Many corporate human resources departments are such technological backwaters that they still rely on Excel spreadsheets or even paper documents for many of their tasks or services.
But the vast majority of HR departments expect to make a quantum leap in their IT systems in just the next two years, with many of them embracing artificial intelligence to help with their functions, according to a new study from consulting firm Bain.
“HR departments are rapidly adopting new technologies,” Michael Heric, a partner with Bain’s Performance Improvement practice, said in the report.
It warned, though, that “the appetite of HR leaders for more digital tools may outpace their ability to absorb the tools.”
For its survey, Bain polled human resource executives and managers at 500 large companies in the US, Germany, and the United Kingdom. The companies, which each have more than $500 million in annual revenue, including both publicly traded and privately owned organizations and represented a broad range of industries from manufacturing to retail to healthcare.
Some HR departments still rely on paper forms
Many of the HR departments are still relying on older processes for many of their services. Depending on the service, somewhere between 23% and 31% of such departments still rely on manual techniques, such as entering data into a basic spreadsheet or relying on paper forms, the study found.
For example, 31% of HR departments surveyed still rely on manual processes for career management of employees. Some 27% rely on such techniques to manage compensation and benefits. And a full quarter of HR departments even use manual processes to handle their payrolls.
HR professionals expect to dramatically reduce their reliance on such outdated techniques and processes within the next two years, according to Bain’s study. By then, just 7% expect to be using manual processes for career management or compensation and benefits. And just 2% expect to be using such techniques for their payroll.
Many departments are planning to up their tech spending significantly in the next two years to replace or upgrade older systems and processes. Some 57% of the HR leaders surveyed expect to increase their department’s IT budget by between 1% and 10% a year during that time period and a full quarter of them expect to their annual budgets to go up by more than 10%.
Much of that investment will go toward artificial intelligence and related technologies, according to Bain’s study.
The HR departments at most of the companies surveyed already have bought into AI. Some 54% said they’re using artificial intelligence in at least one of their functions. The most popular places where they’re using it is in workforce planning and performance management.
Some companies surveyed are already seeing success from using the technology. Unilever, for example, is using AI to help with screening job candidates; the technology has helped cut the average time it takes to hire new people by 75%, according to Bain.
“Artificial intelligence in all its forms … has already demonstrated promising results,” Heric wrote.
Many plan to invest in AI
Other companies who haven’t yet invested in AI expect to do so soon. Some 24% of the HR leaders surveyed said that while they aren’t using AI yet, they expect to be using it in at least 1 of their processes within two years. By then, majorities of those surveyed expect to be using the technology in workforce planning, performance management, compensation and benefits, and learning and development.
But the rapid adoption of AI and other digital technologies, such as cloud services, could cause problems.
As Reuters reported this week, Amazon had to shut down an AI recruiting tool it had built because they found the technology had emulated the unconscious bias in certain people and was discriminating against women candidates for engineering jobs.
And, as Bain noted, many HR departments have already had trouble integrating new high-tech processes into their operations. Some three-fourths of respondents said their tech systems have not reached “optimal performance.” Meanwhile, many expressed frustration with having too use too many digital tools; having to work with too many different data source, which frequently weren’t connected together; and having to try to figure out how to use confusing interfaces.
“HR executives may be overconfident in how quickly they can make the shift [to AI and other new technologies], given how rocky the road has been so far in most HR departments,” Heric wrote.