ORGDYN 53 (2024) 101034

Contents lists available at ScienceDirect

Organizational Dynamics
journal homepage: www.elsevier.com/locate/orgdyn

Will artificial intelligence radically change human resource

management processes?
Dianna L. Stone a, *, Kimberly M. Lukaszewski b, Richard D. Johnson c
a
Universities of New Mexico, Albany, and Virginia Tech, United States
b
Wright State University, United States
c
Washington State University, United States

A R T I C L E I N F O A B S T R A C T

Keywords: Today artificial intelligence (AI) is being employed to streamline and transform many business processes
Human resource management including those in human resource management (HR). AI has and will continue to revolutionize the way that
AI organizations attract talented applicants, hire qualified employees, train workers, manage their performance,
Technology
and develop compensation and reward systems. Many analysts believe AI will help organizations gain a
HR functionality
Artificial intelligence
competitive edge in attracting, motivating, and retaining talented employees. These new AI systems have several
Machine Learning key benefits including reduced transaction times, decreased costs, improved employee service, and streamlined
administrative processes (e.g., screening applications). Despite the growing use of AI in organizations, many
managers have indicated that they do not fully understand how AI will transform HR practices. Thus, the primary
purpose of this article is to highlight how AI will help organizations modify HR processes and practices so that
they can meet their HR goals.

There is a growing use of artificial intelligence (AI) in our society. It
is being used to diagnose diseases, develop financial plans, purchase
products, drive vehicles, and solve complex societal problems (e.g.,
poverty, aging). It is also being employed to transform and streamline
many business processes including those in human resource manage­
ment (HR). For instance, a recent survey by the Society for Human
Resource Management (SHRM) found that 79% of major organizations
now use AI to manage their human resources practices. It has and will
continue to revolutionize the way that organizations attract talented
applicants, hire qualified employees, train workers, manage their per­
formance, and develop compensation and reward systems. Thus, AI is
considered to be one of the top technological trends of the 21st century,
and is a key driver of the future of HR.
Quite simply, AI is the science of making machines (especially
computer systems) that can complete tasks that typically require human
intelligence. It can do a host of things that are considered “smart” like
processing large amounts of data, recognizing patterns, generating
judgments, and making decisions. An important subcategory of AI is
machine learning (ML) which allows a computer to learn. ML refers to
the system’s ability to acquire and integrate knowledge through large
scale observations and improve or extend itself by learning new
knowledge.
Organizations argue that AI will help them gain a competitive edge
in attracting, motivating, and retaining talented employees. For
example, it can help organizations screen applications, interview job
applicants, and personalize training programs. It can also help appli­
cants communicate with organizations, ask simple questions, provide
performance feedback, and help employees choose the best benefit
packages. Further, it can predict which employees are likely to leave the
organization so managers can take steps to retain these individuals,
especially when they have unique skills. These new AI systems have
several key benefits including reduced transaction times, decreased
costs, improved employee service, and streamlined administrative pro­
cesses (e.g., screening applications). Despite the growing use of AI in
organizations, many managers have indicated that they do not fully
understand how AI will transform HR practices. Thus, the primary
purpose of this article is to highlight how AI will help organizations
modify HR processes and practices so that they can meet their HR goals.
Given the goals of this article, we consider how AI has or will modify
several HR functions (e.g., job analysis, recruitment, hiring, training)
below. It merits noting that even though AI has many benefits, it also has
a number of pitfalls (e.g., biases, invasion of privacy), but we do not
consider these problems in this article. They are considered in another
article in this issue.

* Correspondence to: Universities of New Mexico, Albany. & Virginia Tech, Placitas, NM.
E-mail address: diannastone2015@gmail.com (D.L. Stone).

https://doi.org/10.1016/j.orgdyn.2024.101034

Available online 15 February 2024

0090-2616/Published by Elsevier Inc.
D.L. Stone et al.
AI-enabled job analysis
The process of conducting a job analysis for one position is time
consuming and tedious. Since some organizations often have hundreds
of positions, it can make creating and updating job descriptions and job
specifications very difficult to manage and very time consuming.
Therefore, one of the main advantages of using AI for job analysis is that
it can automate and streamline the data collection and analysis process.
AI can use natural language processing (NLP) and ML to scan and
interpret job descriptions, resumes, performance reviews, and other
sources of information. It can then generate comprehensive and accurate
job profiles that highlight the key skills, knowledge, and abilities needed
for each role. This can save time and reduce human efforts in this pro­
cess. The generated job descriptions can be produced in language that is
bias-free or gender neutral. Further, interviews questions can be devel­
oped from the updated job descriptions.
AI-enabled recruitment
Recruiting is an extremely important function in organizations
because companies are now competing based on the knowledge, skills,
and abilities of their employees. Thus, attracting the most talented
employees is critical to an organization’s success, but some recruiters
have lamented that recruiting is like trying to find “a polar bear in a
snowstorm”. They know that a qualified applicant is out there, but it is
an enormous challenge to find the right person.
