Professor of Human Resources Management
When we look at AI's impact on HR today, much of the focus remains on cost reduction rather than revenue generation. This is an important distinction, as within other areas of corporate organisations, like marketing or sales, AI investments are often justified by the potential to increase income. In HR, however, the conversation is often centred on automation, reducing HR personnel costs, and simplifying processes, which positions AI as a tool for cost-saving rather than growth. HR providers, though, can and do make money by integrating and selling AI-related services and products.
Right now, AI has influenced HR by improving decision-making processes and simplifying administrative tasks. For example, it is being applied in areas like training, recruitment, and re-skilling, with the hope of reducing errors, improving outcomes and making the process automatic. On the other hand, AI is also being used to streamline and simplify HR processes, which again ties back to reducing costs. While decision-making improvements are often viewed optimistically, the focus on process simplification can make AI's current role in HR seem more utilitarian than anything else.
People in HR appreciate AI for the convenience it brings. Tasks that were once considered impractical or unreachable are now much more accessible, particularly in analysing large datasets, identifying patterns, and making data-backed decisions. This ability to supplement intuition with data is one of AI’s most promising aspects.
On the downside, enthusiasm for AI often wanes due to the practical challenges of implementation. For example, projects like building skill-based systems or applying AI to competency management can lose momentum because of issues with data quality or the sheer time and effort required to capture and process the necessary information. The optimism around AI sometimes leads to unrealistic expectations, and when budgets run out or progress is slower than anticipated, projects may be paused or abandoned
Indeed, bias, discrimination, or overlooked errors in AI processes mean that organisations have taken notice that they still need human oversight, and the inconsistent results of AI in HR have tempered the perception that AI might one day replace or reduce the HR function. While the possibilities are enormous, the outcomes are often variable, which has created a hesitation to AI that will be hard to shake.
In the future, AI will continue transforming HR, but much of this transformation will likely come through external providers rather than internal corporate initiatives, as large organisations are often too focused on their core operations to develop AI solutions in-house. Instead, they will rely on consultants and specialised companies to provide AI tools and services that can enhance decision-making processes, allowing businesses to benefit from AI innovations without the burden of creating them internally.
Looking ahead, one challenge for Europe in particular is navigating the constraints of GDPR, which could slow down AI adoption compared to regions like the US and Asia, where fewer data restrictions allow for faster innovation.
For individual HR managers, the key will be understanding and leveraging these new tools, even if they aren’t directly involved in their development. Understanding AI’s applications and implications will be crucial as external providers increasingly offer AI-driven tools for decision-making and process improvement, and there is an ongoing risk of relegating AI initiatives to lower levels of the department.
Professor of Human Resources Management / International Dean for BiMBA, Beijing