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AI in HR - Riding the Wave of Change

How Does AI in HR and other Disruptors and Drivers Shape HR and Talent Management?

The human resources (HR) and talent management function is in a state of flux due to various value chain disruptors and drivers. As we navigate the digital era, the advent of advanced technology, data analytics, changing workforce demographics, and the shifting nature of work continue to redefine the field. Join us as we delve into these value chain disruptors and drivers that are shaping HR and talent management.

Value Chain Disruptors in HR and Talent Management

Technological Advancement

A significant factor disrupting the HR and talent management value chain is technological advancements, particularly the introduction of AI (artificial intelligence) in HR. AI-powered systems are being deployed to streamline recruitment processes, support decision-making, and facilitate talent management. They bring increased efficiency, accuracy, and objectivity to HR, transforming traditional practices.

AI algorithms are now capable of screening thousands of resumes, analyzing candidate data, and predicting potential responses to job offers, greatly improving the efficiency and effectiveness of the recruitment process (Brynjolfsson & McAfee, 2014). AI's role extends to performance management and talent development as well, with the capability to identify patterns and trends from various data sources, providing insights that inform strategies for training, development, and succession planning (Cortes, R. & Campello, R.J., 2020).

Remote Working and Gig Economy

A shift towards remote working arrangements and the growing prevalence of the gig economy present significant disruptors for traditional HR structures and practices. Both factors have necessitated new and adaptable approaches to talent management.

Remote work has grown exponentially in recent years, catalyzed significantly by the COVID-19 pandemic. Organizations around the world have been forced to adapt and implement remote work arrangements to continue their operations (Brynjolfsson, E., et al., 2020).

The gig economy — freelancers, independent contractors, and part-time employees — has also been steadily growing. A study by the Australian Government's Future of Work Report, showed that by 2021, one in three Australian workers was engaged in some form of gig work (The Senate, Australian Government, 2021). This shift presents challenges in terms of managing and integrating a more fluid workforce.

As a result, HR has had to devise new systems, procedures and strategies for managing and motivating remote and gig workers; and ensuring legal and regulatory compliance.

The War for Talent

The increasing competition for talent has disrupted traditional recruitment and retention strategies. With rapid technological advancement, there has been an increased demand for digital competencies and advanced technical skills. Positions in areas such as data science, artificial intelligence, and cybersecurity have seen a surge in demand but have a limited pool of qualified talent (World Economic Forum, 2020).

The COVID-19 pandemic also shifted the talent landscape substantially. As businesses pivoted to remote work, the competition for talent became a global affair. Companies are no longer confined to local talent pools; they are now competing on a global scale for top talent (Bloom, N., et al., 2020).

In Australia, there has been an acute skills shortage in areas like healthcare, IT, and engineering, intensifying the competition for skilled professionals in these sectors (Department of Education, Skills and Employment, Australian Government, 2021).

Changes in immigration policies and the aging demographic also influenced the war for talent in Australia. Stricter immigration policies have meant fewer skilled migrants, shrinking the available talent pool. Concurrently, an aging population has led to higher retirement rates, further limiting the talent pool (Productivity Commission, Australian Government, 2021).

In response, companies have been innovating their recruitment and retention strategies. There is an increasing focus on employer branding, creating an engaging workplace culture, and offering career development opportunities to attract and retain top talent (Gallup, 2020).

Value Chain Drivers in HR and Talent Management

Digitization and Automation of HR Processes

HR has seen significant advancements with the digitization and automation of its processes. Tasks that were once manual and time-consuming, such as payroll processing, benefits administration, and record-keeping, are now automated. This shift has enabled HR professionals to devote more time and resources to strategic initiatives (Marler & Fisher, 2013).

The Role of AI in Driving HR Processes

AI is not just a disruptor, but also a significant driver in the HR value chain. Its predictive capabilities enable HR leaders to anticipate needs and shape talent acquisition, retention, and development strategies.

AI-driven platforms provide insights into the talent market, allowing companies to refine recruitment strategies and improve their sourcing of high-quality candidates. These platforms can also assess values fit by analyzing a candidate's language and responses during the interview process (Ramesh & Gelfand, 2020).

In the area of employee engagement and retention, AI can predict potential issues before they escalate, including predicting which employees are likely to leave the company, allowing proactive intervention (Housman & Minor, 2015).

Data-Driven Decision Making

Data analytics is playing a pivotal role in HR's transformation. People analytics provide insights into various aspects of HR, from recruitment and retention to employee engagement and productivity. Data-driven insights enable HR professionals to align their strategies with organizational goals, improve decision-making, and measure the impact of HR initiatives (Ramesh & Gelfand, 2020).

Employee Experience and Engagement

The focus on employee experience and engagement is a major driver in HR and talent management. Companies are recognizing that an engaged workforce contributes to better business outcomes. The pace of business and technological changes has made learning and development a key driver in HR. Companies are investing in continuous learning programs to upskill and reskill their employees and include career development opportunities as a critical part of talent retention strategies (Fosway Group, 2020).

Employer Branding

In the face of intense competition for talent, the importance of employer branding as a key driver in the HR value chain has surged. Employer branding refers to the image and reputation a company holds as an employer. It is how the organization is perceived by current employees, prospective talent, and the wider market. This brand identity influences the talent that the company attracts and retains.

Employer branding is tied to an organization's value proposition to its employees, which encompasses factors like the company culture, work environment, career development opportunities, compensation and benefits, and the organization’s social responsibility initiatives. Strong employer branding is often associated with high levels of employee engagement, productivity, and loyalty (Backhaus & Tikoo, 2004).

In Australia, with the acute skills shortage and intensified competition for talent in some sectors, employer branding has become increasingly crucial. Companies are investing in initiatives to enhance their employer brand, focusing on creating an engaging workplace culture and offering attractive career development opportunities to differentiate themselves in the competitive talent market (Department of Education, Skills and Employment, Australian Government, 2021).

Moreover, the shift to remote work catalyzed by the COVID-19 pandemic has made employer branding even more vital. With the ability to tap into global talent pools, organizations need to differentiate themselves and appeal to a broader, diverse audience. An appealing employer brand can help attract top talent from around the world, regardless of geographic boundaries (Bloom, N., et al., 2020).

To remain effective and relevant, HR professionals must understand and adapt to these changes. By leveraging technology, data analytics, and focusing on employee engagement and their employer brand, they can drive value and ensure the competitiveness of their organizations in an ever-changing landscape.

With 30 years of experience in designing and implementing people-focussed strategies and structures, