The future of HR automation (and AI)
Automation and AI are shaping the future of HR, a trend that's been evident for some time. Where job applications once arrived as paper documents, today they are often submitted electronically with just a click or a tap on platforms like LinkedIn.
Many HR departments now utilize HRMS systems, which have already automated significant portions of the workload. The latest advancement in this space is AI in HR, with innovations like robotic process automation (RPA) evolving into more sophisticated tools.
HR automation benefits
The opportunity for the HR department is to use RPA to say goodbye to high-volume, repetitive, transactional HR tasks. This can free up time for more strategic, decision-making activities.
The first advantage of such a transformation would be the freeing up of HR time, enabling people to tackle more nuanced or decision-based work instead. Anybody in HR knows that much time is spent on straightforward exchanges that aren’t directly related to HR’s strategic goals. When the mundane, procedural tasks are done or part-done automatically, HR’s human element is free to apply their critical thinking skills to more complex people issues.
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Even back when this article was originally published, Deloitte offered the example of a large consumer and commercial bank. The bank implemented 85 bots to handle 13 processes, managing 1.5 million requests annually. This freed up employee time equivalent to 230 full-time staff, but at just 30% of the cost of hiring additional employees. The bank also reported a 27% improvement in tasks completed correctly the first time.
AI HR tools can enhance this further by utilizing data to aid decision-making in complex areas like employee retention and talent management strategies.
HR automation opportunities
RPA remains a critical part of HR automation. As businesses become more data-driven, it’s crucial to use these tools efficiently. The following HR tasks are ideal candidates for automation:
- Data collection (from XLS files or systems)
- Verifying data for completeness
- Data entry
- Pre-populating forms
- Running reports,
- Managing emails (including reading, processing and submitting)
While RPA focuses on following predefined steps, AI HR software can analyze large datasets to provide predictive analytics, identifying trends such as potential employee turnover or recommending the best candidates for promotion based on performance data.
How AI is transforming HR
Artificial intelligence is making its mark in human resources, with various AI technologies emerging to improve processes that used to be manual or only semi-automated:
- AI-powered recruitment: AI now plays a pivotal role in recruitment, particularly in the resume screening phase. AI systems can rapidly parse resumes, scanning for keywords and ideal candidate profiles much faster than a human recruiter. Generative AI is also being used to draft job descriptions and tailor communication with candidates based on their application data. As this technology advances, we may see more comprehensive systems handling larger portions of the recruitment process.
- AI chatbots for HR services: HR chatbots are increasingly used as a first line of interaction for employees seeking HR services. These chatbots are equipped to answer questions, provide updates on leave balances, and even guide employees through policy documentation. This frees up HR professionals for more strategic tasks while offering quicker resolutions to routine employee inquiries.
- Learning and Development: AI is reshaping learning management systems (LMS) by offering personalized training recommendations based on an individual’s performance and career goals. Generative AI could soon act as a virtual career coach, offering real-time feedback on employee performance, suggesting next steps for career development, or even drafting professional communications.
FAQs on AI in HR
Will AI replace HR?
No, AI is designed to assist HR professionals by automating routine tasks and providing data-driven insights. While AI can handle transactional processes, decision-making, and nuanced HR tasks will always require a human touch.
What is an example of generative AI in HR?
Generative AI in HR can be seen in tools that create job descriptions, draft communications for HR teams, and personalize employee development plans based on career data.
How does AI help HR in decision-making?
AI supports HR decision-making by providing insights based on data patterns. For example, AI tools can suggest candidates for promotion based on performance metrics or identify areas for improvement in employee engagement.
What are the risks of AI in HR?
Risks include bias in decision-making processes, data security concerns, and the potential for over-reliance on automated systems, which could lead to a lack of human oversight.
What is the difference between automation and AI in HR?
Automation uses technology to perform repetitive tasks that once needed human intervention, such as processing timesheets or onboarding paperwork. RPA handles structured tasks with little variability.
In contrast, AI in HR goes beyond simple rules. It involves machines that learn, adapt and make decisions in complex scenarios, like parsing resumes, generating job descriptions, or offering personalized training. While automation boosts efficiency in routine tasks, AI adds intelligence for more sophisticated decision-making and problem-solving.
2024 statistics and trends in AI and HR
With the pace at which AI HR tools are improving, it's no surprise that companies are adopting these technologies. Grasping these trends offers valuable insights into AI's increasing impact on the workplace.
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A LinkedIn study found that recruiters using generative AI tools benefit significantly, with 57% saying it makes writing job descriptions faster and easier. Additionally, 45% report it allows them to automate tasks for more meaningful work, 42% say it removes mundane tasks, 41% note improved productivity and 35% find it easier to engage with candidates.
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The global market for AI in HR was valued at USD 3.25 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 24.8% from 2024 to 2030.
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A recent McKinsey survey found that investments in generative AI are most beneficial in human resources, where the largest number of respondents report cost reductions.
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A Mercer study shows that AI adoption in talent acquisition is less widespread than expected. 42% of respondents have no plans to use AI. Key barriers include a lack of systems integration (47%), a lack of understanding of tool efficacy (38%) and a lack of knowledge of recruiting tools (36%).
- SAP, Oracle, and IBM are leading software vendors in the AI HRMS market, shaping many of the ongoing industry trends.
The future of HR is undoubtedly linked to the evolving capabilities of AI and automation tools. Fortunately, human oversight will continue to play a crucial role in managing human resources. Nuanced decision-making is well beyond any immediate workplace applications of this technology and people are still necessary. However, that begs the question, what kind of people? And here we might see changes in the typical HR hiring profile.
Conclusion
As HR relies more on data and sophisticated technology, the HR specialist skills list will include interpreting statistics, evidence-based decision-making and hypothesis testing.
Traditional HR skills may also become more important. With automation shifting focus to strategic issues, skills like organizational development, behavioral science, performance coaching, and leadership may be in higher demand. AI is a powerful ally but won't replace the people-focused role of HR professionals. Instead, it will equip them to be more effective in their roles.
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