Great, great. Amanda, let me bring you in. What’s the current state of implementation of AI in HR? How aggressive are HR organizations adopting it? In what areas are you seeing the most traction in terms of where it’s being introduced?

Amanda Newfield:

When generative AI was first introduced, we saw a lot of excitement from the HR arena, and many organizations have really taken that to heart and have started to experiment with generative AI and are actually achieving very favorable results. In our recent HRTSD study, for example, we have 41% of our respondents had conducted some type of pilot or small-scale deployment of generative AI overall, and of those deployments, 67% of them met the expectations, which is phenomenal when you think about some of the early failures of the more advanced capabilities that are in the system.

I think it’s important to know that in its current state generative AI is essentially, it’s a digital co-worker – something … a tool that we are working with as employees in partnership to be able to increase our productivity. So where we see organizations really leaning in to explore that are in capability areas that are low risk – helping to craft job descriptions, generating or revising emails, conducting research maybe on specific contexts to get educated very rapidly and a lot of times even summarizing information that we’re getting from others to help us comprehend it. I think one of the key hallmarks of generative AI is its ability to be able to take context into consideration and help people connect with people in a more humanistic fashion. HR organizations really have to think about this from an agile approach, and they need to be open to experimentation in order to really get at the value that they can achieve from generative AI and grow with it as it continues to advance.

Tony DiRomualdo:

Great. So it sounds like HR is already doing quite a bit, but we’re still in a period of experimentation and getting familiar with the tool on an individual productivity level, although applying it to some key tasks in HR.

So Harry, let me come back to you, kind of shift the focus a little bit. What guidance should HR be giving business leaders regarding how Gen AI should be implemented in the organization and ways to get the workforce to embrace it? How should HR be supporting the enablement of the workforce with AI?

Harry Osle:

Well, I think the second part of your question is very important. How should HR be supporting the enablement of the workforce within AI? I think overall it comes down to the technology group within any function of how they want to – what tools they actually want to utilize in the tool sets that they have from a technology perspective. So once that’s decided, I believe that the best way HR executives can help in the supporting of the enablement of the workforce with AI is to understand that tool set clearly. So the guidance that HR should be giving to its leaders to leverage the tools and areas where they strongly believe they need assistance in either providing content, and I use the 80/20 rule here. Content that’s developed is probably developed by the HR professionals or the business professionals 80% of the time, and then utilize AI to refine at the beginning some of that content.

You’ll find that that curve will shift depending on whether or not the organization or the function has the capability. So sometimes the tool set can help you drive a first draft and it’s 80% of it there, and then you can help. Or the guidance, I would, if I’m HR, that I would give the businesses is how do we help refine that from a 20% perspective? Refining content is key, such as areas of reviewing policies and procedures or looking for ways to drive process efficiency, generating greater … for instance, an example is on the recruitment side is can we leverage the tool to generate greater pools of candidates – candidates that may be underrepresented in the way that we do business today, but in the future can we create greater pools of candidates? That’s where generative AI can be leveraged. So how can HR be supporting the enablement of the workforce, and AI is really to help educate and drive that on a consistent basis across the functions.

Amanda Newfield:

I think another key area to add to what Harry just mentioned is helping the organization understand the intersection of the business process efficiencies and gains that can come from implementing AI and its overlay with the talent strategy. How does that impact how we look at our current talent in bringing the human element to the evaluation of the impacts to talent strategy, and how can we downstream – upfill – the workers that are working alongside these digital assistants to help them continue to refine and drive better results through the utilization of these types of tools as well.

Tony DiRomualdo:

Great, great points, Harry and Amanda. Continuing, Amanda, how is generative AI being incorporated across the HR tech market? I mean we’ve seen a lot of adoption of HR cloud tools – digital tools in recent years – a lot of new vendors and new products. What’s happening in terms of the incorporation of Gen AI across the vendors and more specifically, are there any kind of domain-specific applications that are already out there being used or that you believe are going to be significant when they get introduced, but that are currently in the works with some of the vendors?

Amanda Newfield:

Yeah, absolutely, Tony. I think the important thing to remember is we’re seeing a lot of movement on the HR tech market around this concept of AI, and it’s important to know that what’s coming is likely a combination of multiple different types of technology that is AI-related, one of those being generative AI and what that’s doing. And as generative AI itself matures and as the overall intelligence automation and content creation elements mature is we’re continuing to see growth and we’re going to continue to see changes in the market. So where providers are looking at today is really focused around this content creation aspect, but where it may be looking in the future is going to continue to grow. Overall, generative AI is already being integrated into our everyday actions. If you go out to Google and ask Google a question, you’re going to get some type of generative AI response oftentimes at the top of your search results.

We’re seeing workplace productivity tools like Microsoft come with an embedded safe place in Microsoft Copilot to do some experimentation with things like building training materials, emails, experimenting with the ways that we can accelerate that 80% so that we can then focus on that 20% as Harry just mentioned. From there, our HCM providers are starting to surface things. Some of these are older or more dated versions of AI technology and some of them are generative and capabilities, but your Oracles, your Workdays, you’re starting to see capabilities to surface skills both from your employee populations, as well as from your job catalog. Surfacing candidates from prospects or candidates have applied to past requisitions and making very solid and educated recommendations on fit for open requisitions within your current recruiting applications. Writing support, so if you think about managers that are creating job descriptions, managers who are writing performance reviews, really helping to up the game for those users and helping them close the gaps on having to think through what to write and instead focus on keywords and generate writing very seamlessly.

From our more knowledge and inquiry-based HR support area – so things like ServiceNow and Salesforce – we’re starting to see enhanced chatbot capabilities where the chatbot is leveraging generative AI to learn from the history of inquiry responses through the system and either helping to support the employee in providing more educated responses, or even in some cases, helping to author new knowledge articles that then can be used in the direct access self-service format by employees and managers in the organization. So really cutting down the time it takes to push new information out and for employees and managers and users to be able to consume that education within the context that they understand. And then finally, from a point solutions perspective, I’ve seen a tremendous amount of startups that have emerged since generative AI became public knowledge and people started to learn from that learn. We’ve had some existing players that have started with cognitive AI and their goals, so things like Gloat, Eightfold and Fuel50 – they’re primarily focused around talent management capabilities.

I’m seeing these players further extend their platforms to fill gaps that we’ve seen in the HCM systems around things like skills learning and really surfacing skills across the organization, as well as niche startup, particularly in this talent space around things like sourcing candidates, as Harry mentioned, but also more personable things around coaching leaders and helping leaders to improve the execution of their leadership skills in the moment. I think there’s a lot of promise here and a lot of investigation to be had and smart consideration of what’s out there and how it applies to your organization’s overall strategy are going to be really key for organizations to understand as they look at evaluating solutions that are out there.

Tony DiRomualdo:

Great, great insight. Certainly a lot of different ways that Gen AI is already finding its way into all the different products and services used by HR on a daily basis. Harry, let me shift back to you with the question – what are the most important things that you think HR organizations need to be doing now to improve HR function capabilities and performance? And specifically I’m referring to doing in terms of incorporating AI and Gen AI capabilities?

Harry Osle:

I think it really all starts with education. To me, foundationally, you have to start with a foundation of educating your entire HR function around the capabilities of the Gen AI tools, and what it does and what it doesn’t do. And so providing key development curriculums are very, very key. Key insights on how to best leverage AI tools within the tool sets that you have within the function is the first step. The second I would say is to then utilize tools. I mean we have a tool called AI Explorer to assess areas within HR that can drive, or ripe, I should say, for leveraging Gen AI in a way that will drive process efficiency and higher engagement with your associates. So the first is to educate your entire function on what Gen AI is. The second is to assess – use a tool to assess what are the areas that we can that generate AI. AI as a tool can drive better performance for the function. What are those use cases? Then once you understand those two things – once your organization’s educated and once you understand what those use cases are – the last thing, not the last thing, but the last step would be to start on a small project. I’ve seen a lot of organizations sometimes fail trying to take a big step with a new technology. Here I would counsel to take a small step with this new technology – find an area, a defined use case – and work that use case and get very, very good at leveraging the tool to drive better performance. I go back to the example that everybody can relate to – recruiting and staffing. We internally have used the AI Explorer to understand what our use cases were and our use cases were around two areas – candidate intake and understanding, doing the candidate search, and the second was candidate interview scheduling.

Those two areas right there drove a 40% efficiency increase for us. So start with that, and then we started with a small pilot there. So start with a small pilot, get very good at understanding the capabilities of the tool through that small pilot, whether again, whether it’s in the recruiting and staffing area to Amanda’s point or about generating new policies and procedures. Again, start small and then utilize those learnings to then build upon that and create a greater storyline with then you can get to bigger projects. So those are the three steps I would undertake.