Some estimates indicate that over 40% of major companies use AI or
ML to help them recruit applicants. For instance, AI-enabled recruiting is
used by Accenture, Unilever, Amazon, Siemens, Electrolux, Open AI,
Hilton Hotels, L′Oréal, and Delta. AI is used in the recruiting process in a
number of ways, and it is modifying one of the basic recruiting para­
digms in many ways. Organizations typically recruit applicants by
posting job ads on websites, newspapers, or other forms of media, and
wait for applicants to apply for jobs. However, AI makes recruiting much
more proactive by readily scanning internal and external databases,
social media sites, and the Internet to uncover qualified applicants,
especially passive job seekers, and encourage them to apply for jobs.
This process enhances the ability of organizations to assertively search
for the most qualified individuals or those with unique knowledge,
skills, and abilities rather than passively wait for them to apply for jobs.
As a result, some organizations maintain that AI-enabled recruitment
substantially increases recruitment effectiveness, enhances applicants’
views about the organization, and heightens their motivation to apply
for jobs. For instance, Hilton Hotels and L′Oréal report that AI helped
them reduce hiring time by nearly 90%, and Unilever indicated that they
were able to double the number of internship applicants after imple­
menting AI. Another important benefit of AI-enabled recruiting is that it
broadens the applicant pool and ensures that organizations have a wide-
ranging set of applicants who are qualified or exceed requirements for
job openings. In addition, AI-enabled recruiting helps overcome one of
the major criticisms of online recruiting by giving applicants the op­
portunity to communicate with the organization and ask simple ques­
tions about jobs. Applicants often complain that traditional web-based
recruiting is an impersonal process, and they have few opportunities to
ask questions about jobs. After applicants submit their applications,
nearly 40% of them never hear back from the organization. Studies have
shown that these communication gaps decrease applicants’ attraction to
organizations, and the likelihood of accepting job offers. AI-enabled
chatbots are now used to overcome these communication obstacles,
and can help maintain constant contact with applicants, answer their
questions, and provide them with consistent, timely, and accurate up­
dates on the status of their application. It merits emphasis that chatbots
can be programmed so their voices are similar to a person’s voice, so
users often believe that they are talking with an actual human being.
AI can also help companies conduct traditional or web-based
recruiting by advertising job openings, identifying vacancy
2
Organizational Dynamics 53 (2024) 101034
characteristics, and sending acknowledgment and follow up letters to
applicants. For instance, generative AI (e.g., ChatGPT, Copilot, Gemini)
can be used to write job advertisements and website information that
includes vacancy characteristics (e.g., job and educational requirements,
basic pay levels and benefits), and instructions on how to apply for jobs.
These new systems can also generate letters or emails to applicants that
acknowledge receipt of their application and compose follow-up letters
to inform them about job offers or rejections.
A new use of AL and ML in the recruiting process helps applicants
identify the jobs in the organizations that that meet their interests and
needs. While applicants search for positions at organizations, machine
learning can provide recommendations in real time that would help the
applicants meet their career goals. Machine learning algorithms are used
to scan individuals’ resumes or applications, match their skills and in­
terests to job openings, and make recommendations to applicants about
the job openings that fit their needs and abilities. This can be especially
helpful for interns and part-timers that an organization may be inter­
ested in moving into full-time positions. Further, such matches can be
provided to the organization’s recruiters in order to target their efforts
toward the internal interns and part-timers. For example, an Amazon
intern’s resume may mention their interest in embedded systems, the
system could then notify the intern of an opening on the Alexa team and
then notify the internal recruiter of the potential match. If you are using
such capabilities in your recruiting systems, it is important to continu­
ously monitor the recommended matches to ensure fairness. Further, it
is important to have your recruiting team review all recommendations
to confirm that they reflect the best fit for long-term success at your
organization.
AI-enabled hiring
Hiring the right employees is critical for the success of any organi­
zation, and most companies know that finding the right person for the
job influences overall performance, innovation rates, and the ability to
compete with other companies. As a result, organizations such as
Amazon, Microsoft, IBM, Accenture, Unilever, Siemens, Nvidia and
OpenAI are increasingly using AI to improve the effectiveness of the
hiring process. Interestingly AI and ML are making dramatic changes in
how companies (a) perform initial screening of applications, (b) conduct
assessments, (c) interview applicants, and (d) make final hiring de­
cisions. Each of these processes will be discussed below.
AI-enabled initial screening
Many large organizations receive hundreds of applications every
time there is a job opening, and they typically screen these applications
manually which is an extremely tedious and time-consuming process.
Further, when humans screen applications they often fail to notice
important information about applicants’ background or work experi­
ence so manual screening is not always thorough or consistent. As a
result, organizations started using keyword scanning systems which
scan resumes for keywords related to the job, and then match qualified
applicants to jobs. One limitation of these systems is that the key words
are not always based on job analysis and may not be relevant to jobs.
Given the limitations of manual and keyword systems, organizations
began using AI-enabled initial screening systems that use algorithms to
automatically scan resumes or applications against the job re­
quirements. These systems reduce the time and tedium associated with
manual screening and can also use semantic analysis to identify and
understand the meaning of words used in an application or resume. For
instance, if an individual’s application lists leadership experience rather
than the required supervisory experience on their application, semantic
analysis will understand that the words leadership and supervision are
equivalent in most contexts. As a result, the applicant will be viewed as
qualified for the job when AI-enabled screening is used but may not be
viewed as suitable when literal keyword screening systems are used.
D.L. Stone et al.
Thus, AI screening systems are able to analyze applications at a deeper
level and identify qualified applicants more often than human or
keyword scanning systems. Studies have shown that AI based screening
systems are much better at assessing applicants’ qualifications than
other methods, and they are more likely to reduce transaction times,
costs, and streamline screening processes than traditional methods.
AI-enabled assessment
AI is changing employment testing and assessments in a variety of
ways. Various forms of computerized tests have long been used to assess
applicants’ skills, job knowledge, cognitive ability, and personality.
However, AI has allowed organizations to expand these assessments to
include a broad range of measures that examine a much wider array of
skills and abilities. For instance, AI allows organizations to use gamified
tests, situational judgment tests, video interviews, social media, and
other online data to make predictions about job success. Gamified tests
typically engage applicants in interactive and engaging gameplay,
tackling challenges, puzzles, and scenarios designed to measure
knowledge, competencies, and decision-making strategies. Data from
game-based tests often include assessments of decision making, and
examine mouse clicks, responses to scenario, and event-based response
times. Situational judgment tests typically use chatbots to pose questions
to applicants, and their responses are scored based on the degree to
which they are appropriate for job situations.
Further, organizations may use videotaped interviews to gather data
on voice quality and facial features that are exhibited during the inter­
view, and they may assess word usage, discussion themes, length of
words, use of personal pronouns, and so on. Other approaches to
assessment might include the use of data collected from application
forms, emails, social media sites, etc. The data from these assessments
are designed to provide much more thorough assessments of applicants’
strengths, weaknesses, response styles, and decision-making patterns.
Not surprisingly, the use of measures of voice quality, facial ex­
pressions, social media sites, etc. has prompted questions about the
degree to which the collection of these data are ethical, and it is not yet
clear that they predict success on the job.
AI-enabled job interviews
Although almost all employers interview job applicants, they are
often problematic because they are prone to interviewer biases, pre­
mature decisions, and deceptive responses from applicants. As a result,
traditional unstructured job interviews do not always predict applicants’
job performance, and interviewing all applicants is a very time
consuming and costly process. As noted above, some organizations have
started videotaping interviews and using AI to assess individuals’ voice
quality, facial expressions, and word usage.
AI is also being used to make inferences about an interviewees’
personality based on their facial expressions, tone of voice, choice of
words, and overall behavior in the interview. Organizations then
compare the interviewee’s responses to the company’s profile of an ideal
applicant to determine if the person is suitable for a job. For instance, if a
company wants to hire salespeople who have friendly personalities, then
they use facial expressions and tone of voice to determine applicant’s
friendliness.
Use of AI for scanning facial expressions
AI -enabled interviews are now using emotion-sensing technology
which is a form of AI that scans facial expressions and micro-movements
of face and eye muscles. It then attempts to identify a person’s emotions
(e.g., boredom, stress, friendliness, sadness, anger, anxiety), and they
use these emotions to make inferences about a person’s job suitability.
Although companies are already using facial expressions to make
inferences about the job suitability of applicants, one of the major lim­
itations associated with it is that they are not completely accurate. For
3
Organizational Dynamics 53 (2024) 101034
example, it has long been assumed that others can accurately recognize
facial expressions, and these expressions reliably reflect internal emo­
tions. However, studies have shown that people who are rating others
cannot always determine their actual feelings from facial expressions
because they have learned to hide their true feelings behind fake smiles
or blank expressions. Further, we know of no evidence that inferences
based on emotion-sensing technologies actually predict job
performance.
Use of AI for screening tone of voice
Organizations have also starting using NLP to assess interviewees’
tone of voice and modality to determine their personality and job suit­
ability. NLP is a subset of artificial intelligence that deals with the ability
of a computer to understand human natural language, and analyze a
large amount of natural language data. One of the basic foundations of
AI is to make software intelligent by using data sets to train NLP algo­
rithms, and build a model based on NLP to make inferences about an
individual’s personality or job suitability.
Most assessments of interviewee’s language assess tone of voice,
modality, and cadence (i.e., speed of talking). Tone of voice is the in­
terviewee’s attitude toward a subject or the interviewer which is
conveyed through choice of words and the emotion associated with
response. For instance, the tone of voice can be viewed as formal,
informal, serious, sarcastic, happy, or cynical. Modality deals with the
ways that language expresses “certainty or uncertainty” of the response.
