INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 03, MARCH 2020 ISSN 2277-8616

Evaluating Influence of Artificial Intelligence on

Human Resource Management Using PLS-SEM
(Partial Least Squares-Structural Equation Modeling)
Smita Chakraborty, Arunangshu Giri, Abanti Aich, Swatee Biswas

Abstract: In this competitive world, every kind of business requires Human Resource Management (HRM). It is an asset
for improving the organizational performance. An organization becomes successful when it can meet the needs and
demands of a consumer and to do so, organizations will have to adopt innovative HR practices. Soon, HRM will be moving
away from its traditional administrative functions like recruitment, selection, appraisal to more advanced processes like
Automation, Augmented Intelligence, Robotics and Artificial Intelligence (AI). These processes will completely reshape
and redefine the work of HRM in various organizations. At present AI is the buzz word as it is completely transforming
HRM, providing millions of jobs, producing easy method of hiring, providing innovative applications and advanced
solutions to various problems. This paper helps to study the influence of artificial intelligence (AI) on Human Resource
Management (HRM) using PLS-SEM in various sectors of West Bengal.
Keywords: Artificial Intelligence, Human Resource Management, Organizational Performance, PLS-SEM

I. INTRODUCTION Improving the efficiency of HRM through the application

The term ‘Artificial Intelligence’ (AI) was first coined by
John McCarthy in the year 1956 in his first academic
conference. It is also known as Machine Intelligence. It is
an inter-disciplinary science that mimics human
intelligence behavior. It can make computers perform
those tasks in which humans are expert at (Rich, 1983)13.
It helps to retrieve database, answer doubts quickly,
extracts information and provide the best output. AI
applications are expanding every day and many AI tools
(Artificial Neutral Network, Intelligent Decision
Systems, Fuzzy Sets) are used in various fields. AI helps
machines to act like a human brain and can give outputs
efficiently. It also uses certain algorithm and based on
that it performs its actions. With the development of AI
technology, a new generation of labor which is
equivalent to human intelligence has become a key factor
for bringing transformation and change in the system
(Ertel, 2018)3. Application of AI in organizations eases
the work of HRM. The HR team uses AI for smooth
recruitment, hiring, making decisions, predicting
performances and task automation. It helps to take
decisions at a faster rate, helps to speed up tedious and
daily repetitive work. It provides powerful analytical
support and database. Managers need not do the
mechanical work anymore and can utilize their time in a
more valuable task (Partridge & Hussain, 1992) 12. HR
team can smoothly coordinate with other employees and
build strategies for delivering innovative work (Holland,
1992)5. The use of AI technology can also help HRM to
reduce unnecessary cost and bring greater economic
benefits.
Smita Chakraborty, Assistant Professor, Hospital Management
Department, Haldia Institute of Health Sciences, West Bengal.
Dr. Arunangshu Giri, Associate Professor, School of Management &
Social Science, Haldia Institute of Technology, MAKAUT, West
Bengal.
Abanti Aich, Assistant Professor, Department of Science and
Management, Haldia Institute of Health Sciences, Haldia, West Bengal,
India.
Swatee Biswas, Officer in Charge, Administration Department, Haldia
Institute of Management, MAKAUT, West Bengal
of AI technology has become a recent trend for future
development. Some of the general examples of AI
application is Uber, Ola, Google Voice, Facebook,
Alexa, Siri (I-Phone), Fingerprint in mobiles, Face
Recognition and Biometric. Another example of AI
application is Naukri.com. It is a newly emerged startup
which provides AI based HR solutions. It aims to help
every recruiting team to find the right applicant globally.
It helps to asses the candidates by proper screening
method and decides which candidate will fit for which
job based on requirement. Humans can do this same job
but the decision taken can be partial and time taking.
Whereas AI application will help to eliminate wastage of
energy, time, human biases. It will help to provide
complete transparency, simplify the tasks and predict
which employee can perform better. It has the power to
transform HRM in organizations. This paper studies to
evaluate the influence of AI on HRM in various
organizations.
II. REVIEW OF LITERATURE
HRM team deals with people in the organization. It deals
with recruitment, selection, development, training,
compensation management, payroll and performance
appraisal. It helps to encourage employees to do their
best in the organization and helps to make their work
productive. It also encourages employees to achieve
company’s goals and objectives. Artificial Intelligence
plays an important role in HRM as it reduces the work of
HR managers. It uses certain algorithms, based on which
the HR processes are done (Netessine & Valery, 2012)10.
When AI technology is linked with HRM, the process
will be enhanced and will improve the performance of
the employees (Pickup, 2018)11. It helps to reduce paper
work and manual work. It also makes the employees
tasks easier and productive. Thus, this literature review
mainly focuses on certain factors which study the impact
of AI on HRM in the organizations. Recruitment is a HR
process of shortlisting and selecting suitable candidates
for jobs within an organization. If AI technology is
applied while recruitment, it will help HRM to streamline