Tony DiRomualdo:

Great. Thank you, Harry. So it sounds like the evolutionary approach is really the more prudent way of making progress slow and steady. OK. Let me ask a final question. I’ll put it out there to Amanda. We’ve been talking a lot about what’s happening right now, but Amanda, how do you see AI impacting HR in the intermediate to long term? As we begin getting more and more experience with this and implementing it and seeing the business use cases where they’re proving out – where they’re not – one of the questions we get all the time is what’s going to happen to costs and staffing levels? So what’s your view on this – do you think they’re going to go down, they’re going to go up, are they going to be relatively stable? That would be question No. 1, and let’s start with that. I have a few follow-ons. What’s your take on that?

Amanda Newfield:

Yeah, absolutely. I always temper this kind of question with the point that generative AI is just one small emerging component of a broader set of intelligent automation and content creation type of capabilities that are continuously evolving. What we see today from that technology and what we can do today is most likely going to be different even a month, two months, six months or a year from now. Some of that we can dream it and it can happen, and some of it, there may be things about that future that we’re not aware of yet, and the important piece is that HR needs to be prepared to be flexible enough to roll with, quickly upskill and understand how the technology can make those impacts, and capable of flexing and moving. Overall, I think we’re still a few years out, quite honestly, before HR really begins to see significant impact.

I do think that there will be impacts in lowering costs, as well as potential to be able to reduce some staff. But I think the key piece to think about from an HR perspective that may be different from other areas of the organization is that HR is already continuously, year-over-year, doing more with less people and less operating budget. So I think there’s a huge amount of space that generative AI is going to create space for more value-added work for HR. So I think you may see some changes in who is doing the work, maybe some opportunities for upskilling areas of the organization overall to move them into different types of work. But there’s more than a plethora of work to be had in the HR space that’s truly going to make a business value difference for organizations that we’re not getting to today. That 80% that we are able to achieve in efficiencies from generative AI even today is helping us escalate to get to the point of truly getting good stuff much faster in my opinion.

Tony DiRomualdo:

Yeah, and so you answered my follow-on questions around new capabilities and a growing workload, as well as what the higher-value activities that most HR organizations are not able to get to today, that the efficiencies and productivity gains and also the new capabilities that Gen AI in terms of the insights and analytical ability are going to enable HR to tackle going forward. So I guess the net of your answer would be more positive in terms of what Gen AI bodes for HR in the future.

Harry Osle:

Yes. I would also add Tony that to the point that Amanda just made, and you summarized, that’s very, very key. Not only does the technology hold promise to drive greater efficiencies and I would say greater engagement with the associates and the businesses, it’s going to upskill the capabilities of your HR professionals if leveraged correctly. So as I look and I counsel CHROs and HR executives, I tell them that one of the questions I typically get is what skill sets should we be looking for that’s key for the future? And before where there was such a big balance on really fundamentally understanding HR and then having some technology skills, I think that that’s shifting a bit. I think it’s more around having great foundational technology skills is going to be much more important going forward because these individuals, as they leverage technology, will be able to drive a lot more work and thus more efficiencies for the organization. That skill set component – where it used to be a nice to have – is going to be a must have in the future.

Amanda Newfield:

I can’t agree with you more, Harry. I always think about it as learning how to communicate with the digital co-worker. That’s what we’re essentially talking about. How do we communicate with a digital partner if that’s going to be a critical competency for all HR professionals?

Tony DiRomualdo:

Well, on that note, I think that’s a great last point, Amanda. We’re at the limit of our time, so I want to thank you, Amanda, for joining us today. Great to have you.

Harry Osle:

Thank you so much, Tony.

Tony DiRomualdo:

And Harry, always a pleasure to have you join us.

Harry Osle:

Thank you, Tony. Really appreciate it.

Tony DiRomualdo:

OK. To our listeners, don’t forget to go to our website at podcast.thehackettgroup.com for more information about today’s “Business Excelleration Podcast” and also upcoming podcasts in the series.

Announcer:

Thanks for listening. If you like this episode, please share it. You can find show notes, transcripts and related research at www.thehackettgroup.com/podcast. Subscribe on your favorite listening app so you never miss an episode. We welcome your feedback by rating this or any episode, or send us an email at podcast@thehackettgroup.com. The Hackett Group is a strategic consulting and executive advisory firm. Learn how we can architect your digital transformation journey, including Gen AI at www.thehackettgroup.com.