Low modality shows less certainty and high modality shows greater
certainty.
The natural variation in tone and modality of a person’s voice pro­
vides information about their enthusiasm and intellect, and interviewers
use this information to make judgments about job suitability. They also
use how fast an interviewee talks (e.g., cadence) to determine anxiety,
and those who appear highly anxious receive lower suitability ratings
than those who appear to be low in anxiety.
Interestingly, research have shown that raters can make fairly ac­
curate assessments about some aspects of a person’s personality (e.g.,
friendliness, engagement) based on voice analysis, but we know of no
evidence that these ratings of voice tone or modality predicts perfor­
mance on the job.
Many organizations have also started using chatbots to conduct
employment interviews because they save time and are thought to be
more objective and less biased than traditional interviews. They are also
using AI to score the interview responses, rate applicants’ levels of fit
with the job, and generate a list of qualified applicants. Interestingly,
some HR professionals argue that applicants feel more comfortable with
chatbots based interviews because they are less likely to be evaluative,
but it is not completely clear how applicants react to the use of chatbots
in interviews. Some applicants may perceive that chatbots are too
impersonal, and too rigid to make valid decisions about applicants.
AI-enabled hiring decisions
Some organizations are also using AI-enabled algorithms to make
final hiring decisions. One reason for this is that they believe that AI will
be less biased by age, race, gender, and other factors, but there is a great
deal of controversy about the effectiveness of AI-enabled hiring de­
cisions. Studies have shown that AI algorithms make decisions that are
equivalent to human decisions, and some experts argue that they have
the potential to make better hiring decisions than those made by people.
However, research has found that AI-based hiring decisions are just as
susceptible to biases as human made decisions because AI is pro­
grammed by people and human biases are transferred to AI systems.
Thus, some analysts have argued that AI-based hiring decisions should
not be used alone but should be used as one input into the human made
decision making process.
In summary, AI is making a number of key changes to the hiring
process and is (a) streamlining the initial screening process, (b)
D.L. Stone et al.
expanding the assessment process, (c) decreasing the time and costliness
of interviewing, and (d) assisting employers with hiring decisions. This
can be demonstrated by the example of Hilton Hotels when hiring for
their call center positions. They use chatbots for initial assessment that
ask candidates such questions about their availability and Internet ac­
cess. Next, they use video interviews where candidates answer a series of
questions. The responses, including facial expressions, are then analyzed
by an algorithm. The algorithms make recommendations that prioritize
those candidates with the best fit. The use of AI has reduced their
recruiting costs and has made the time to hire much faster.
AI-enabled training and development
Training is an important HR function because it helps employees
build their skills and abilities and fosters increased engagement, pro­
ductivity, job satisfaction, and retention in organizations. In view of the
importance of training, some organizations have started using AI to
enhance the effectiveness of the training process. For example, AI-
enabled training is used to personalize training and meet the specific
needs, roles, and preferences of employees rather than provide stan­
dardized courses. In addition, AI-enabled training uses virtual tutors to
assist trainees and enhance the extent to which they learn the training
content. Finally, AI can create realistic simulations that help employees
learn complex job skills that enhance the effectiveness of employees in a
variety of jobs including medical doctor, nurse, pilot, customer service
representative, etc.
Personalization of training
Employees typically vary in their skills and abilities, which means
that they often need different types of training to enhance their skills.
However, most organizations offer standardized or cookie-cutter
training programs that may not be effective for increasing skill levels
for all employees. As a result, organizations have started using AI-
enabled training which can personalize the content and training based
on an employee’s role, primary language, learning style, and other
personal preferences. The goal of personalization is to ensure that
training is customized to provide the content needed for a specific
employee and employ the training methods that are effective with
particular trainees. For example, if the trainee is a visual learner, then
their content can be delivered in video format using visual aids, and
research shows that tailoring training to a trainee’s learning style can
increase learning.
Personalization can also provide a customized curriculum for each
trainee, and tailor it to their specific goals, needs, and past performance.
Instead of offering standardized training, courses would be different for
each employee, and only relevant courses would be included in their
training programs. AI-enabled training systems could also develop
training programs for employees based on current performance ap­
praisals, current job skills, and needs for future skills. For example, if a
performance appraisal identifies a difference in person’s actual skill
levels and required skill levels then training could be customized to
enhance their needed skills and abilities. Similarly, if a manager believes
that an employee should be considered for promotion in the future, then
training could be customized to provide him or her with supervisory
skills needed in higher level jobs. Overall, personalized training pro­
grams should result in a reduction in training time, decreased costs
because only needed courses are developed, increased learning, and
enhanced employee skill and ability levels.
AI-enabled virtual intelligent tutors
AI-enabled training is also beneficial because it can use virtual
intelligent tutors, which are software agents that provide advice, rec­
ommendations, and guidance to trainees. These virtual tutors can range
from simple text-based prompts, to avatars, to chatbots that provide
feedback on trainees learning during the training process. Their use can
increase the trainees’ engagement by allowing easy access to resources
4
Organizational Dynamics 53 (2024) 101034
and information, increasing their motivation, helping them navigate a
difficult course module, and increasing the trainee’s acquisition and
retention of knowledge. Intelligent tutors can also analyze an individual
trainee’s performance and deliver text-based feedback about how well
they are performing and how that can enhance their learning during the
training process. Research has found that individuals who used AI-
enabled virtual tutors outperformed those who were trained without
using them. For instance, the U.S. Navy also found that trainees using a
virtual tutor performed better on post training work tasks than those
who did not interact with a virtual tutor.
Organizations are also using AI-enabled chatbots to serve as virtual
intelligent tutors or “digital friends” during the training process. Chat­
bots can help overcome the challenge associated with the isolation of
learning online, where training is often done individually, and trainees
are presented with online content. Chatbots can help overcome this
isolating environment by creating a sense of social connections, which
can improve learning outcomes. For example, chatbots can generate
helpful information for trainees, and can provide answers to trainees’
questions during formal training and outside of formal training sessions.
Given that chatbots typically use human-like language, they can
provide expert advice, feedback, and fulfill a human-like coaching role
(e.g., tutor) during the learning process. Research has shown that
trainees are more likely to respond to them as they would any other
learner, and positive responses to chatbots can be magnified if the
chatbot is designed to be more social and more like the trainee. In
support of this argument, Target found that over 75% of the trainees
used their training chatbots during and after training and those using the
chatbot were more likely to complete their post-training action plans
than those that did not use the chatbot.
AI-enabled job simulations
Another very interesting application of AI in training is that realistic
virtual simulations can be used to increase skill levels in a variety of jobs.
AI enabled simulations are used to train doctors, nurses, surgeons, pilots,
customer service representatives, salespersons, astronauts, firefighters,
police officers, and combat infantry specialists. For example, AI can be
used to create simulations which replicate real life scenarios and become
an essential tool to help trainees learn new roles or increase their skills
and interpersonal interactions. These simulations alter the way that
employees learn, practice, and make daily decisions in their daily work.
For example, companies often create simulations to train customer
service representatives to help them learn or practice interacting with
customers. Traditional simulations might involve workers in contrived
situations where they interact with a client, but they can only replicate a
limited range of situations. However, AI-enabled simulations can
generate a virtually infinite number of complex scenarios that consider
client demographics (e.g., age, ethnicity, sex), purchasing history, type
of complaint, and other issues. This allows trainees to practice their
skills in a wide array of situations preparing them for many of the
challenges they face every day. For example, a simulation may ask a
trainee to respond to an irate client who threatens to take legal action
against the company.
AI can help tailor customer service simulations to the individual
trainee’s needs, analyze their performance during the simulation, and
provide feedback on how the representative can improve their in­
teractions with clients. AI algorithms can identify areas where the
trainee may need additional training or practice, and the system can
adapt the simulation to focus on these specific areas, providing a
personalized learning experience that is more effective than a one-size-
fits-all approach. This targeted training can lead to significant im­
provements in customer-related skills and decision-making abilities
which should ultimately result in more satisfied customers.
Generative AI-enabled systems
Apart from the training methods reviewed above, Generative AI
systems, like ChatGPT, can be used to develop job-related simulations,
D.L. Stone et al.
training materials, manuals, and other resources that can be used in
training programs. The development of these materials is very time
consuming so Generative AI may decrease the amount of time needed to
create, deliver, and employ materials in training. It should also reduce
the costs needed to produce these materials.
Further, there are AI video tools that can create a video with human-
like voice overs and a human avatar from a prepared script. The creation
of a script can be done through text-to-video option or through NLP. In
the NLP option, data are used to analyze language patterns, identify
ideas, and produce a written script. The outcome is a professional and
engaging video. Companies who used traditional video production
would often find it would take up to 30 days to create a video for
training. The use of these AI video tools reduces the time to create videos
by over 60% and allowed for the creation of over seventy videos in one
year.
Taken together, AI-enabled training should benefit training in or­
ganizations in a number of ways including (a) developing personalized
training programs and methods that meet trainees’ needs, (b) creating
virtual intelligent tutors who can assist trainees during the training
process, provide feedback, and serve as coaches, and (c) creating job-
related simulations that place trainees in interactive situations that
help them practice their skills and learn interpersonal skills that can
enhance their performance, and (d) using GAI methods to develop
training materials, training manuals, and other types of training
resources.
AI-enabled performance appraisals
Performance appraisals are one of the most challenging processes in
HR, and some organizations have stopped using them altogether. One
reason for this is that appraisals often involve only one person (e.g., a
manager or supervisor), who may have biases, evaluating an employee’s
performance, and providing them with performance feedback. Another
reason that they are problematic is that they are typically conducted
once a year, and only provide a snapshot of an employee’s most recent
behavior. As a result, they do not provide an accurate reflection of an
employee’s overall performance. Given that yearly performance evalu­
ations may not always be correct, then the feedback generated from
them may also be ineffective. For instance, feedback based on appraisals
may not be seen as rewarding if the employee has exhibited outstanding
performance and may not improve worker’s performance when it does
not meet expectations.