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 INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 9, ISSUE 03, MARCH 2020
the monotonous and high-volume task smoothly and
It will easily screen resumes from a large pool of
applicants and find the right candidate at the right time
and reject the ones which are unsuitable (Malvarez, et al.,
2014)8. Intelligent Screening Software powered by AI
will select those candidates who have maximum
experience, skills and performance. It will also analyze
the turnover rates and accordingly select the best
candidate for the job. When audio visual interviews are
taken using AI software, the candidate’s choice of word,
speech, body language, personality traits are assessed
(Granados & Gupta, 2013)4. This helps the HR team to
easily decide the job role of that candidate. AI also eases
the work of HRM by constantly updating employees
about information, suggestions and feedbacks. Thus, AI
helps HRM to smoothly and easily carry out the
recruitment process, thereby improving the employee
performance which in turn improves the organizational
performance. HR design their training programs without
any predefined parameters and are unable to train
employees perfectly. HR managers complain that
whatever trainees learn during the training program at
least half is forgotten. But now, the application of AI in
the training and development process has become very
effective. AI uses certain algorithms which monitors and
studies the behavior, skills and attitude of employees
working at various levels (Clemons, 2008)2. Different
people have different learning style so by using AI
application, training programs can be made easier and
convenient for employees. After the training, the trainees
provide feedback so that improvisations can be done. The
AI helps both the employee and the HRM team to know
about the gaps of the training program. It helps to
understand the skills, performance and knowledge
required by employees to achieve the organizational
goals. These helps the HRM team to improve their
performance which in turn would increase the
performance of the organization also (Malthouse, et al.,
2010)9. Most organizations prefer to do performance
management of employees backed by numbers and data.
In this case, HR managers rely only on factual
information for taking any decision. They need to
collaborate with multiple teams and departments for
collecting information which may lead to missing out of
information of employee’s valuable contribution towards
the organization. It further lead to inaccuracy in the
process (Bharadwaj, et al., 2013)1. Whereas if AI
technology is applied in this process, it can help HRM to
collect information smoothly from multiple sources,
enable HR manager to extract correct information at the
right time, eliminate psychological biases related to
performance reviews. It also allows performance
assessments to take place frequently rather than annually.
Thus, it makes the work of HRM easier and helps to
increase the employee’s performance which will
automatically improve the performance of the
organization. High attrition in an organization can
increase unnecessary cost and lower the work
productivity. It also leads to loss of skilled employees
having essential knowledge of work. HR managers are
responsible for identifying dis-engaged employees and
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ISSN 2277-8616
automatically.
should find ways to retain them in the system (Lucas, et
al., 2013)7. However, in a large organization with a
diverse workforce it is difficult to initiate retention-
strategies on time. This is when AI application is used to
overcome the situation. An AI powered analytics engine
can automatically scan massive data of employee
communication, employee performance records, time,
