2024 HR Outlook & Trends Part 3: Impact of AI and HR Tech
As we enter the final part of our 2024 HR Outlook series, let's review what we have covered so far. In part 1, we explored the job market, workforce outlook, the impact on staffing and hiring, and the push to close skills gaps through reskilling and upskilling. In part 2, we focused on the importance of flexible work arrangements in 2024. We discussed the significance of flexibility, the rise of hybrid work models and workforce plans to bring employees back to the office through return to office.
Now, our focus shifts to one key element will influence the upcoming year. This key factor for 2024 is technological developments, especially in artificial intelligence (AI). This new technology is expected to bring transformative effects, resonating across various sectors, and notably within human resources. Join us on this exploration of how AI and HR tech are positioned to change the new year.
AI Meets HR
2023 marked the dominance of AI. Technologies like ChatGPT, Google Bard, and others created waves in the news, making headlines throughout the year. Now, everyone is wondering how AI will continue to change the business world in 2024. HR being no exception to this.
In 2024, AI is set to impact almost every facet of the HR function. AI can improve the recruiting process by analyzing candidate data to identify best fits based on skills, experience or cultural fit. Workforce analytics, powered by AI, can provide valuable insights from complex data sets. These insights aid HR teams in decision-making regarding employee development, performance and retention.
Furthermore, AI plays an important role in automating routine HR tasks, like payroll processing and benefits administration. This automation allows HR leaders more time for strategic initiatives. Taken all together, Boston Consulting Group estimates that generative AI “has the potential to drive about 30% increased productivity across the HR value chain in the near term.”
It's important to approach the adoption of AI with caution. Findings from McKinsey, a consultancy group, highlight that only one-fifth (21%) of businesses that have adopted AI have formalized official usage policies.
Fewer than a third (32%) said that they were taking any steps toward “mitigating inaccuracy,” which is a known issue with AI, at least at its current level of development. Businesses need to tread carefully with AI. Policies and strategies need to be implemented to navigate the challenges and ensure responsible and effective use of AI.
What Should You Consider When Integrating AI?
Wise companies will spend 2024 not just exploring ways to use AI, they will be thinking carefully about how to integrate it into their operations in thoughtful, strategic, and—critically—safe ways. Gartner recommends addressing four key questions to this end:
Governance:
Who will own, maintain, and manage the technology? This question becomes crucial as it's not just about procedures; it's a strategic need. Establishing a clear governance structure is essential for smooth and responsible use of AI within the organizational landscape.
Workforce Readiness:
How will the technology affect both current as well as future approaches to work? This highlights the importance of adjusting to immediate changes while also actively preparing the workforce for a changing landscape influenced by AI. It's crucial for foreseeing and meeting the evolving needs and skills necessary in a work environment shaped by technological advancements.
Vendor Landscape:
What are the third-party vendor options, or should organizations build their own solutions internally? Considering third-party options versus internal development becomes crucial. Companies should assess the pros and cons of each to make an informed decisions on whether to use external vendors or choose in-house solutions. This question reflects the strategic challenge companies face in navigating the landscape of AI vendors and figuring out the best approach for integration.
Risks & Ethics:
What are the associated risks; do they meet acceptable tolerance levels; and are there any mitigations to implement? Considering third-party options versus internal development becomes crucial. Companies need to thoroughly asses the potential risks associated with AI and its implementation. It involves determining if these risk align with acceptable tolerance levels.
Additionally, exploring effective ways to address these concerns is critical to uphold ethical considerations during the integration process. This question summarizes the ethical responsibility companies bear when navigating AI. This highlights the importance of a balanced and principled approach to adopting new tech.
Preparing for the Future Workforce
There’s another dimension to the adoption of AI as well: recruiting workers who have AI-relevant skills in order to make maximum use of the technology. Indeed.com reports that the number of job postings that contain “GenAI” or “Generative AI” sat at less than 0.1% between 2020 and early 2023.
However, by October 2023, there was a significant leap, reaching 0.6%. While less than one percent is a modest number, of course, but a more than six-fold increase in less than a year is still eye-opening. As Techopedia puts it, “The need for workers with GenAI skills is growing.”
This surge in job postings indicates a shifting job market, highlighting the increasing demand for professionals equipped with expertise in generative AI. As companies embrace AI, the need to recruit these individuals becomes evident. The growing importance of these skills highlights the need for talent acquisition strategies that align with the evolving technological landscape.
Technology for People
In the midst of the buzz around machine learning intelligence, it's essential to remember that technology is ultimately designed for people. To that end, another major trend that’s likely in 2024 is renewed emphasis on employee experience from a technology perspective.
As HR expert Josh Bersin says, “The success or failure of every HR technology product today … depends entirely on how easy it is for employees to use, how seamlessly they can incorporate it into their flow of work and how effectively it helps them get their jobs done.” That’s probably why nearly nine out of ten IT leaders (86%) say that employee experience has a “very positive impact” on the ROI associated with technology initiatives.
In addition to the questions Gartner proposes (mentioned above), companies should spend 2024 making sure any technology investments—AI or otherwise—will successfully enhance employee experience. The ease of use, seamless integration into daily workflows, and effectiveness of assisting employees in their tasks become crucial factors in determining the success of HR tech initiatives. Aligning with the needs and experiences of the workforce is essential for companies aiming to maximize the value from their technological investments.
Wrapping up the 2024 HR Outlook
As we bring our insightful journey through the 2024 HR Outlook series to a close, we find ourselves navigating the complex world of HR. Throughout this exploration, we've covered critical aspects that will transform the upcoming year.
In the first part of the 2024 HR Outlook series, we concentrated on labor trends and challenges in the workforce. We discussed the challenges and opportunities for business leaders dealing with talent shortages. Despite uncertainties, there's an expectation for job growth in 2024. The article further emphasizes addressing the skills gap by using talent management strategies like reskilling and upskilling programs accessible to workers of all skill levels.
In the second part of the 2024 HR Outlook, the focus shifts to the importance of flexible work arrangements. Understanding the transformed work-life balance, part two emphasizes the role of flexibility in attracting top talent and improving the employee experience. Flexibility can enhance trust, productivity and employee engagement.
Embracing flexible work options is paramount for modern workplaces, aligning with workforce preferences and fostering a flexible company culture. Additionally, we discuss the anticipated Return to Office (RTO) plans in 2024, based on industry and company needs.
In this final part, our attention shifts to the expected impact of AI and HR tech in 2024. We explored AI's role in various HR functions like recruitment and automation, underlining key considerations for integrating AI. Finally, there's an anticipation of a renewed emphasis on employee experience in 2024. This involves recognizing the role of technology in delivering user-friendly experiences and aligning tech investments with the needs of the workforce.
In the evolving world of HR, our journey through the 2024 HR Outlook series has explored various challenges and opportunities businesses may face. As we bid farewell to this series, the lessons and insights gained set the stage for HR departments to navigate the future workforce with foresight and adaptability. Here's to a transformative and forward-thinking year ahead in the realm of human resources!
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.