Further, performance appraisals have also been plagued by rater
biases, and employees typically complain that they are influenced by
supervisory favoritism or prejudice against specific employees. Thus,
there is a great deal of dissatisfaction with traditional appraisals, and
both managers and employees indicate that they do not meet their
intended goals.
In order to address the limitations of traditional performance ap­
praisals organizations have started using AI to improve the appraisal
process. AI enables organizations to collect data about employee’s per­
formance on a continuous basis rather than one point in time, and helps
organizations collect a variety of information from multiple sources (e.
g., supervisors, peers, subordinates, customers) rather than only one
source. AI can also be used to generate and provide performance
frequent feedback to employees using chatbots. When feedback is given
on a recurring basis, employees have the opportunity to improve or
change their performance before appraisals are used for pay raises or
promotions.
Increased accuracy of ratings
Given that AI-enabled performance appraisals may collect data about
employee performance on a continuous basis, it should provide much
more factual data on an employee’s overall performance. Thus, it should
reduce raters’ biases, favoritism, and prejudice because a wide variety of
5
Organizational Dynamics 53 (2024) 101034
data are used to evaluate performance rather than one person providing
an overall appraisal. Further, it can provide more timely and concrete
feedback to employees which will give them the types of information
needed to improve or change their performance.
AI-enabled performance evaluations also use real time data collected
from multiple sources, and the information from these sources can be
used to quickly identify performance gaps as they occur, provide im­
mediate feedback to employees, and help them decrease these gaps
through training or job reassignments.
Another problem with recent performance appraisals is that they are
typically completed online, and studies show that raters are more likely
to inflate evaluations when they are completed online than when they
are not. Thus, the use of online appraisals is more likely to result in
inaccurate ratings than traditional methods. AI-enabled appraisals can
help reduce these problems because performance data are collected over
time, they incorporate ratings from multiple sources, and the collection
of large amounts of factual data may make raters more accountable for
their evaluations. Despite these arguments, research is still needed to
examine the effectiveness of AI-enabled ratings.
Improved performance feedback
Organizations are also using chatbots to provide more frequent
performance feedback and coaching so employees have the information
needed to improve their performance in a timely way. Analysts have
argued that employees are more likely to trust and respond positively to
feedback provided by chatbots because they are not evaluative. Further,
research has shown that employees are less concerned about whether
feedback is provided by a chatbot or a human being, and more con­
cerned about the fairness of feedback.
As a result, chatbots may help improve the performance feedback
process, and enable organizations to provide employees with frequent
feedback. However, employees’ reactions to chatbot provided feedback
may depend on the purpose of the feedback, the context in which
feedback is provided, the timing of the feedback, and the extent to which
employers use factual performance data to generate the feedback.
Although there is some evidence that shows employees respond more
positively to computer generated feedback than feedback provided by
humans, studies are needed to examine employees’ reactions to chatbot
provided feedback. They are also needed to assess the degree to which
this type of feedback improves employee performance. It merits noting
that generative AI can be used to develop scripts for feedback and
written performance evaluations. The use of this new method is likely to
reduce costs and save a great deal of time.
Further, there are other AI-tools that can highlight the areas where
managers need to address or provide action steps for. Once the manager
constructs their feedback, the tools will let the manager know if there is
too much soft language and will indicate where more direct language is
needed. The tools will also note corrections if the focus is on personality
and not behaviors. For example, if the feedback indicates the employee
has a great attitude, the AI tool will indicate the employee’s approach
should be used instead.
Compensation
Compensation is a critical part of HRM because it has a major impact
on the attraction, motivation, and retention of employees. It also con­
sists of very complex and time-consuming processes, so organizations
have started using AI to help develop compensation and benefit systems,
establish pay raises or bonuses, and help employees select benefit
packages. For instance, KPMG, IBM, Amazon, Uber, ScaleAI, and other
companies are now using AI to assist with developing compensation and
benefits. In the following sections, we discuss how AI can help establish
pay plans, pay raises, and facilitate the selection of benefits.
D.L. Stone et al.
Establishing pay rates
First, organizations are using AI to help them establish pay rates and
pay plans. As part of this process, companies use AI to help them conduct
job evaluations which involves defining the purpose of the job, the
essential duties and responsibilities, and skills, knowledge, experience,
and educational level required. Then AI is used to collect large amounts
of data from internal and external databases, other organizations, or
chatbots are used to conduct interviews with job incumbents, supervi­
sors, subordinates, or others familiar with the job. They can then
combine data from all these sources to define the job and use the data to
price the job. Pricing the job typically consists of using and combining
salary survey data from a number of sources and matching internal jobs
to those in the surveys. Then AI can use the data collected to establish
market pay rates for particular positions in their organization.
