Good morning!
Last month for our third Fortune @ Work installment, my colleagues and I wrote about how A.I. can revolutionize the HR function. From hiring to performance review management, HR teams will emerge from this technological evolution better equipped for fast and efficient decision-making.
Yet while most CHROs see A.I. as an enhancement to their work, CEOs don’t consider it a worthwhile financial investment. Sixty-five percent of CHROs expect A.I. in all forms to positively impact their function within the next two years, according to the second quarter 2023 edition of The Conference Board CHRO Confidence Index.
However, the organization's C-Suite Outlook 2023 published in May found that CEOs do not consider improving HR teams’ data analytics skills or investing in A.I. for HR high priorities for human capital management—despite an investor and regulator push for evidence-based, quantitative human capital disclosures. Instead, chief executives are more focused on enterprise-wide digital transformation.
“This creates an even bigger challenge for CHROs seeking to introduce this technology,” The Conference Board's Rebecca Ray, executive vice president of human capital, and Solange Charas, distinguished principal research fellow of human capital, write. “CEOs must have a clear understanding of the technology’s value and be able to demonstrate the payback for the incremental cost.”
CHROs will need to make the business case of A.I. use in the people function clear. For instance, payroll alone can represent as much as 60% of a Fortune 500 company’s spending, according to a 2017 analysis from Deloitte. A.I. can help cut down on this and other labor costs.
In HR, every process “is an opportunity for generative A.I.,” the authors write. Using A.I., HR teams can conduct quicker analyses and make faster decisions on pay transparency and equity audits. They can also streamline sourcing, selecting, and hiring candidates; use A.I. to help write behavior-based interview questions; and leverage A.I. to generate individualized employee development plans, performance evaluations, and monitor worker productivity.
Beyond these use cases, generative A.I. can “provide almost limitless opportunities for efficiency” in other functions, including talent acquisition, total rewards, DEI, and employee engagement.
Per the report's authors: "Making the business case by articulating the longer-term positive impacts to the organization—whether those are in job redesign, organizational processes, information, analytics, markets, and employer brand—is critical."
Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion
