In Employment Decisions
In Part 1 of this two-part article, we are going to look at what is Artificial Intelligence as well as some of the potential uses of AI in typical Human Resources functions. Part 2 will focus on potential pitfalls and some of the recent regulatory efforts to control the use of AI.
Artificial intelligence (AI) refers to computers or computer-controlled machines that can simulate human intelligence and can range from a laptop or cellphone to computer-controlled robotics and software programs. AI attempts to mimic human thought by analyzing and finding patterns within large amounts of data saving time and resources for decision makers allowing them to make better informed decisions and assess business performance. The key distinction between AI and other software programs is that AI has the ability to self-learn based on its analysis of its experience base.
Recent surveys have shown companies are using AI across HR functions like employee records management (78 percent), payroll processing and benefits administration (77 percent), recruitment and hiring (73 percent), performance management (72 percent), and onboarding new employees (69 percent). A large proportion of companies interested in or deploying AI are looking to improve customer service and create a more personalized experience for applicants and employees by enabling them to find information and resolve frequently asked questions.
Some of these AI tools are free while others have paid plans that include more advanced customization options. Often the paid plans have a more significant and up-to-date resource base for their AI tools enabling the programs to recognize, learn, and apply current events. This is especially important in an HR environment where rules often change based on new laws or regulations.
Typical HR applications of AI include:
- AI-powered natural language processing (NLP) chatbots: These applications understand and respond to text or voice data. They can help filter, tag, and even answer frequently asked questions (FAQ’s) from job applicants so recruiters can focus on the more important activities of the recruitment process.
- AI-powered content creation: These applications allow users to ask questions in a conversational manner to find answers or to create written content though human review and final editing is almost always necessary. Typical applications within this category are drafting routine correspondence such as employee recognition letters or creation of job descriptions.
- AI-powered speech recognition & classification: These applications make use of speech-to-text capabilities in business settings to automatically transcribe calls, send emails, and even translate from one language to another in real time.
- AI-powered grammar checking & predictive text: These applications apply grammatical rules, spell check, and make predictions of the next most likely words or thoughts based on their analysis of prior correspondence. These applications can make drafting typical business documents significantly easier.
- AI-powered talent acquisition tools: These applications use automation and mathematical algorithms to analyze large quantities of resumes and to provide likelihood of success ranking based on prior experience. These applications are among the most problematic because they will tend to perpetuate any bias present in the prior experience base.
AI in Talent Management
The talent shortage, lack of diverse talent, and high turnover rates are forcing employers to adopt a new approach to the talent lifecycle. According to the U.S. Bureau of Labor Statistics, in 2021 the average time to fill a job skyrocketed from 20 to 50 days. In 2022, there was less than one available worker for every job opening, the lowest in history. Business leaders frequently cite their most significant challenges were attracting diverse candidates, long hiring processes, and managing a high volume of applications amid turnover.
AI-driven talent acquisition tools can help companies find talent faster and reduce turnover. Not only does turnover affect morale, but research shows that the cost of replacing an employee can range from half to two times their annual salary. Turnover also has intangible costs on culture, employee trust, and productivity.
Application of AI tools in talent acquisition include:
- Helping recruiters source qualified candidates more efficiently by assessing these candidates on their aptitudes.
- Assisting in recruitment by identifying candidates with potential transferable skills that could counterbalance a lack of specific experiences, education, or qualification that would otherwise go unnoticed in a traditional resume evaluation.
- Assessing candidates on their specific experiences and estimating how well those experiences line up with a job description or keywords.
- Delivering a better candidate experience by matching candidates with jobs, often matching a candidate to a position they may have never considered.
- Reducing the need for recruiters to screen as many candidates manually granting more time to spend with hiring managers to fine tune job descriptions and refine talent acquisition strategies.
- Conducting web-based or video-based pre-screening interviews where AI is used to judge both verbal and nonverbal cues.
- Reducing bias that can come about if, for example, an interviewee’s energy levels are low, or if the hiring manager has more affinity to the interview based on similarity, for example, age, race, and related demographics.
- Monitoring employee performance and work history and recommending online courses, training, and development programs to improve overall performance and employee retention.
AI for Government Contractors
Government contractors have several compliance-related incentives that lend themselves to the use of AI applications:
- Affirmative Action requirements demand demonstrated efforts to reach and recruit candidates from protected classes. AI applications can provide real time performance evaluation as well as assistance in identifying specific elements that contribute to an adverse impact among protected classes. Combined, AI can help ensure that employers are embracing diversity to all protected groups.
- Certain federal contractors are required by the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) to report annually on their affirmative action efforts in employing veterans. AI can help evaluate candidate resumes to detect qualification as a Vietnam Era Veteran and cumulate this information for use in completing the VETS-4212 Report.
- The EEO-1 Component 1 report is a mandatory annual data collection that requires federal contractors with 50 or more employees meeting certain criteria, to submit workforce demographic data, including data by job category and sex and race or ethnicity, to the EEOC. AI applications can analyze an employer’s workforce and extract the relevant data facilitating the completion of the report.
- AI tools can also be used to remove names and demographic information to assist in documenting the lack of conscious or unconscious bias in employment decisions.
AI For Employee Development & Retention
Successful companies should constantly work on engaging employees to make them enthusiastic about going to work. Employees that are actively engaged will assist in the profitability and longevity of the company. To quote Simon Sinek (English-American author and inspirational speaker, “When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.” A key engagement factor is supporting employee’s long-term career growth by empowering employees to learn new skills. Upskilling and reskilling employees can improve their productivity in their current position, fill labor or skills gaps, and prepare them for upward mobility or for a lateral career move.
AI-drive talent intelligence tools collect and analyze data regarding the talent and skills employee current possess (e.g., degrees, certifications, skills, project completed) and compares that to the talent and skills the company will need in the future. Having identified labor and skill gaps, the talent intelligence platforms then can offer personalized training, mentoring, and education.
When a company understands the capabilities and potential of its people, recruiters have access to a much wider pool of talent for any role. Instead of always sourcing externally for candidates, a company can use a talent intelligence platform to search for internal employees with the potential to succeed in those open roles in turn decreasing turnover and recruiting costs dramatically.
C2 is a Professional Employer Organization (“PEO”) that provides outsourced HR services to businesses across a variety of service industries with a focus on federal government contractors. Utilizing our PEO model allows our clients to transfer the responsibilities and liability of payroll, benefits administration, employee onboarding, and employee relations to C2 and to focus their attention on satisfying their clients and growing their business. C2 blog posts are intended for educational and information purposes only.
More information about C2’s PEO and other related HR services is available at www.c2essentials.com.