Developing fair pay raises and bonuses
Second, AI can help organizations develop fair pay raises or bonuses.
For example, KPMG uses AI to help them implement their “pay for
performance” reward plan. They use AI to define standards of job per­
formance that identify required work output level, and the quality of
work expected on the job. Then, they use AI to derive the exact merit
raise or bonus by calculating employees’ work deliverables, relevant
skills improvement, and characteristics viewed as necessary for busi­
ness. They begin by having AI establish job-specific performance in­
dicators that are objective, measurable, fair, and meet the company’s
reward philosophy. These criteria include the work requirements, the
quality of work output for each employee including their efficiency,
effectiveness, and the value of their contribution to the organization. AI
then calculates an employee’s level of performance by collecting data
from multiple sources, analyzing behavioral patterns, and assessing
their quality of work output. This process helps the organization
establish standards for pay raises that are fair to all employees, are
applied consistently, and are based on objective rather than subjective
performance.
Apart from KPMG, IBM also uses an AI system to develop pay raises
that reward employees’ efforts and the achievement of organizational
goals. For example, IBM uses data from ongoing employee performance
evaluations rather than one periodic (e.g., yearly) performance rating,
and they tie pay increases to these evaluations and improvements in
employees’ skill levels. Thus, employees’ pay raises are more likely to
reflect market rates for skills and competencies than traditional raises.
They also use machine learning to make recommendations about pay
increases and use this information to explain how pay raises are related
to employees’ skills and overall performance. It merits noting that even
if ML makes pay raise recommendations, the manager makes the final
decision about raises. Given that raises are tied to ongoing performance
and skills, AI enabled pay raises are more likely to retain talented
workers than the typical methods of establishing pay raises. In support
of this argument, research revealed that when IBM started using AI it
made better pay raise decisions and the turnover rate decreased by 50%.
One of the major concerns with traditional pay raise systems is that
they are often subject to biases, and employees perceive that favored
employees are given higher pay raises than others. These biases
perpetuate feelings of unfairness and serve as one of the primary reasons
that employees leave organizations. However, AI can help organizations
eliminate these biases by identifying the behaviors of high performers,
correlating these behaviors with pay rates, and suggesting appropriate
pay raises. AI can also help organizations conduct regular pay audits that
ensure that that all employees have equitable pay rates.
Assisting employees with selection of benefits
AI can also assist organizations with benefits administration, and
help employees select optimal benefit plans. Today, many organizations
6
Organizational Dynamics 53 (2024) 101034
use cafeteria benefit systems which allow employees to choose their
benefit plans (e.g., health or life insurance, retirement plans), but
selecting these benefits can be an extremely complex process so HR
professionals often meet with individual employees to help them. AI can
use chatbots to help employees better optimize their benefit plans and
increase their satisfaction with benefits. For example, AI-enabled tools
can analyze historical data to analyze millions of past claims to help
employees compare plans, and AI-enabled chatbots can help employees
identify their needs. Then, they can match employees’ needs with past
claims to identify the most cost-effective benefit plans for the individual.
Selecting retirement plans typically involves a similar process. Both of
these processes can decrease the likelihood that an employee is over or
under insured and ensure that employees have the benefits they need.
AI-enabled benefits can also help employees manage the investment
strategies in their retirement plans, and these strategies can be designed
to match their needs and risk tolerance levels. These new systems can
also proactively reach out to employees with suggestions for optimizing
retirement savings. This approach is similar to the financial services
offered by companies that help employees maximize return on in­
vestments. Despite the potential of AI to enhance benefits decisions, and
retirement investment strategies, there have been very few studies that
have assessed the effectiveness of AI-enabled benefit systems.
AI-enabled strategies to retain talented employees
Given that today’s organizations are competing for talent, retaining
employees is one of their most important challenges. Employee turnover
creates difficulties in organizations because it reduces productivity, is
often contagious, and requires a great deal of work to replace workers,
especially when they have unique skills and abilities. As a result, orga­
nizations are using AI to help predict and proactively decrease employee
turnover. For instance, companies are using AI and data analytics to
identify employees who are likely to leave the organization, and they
take preemptive steps to retain these individuals. Several organizations
are using these new methods including KPMG, IBM, Dupont, Honeywell,
and Lockheed Martin, and we provide a more detailed description of
them below.
First, AI-enabled retention systems are used to collect descriptive
data about employees to help them predict and reduce turnover (e.g.,
employee demographics, salary, satisfaction surveys, performance rat­
ings, and other similar data). Then, these systems are employed to scan
internal and external databases, social media, performance appraisals,
and other sources to gather information that will help them make pre­
dictions. For example, organizations might collect data about em­
ployees’ job dissatisfaction, perceptions that there are few advancement
opportunities, and burnout. The data from these methods are combined
and organizations search for patterns and correlations that predict
turnover (e.g., pay dissatisfaction, employees’ skill levels).
