HR Efficiency Bolstered by Generative AI Amid Global Economic Challenges

In the face of global economic instability, high interest rates, and concerns over labor and skill shortages, human resources (HR) departments are under mounting pressure to perform. The Hackett Group, Inc. has highlighted through their latest HR Key Issues research that HR teams are anticipated to deal with increased workloads and facilitate success for business stakeholders. HR leaders identify generative AI (Gen AI) and additional technological tools as essential for augmenting efficiency and refining effectiveness.

HR Priorities in the Current Climate

The prime focus for HR in 2024 remains the development of effective leadership, a repeat from last year, emphasizing its significance. Equally important is fostering a high-performance organizational culture, now the second-ranked priority. The integration of leadership coaching and development into the HR operational framework is a strategic aspect that requires careful consideration, as HR business partners are encouraged to engage in leadership coaching at senior levels.

Managing Workloads and Technology Investments

With HR workloads predicted to surge by 7%, HR departments also have to navigate a tightrope of budget constraints and staff reductions. To bridge the resulting efficiency gap, technology investments are expected to increase by 4%. A greater reliance on fully automated systems and self-service functionalities is foreseen, along with an anticipated shift of more HR work towards global business services (GBS)/HR shared services units.

The Role of Generative AI in HR

Generative AI stands as a transformative factor in HR's digital transition, promising up to a 40% cost reduction in selling, general, and administrative (SG&A) expenses, and a potential decrease in related staff numbers over the next five to seven years. With 41% of HR organizations already testing or implementing Gen AI on a small scale, its growth rate in 2024 is projected to surpass any other emerging technology. The areas where Gen AI is expected to streamline HR processes extend from talent acquisition to onboarding, and from learning and development to employee engagement.

HR's Approach to Digital Transformation and Emerging Tech

HR leaders acknowledge the crucial impact of digital tools in elevating efficiency and productivity. The Hackett Group's Principal and Global HR Advisory Practice Leader, Harry Osle, points out that technologies like cloud-based human capital management applications, HR point solutions, generative AI, and agile orchestration are envisioning substantial advances in adoption. HR teams are taking cautious steps towards testing Gen AI for low-risk activities as they gradually incorporate it into more strategic areas, potentially revolutionizing HR operations in alignment with business objectives.

efficiency, AI, HR