attendance, participation rates and helps to understand
which employee is looking for promotion (Kauffman, et
al., 2010)6. It can help HRM to analyze employee
interactions and engagements and give HR managers
deeper insights into organizational dynamics. AI helps
HRM to understand the risk and take retention decisions
at the correct time. They do not have to wait for annual
reviews. Thus, with the help of AI application, HRM can
retain talented employees and improve their work
performance which in turn will improve the performance
of organization also.
III. HYPOTHESES DEVELOPMENTAND
RESEARCH MODEL
H1: ‘Strategic HR Planning through AI’ positively
influences the ‘Efficient Human Resource Management’.
H2: ‘Smooth Recruitment & Selection Process through
AI’ positively influences the ‘Efficient Human Resource
Management’.
H3: ‘Planned Training and Development Process through
AI’ positively influences the ‘Efficient Human Resource
Management’.
H4: ‘Tactical Performance Appraisal through AI’
positively influences the ‘Efficient Human Resource
Management’.
H5: ‘Efficient Human Resource Management’ positively
influences the ‘Effective Organizational Development’.
Figure 1: Hypothesized Research Model
Establishment
IV. RESEARCH METHODOLOGY
A survey study was conducted with HR personnel
covering 4 industries in West Bengal including
Healthcare, Food, Manufacturing and IT using a
structured questionnaire. All variables under each factor
were taken from the previous literature and were
suggested by the experts from HR field. These variables
were judged using a 5-point Likert scale ranging from 5
(Strongly Agree) to1 (Strongly Disagree). 146 responses
were collected through convenience sampling
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technique. Data collection period was 20th October, 2019 Table 1: Factor Analysis - Rotated Component
to 20th December, 2019 with response rate of 73%. PLS- Matrix
SEM was used in this study to test the relationships
Factors with Identified Variables
among factors in the proposed hypothesized model
(Figure 1). For prediction-oriented complex model with 1 2 3 4 5 6
many factors and variables PLS-SEM is useful. Also q1 .950 .041 .017 .000 .033 -.089
large sample size is not required for executing PLS-SEM.
In the first step we checked reliability and validity of the q2 .939 .000 .061 .052 -.085 -.081
factors and variables through measurement model and q10 .036 .936 -.028 -.059 -.005 .020
then we tested hypotheses for establishing the research
model through path analysis and structural model. q9 .004 .914 -.127 -.023 -.089 -.131
q4 -.015 -.012 .921 -.012 .034 .048
q3 .098 -.146 .869 .162 -.037 -.079
V. ANALYSIS AND RESULTS
At first reliability and validity of the factors were q6 -.064 -.075 -.007 .915 .049 .004
checked before hypothesis testing. In this study, we used q5 .123 -.006 .153 .878 .126 -.041
PLC-SEM for establishing the hypothesized model using
q8 .012 .043 .092 .131 .891 .040
SPSS 23.0 and AMOS 23.0 software. Also we checked
model fitness through structural model. Here overall q7 -.063 -.140 -.096 .039 .857 -.147
Cronbach alpha for all variables was 0.82 (>0.70), which q12 -.002 -.066 -.030 -.065 .017 .874
indicated the tolerable range of reliability. On the other
hand construct validity was executed through q11 -.166 -.031 .008 .033 -.117 .828
Exploratory Factor Analysis (EFA) through Rotated Extraction Method: Principal Component Analysis; Rotation
Method: Varimax with Kaiser Normalization.
Component Matrix (RCM). By the help of Principal 1. Strategic HR Planning; 2. Efficient HRM; 3. Smooth
Component Analysis (PCA), 6 different factors were Recruitment & Selection; 4. Planned Training and
created with a cluster of individual ‘factor loading’ more Development; 5. Tactical Performance Appraisal; 6. Effective
than 0.5 (Table 1). Organizational Development

Factors Related to Artificial Intelligence Affecting Human Resource Management Using Partial Least Squares
Structural Equation Modeling (PLS-SEM)

Table 2: Measurement Model Outputs

Average Maximum Average

Standardized Construct
Variables/ variance Shared Shared
Constructs/ Factors Regression Reliability
Items extracted Variance Variance
Estimate (CR)
(AVE) (MSV) (ASV)
SHRP: q1 .773
Strategic Human 0.750 0.600 0.021 0.011
Resource Planning q2 .776
SRS: q3 .788
Smooth Recruitment & 0.752 0.602 0.051 0.017
Selection q4 .764
PTD: q5 .764
Planned Training and 0.760 0.613 0.051 0.022
Development q6 .801
TPA: q7 .826
Tactical Performance 0.785 0.646 0.045 0.014
Appraisal q8 .781

EHRM: q9 .873
0.867 0.766 0.027 0.009
Efficient HRM q10 .877
EOD:
q11 .790
Effective 0.767 0.622 0.027 0.014
Organizational
q12 .787
Development

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Table 3: Squared Correlations between Factors for Table 4: Fit indices of Structural Model
Measurement Model
Fit Index with Structural Model
1 2 3 4 5 6 Acceptable Range Values
1. EHRM .875 χ2/df ( <3) 1.585
2. SHRP .031 .775 RMSEA (<0.06) 0.055
3. SRS -.099 .145 .776 GFI (>0.90) 0.989
AGFI (>0.90) 0.932
4. PTD -.047 .099 .226 .783
NFI (>0.90) 0.984
5. TPA -.058 -.061 .001 .212 .804
CFI (>0.90) 0.997
6. EOD -.163 -.132 -.068 .004 -.142 .789
1. EHRM: Efficient HRM; 2. SHRP: Strategic HR Planning; 3.
In this study, all fit indices (Table 4) of Structural model
SRS: Smooth Recruitment & Selection; 4. PTD: Planned Training (Figure 2) proved that the model was fit.
and Development; 5. TPA: Tactical Performance Appraisal; 6. EOD: Figure 2: Path Diagram of Structural Model
Effective Organizational Development
*Diagonal elements are Average variance extracted (AVE).
Standardized Regression Estimates with values of more
than 0.7 indicate the significant and effective
relationships between the factor and variables under it.
Internal consistency among variables was described the
Construct Reliabilities which should be more than 0.7.
Also the conditions depicted below satisfied convergent
and discriminant validity in Measurement model.
AVE> 0.5 MSV < AVE
CR > AVE ASV < AVE
In this study all conditions were under the satisfactory
range (Table 2). Also, AVE values which were larger
than corresponding squared inter-construct correlation
(SIC) supported discriminant validity (Table 3). After
that we checked fitness indexes of structural model and
tested hypotheses.
Table 5: Path analysis of Structural Model
Measurement Path Hypothesis Estimate S.E. C.R. P-Value Assessment
Efficient Human Strategic Human
Resource ← Resource H1 .438 .056 7.862 <0.01* Supported
Management Planning
Efficient Human Tactical
Resource ← Performance H4 .393 .059 6.650 <0.01* Supported
Management Appraisal
Efficient Human Smooth
Resource ← Recruitment H2 .187 .050 3.719 <0.01* Supported
Management Selection Process
Efficient Human Planned Training
Resource ← & Development H3 .368 .046 7.996 <0.01* Supported
Management Process
Effective Efficient Human
Organizational ← Resource H5 .784 .040 19.679 <0.01* Supported
Development Management
Significant Regression co-efficient (* for P<0.01)
Here all hypotheses were supported by the significant P- inter-disciplinary science with multiple approaches. AI
application can be used in any machine. It helps the
Value and other criteria of path analysis (Table 5).
machines to exhibit human traits such as learning and
VI. MANAGERIAL IMPLICATIONS problem-solving. It can rationalize and take actions that
Artificial Intelligence (AI) is a branch of computer may help to achieve company goals and objectives.
science. It helps to make smarter machines which can Advancement in machine learning is creating a shift in
perform task that are typically done by humans. It is an paradigm towards AI. From the industrial point of view,

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it helps the HRM to carry out functions easily and
efficiently. It helps in recruitment, staffing, training,
From the societal point of view, AI helps in Quantum
Computing (exploring mysteries regarding environment,
pollution and disease), acts as personal assistant (Alexa,
Siri), provides self-driving features in cars (Tesla), helps
to improve emotional intelligence of customer support
representatives (Cogito), helps to improve customer’s
experience in travel industry and delivers ‘micro-
moments’ or experiences that delights a customer
(Boxever), helps to understand the needs and desires of
the customer (John Paul), face-recognition, fingerprint
scanning, voice search and so on. This study provides an
empirical and theoretical analysis to study the factors
because of which HRM is shifting towards AI
application.
VII. CONCLUSION
AI is one of the emerging technologies which try to
stimulate human reasoning. It is the ability of a computer
program to think and learn. AI can do all those things
which a human can usually do. The advantages of AI
applications mainly for HRM are enormous and can be
applicable for any sector. It helps HRM in recruitment,
training, development, job-analysis, employee retention,
talent management, performance management,
performance appraisal and all other HR related activities.
It also reduces human errors, helps to take risks, helps to
take faster decisions, available 24*7, helps in repeating a
task, acts as a digital assistance to interact with users,
used as a daily application like SIRI and OK GOOGLE
and helps to create new inventions. AI can analyze
clinical data in health sectors and check history of
patients and diagnose diseases. This paper thus helps to
evaluate the influence of AI in HRM in various sectors.
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ISSN 2277-8616
development, performance appraisals, performance
management, employee retention and job-analysis.
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