Second, organizations use AI and data analytics to identify turnover
patterns in the industry or department. Then they correlate the infor­
mation about employees who left the company (e.g., demographics,
performance ratings, salary rates, survey data) with these data. Simi­
larly, they use surveys to identify reasons that current employees are
likely to leave the organization. They also use interactive chatbots to
interview employees, and scan other sources (e.g., emails, social media)
to collect information on employees’ burnout, job dissatisfaction, and
interest in quitting. As part of this process, they often find that the pri­
mary reasons that employees quit are uncaring managers, lack of career
advancement opportunities, lack of meaningful work, low salary levels,
and unstainable work expectations. Interestingly, some organizations let
employees decide for themselves if they want to participate in the job
dissatisfaction surveys, but companies argue that they can spot “burn
out” before the employee knows that they are experiencing these emo­
tions. KPMG also calculates a score for an employee’s risk of turnover,
then the system tries to identify a reason for the risk, and finally it
suggests a remedy for the problem. The company argues that they have
D.L. Stone et al.
been consistently able to predict two-thirds of people about to resign and
save 10% to 20% of the ones that they identified.
Third, once they collect and identify patterns in the data, they can
build a model to forecast turnover. For instance, they can use ML al­
gorithms including logistic regression, or decision trees to estimate the
probability that an employee will leave the organizations. Note, how­
ever, that these models must be updated or changed over time in order to
provide accurate predictions.
Fourth and finally, based on the predictions made by the model,
managers can develop personalized strategies for retaining key em­
ployees. For instance, if the model identifies a reason that an employee is
likely to leave the organization then they can develop interventions to
prevent turnover. They might take proactive steps to increase the salary
rate to market levels for this employee or other talented employees with
salaries that do not meet market rates. Given that AI, machine learning,
and data analytics can help prevent turnover of talented employees,
these new methods should be extremely beneficial to organizations.
However, it should be cautioned that there may be ethical issues asso­
ciated with these new methods (e.g., violations of privacy) and these will
be considered in another article in this issue.
Conclusion
It should be clear from our article that AI and ML are having a dra­
matic impact on HRM processes and practices. We hope that our dis­
cussion of these new practices provides a clear explanation of them for
practicing managers and human resource professionals. New AI and ML
practices should modify many HRM processes, and decrease transaction
times, reduce costs, increase efficiency, and streamline many burden­
some administrative practices. We hope that this article sparks an in­
terest in these new methods among managers and HR professionals, and
encourages researchers to assess their value.
Selected Bibliography
For insights on how AI-enabled recruitment and selection will affect
the jobs of recruiters and the roles of HR managers see Hmoud, B., &
Laszlo, V. (2019). Will artificial intelligence take over human resources
recruitment and selection? Network Intelligence Studies, 7(13), 21–30. To
understand how hiring algorithms are used in the hiring process see
Bongard, A. (2019). Automating talent acquisition: smart recruitment,
Organizational Dynamics 53 (2024) 101034
predictive hiring algorithms, and the data-driven nature of artificial
intelligence. Psychosociological Issues in Human Resource Management, 7
(1), 36–41. doi:10.22381/PIHRM7120193.
For insights on how AI will change training and developmental op­
portunities in organizations, see Maity, S. (2019). Identifying opportu­
nities for artificial intelligence in the evolution of training and
development practices. Journal of Management Development, 38(8),
651–663. https://doi.org/10.1108/jmd-03–2019-0069.
For insights on AI-enabled performance appraisals and how this will
help managers in this activity, see BasuMallick, C. (2019, Dec 16). How
AI-drive performance feedback can make you a better manager. Spiceworks.
https://www.hrtechnologist.com/articles/performance-management-
hcm/ai-driven-performance-feedback/.
For insights on AI-enabled compensation and how AI can be used in
compensation and the administration of benefits by HR managers, see
Kulkarni, P. (2019, Aug 16). The impact and potential of AI in compen­
sation and benefits. SightsInPlus. https://sightsinplus.com/practices/re­
wards/the-impact-and-potential-of-ai-in-compensation-benefits/.
For insights on AI and turnover and how model can be developed
through machine learning, see Sajjadiani, S., Sojourner, A. J.,
Kammeyer-Mueller, J. D., & Mykerezi, E. (2019). Using machine
learning to translate applicant work history into predictors of perfor­
mance and turnover. Journal of Applied Psychology, 104(10), 1207–1225.
https://doi.org/10.1037/apl0000405.
CRediT authorship contribution statement
Stone Dianna L.: Conceptualization, Writing – original draft,
Writing – review & editing. Lukaszewski Kimberly M.: Conceptuali­
zation, Writing – original draft, Writing – review & editing. Johnson
Richard D.: Conceptualization, Writing – review & editing, Writing –
original draft.
Declaration of Competing Interest
None.
Data availability
No data was used for the research described in the article.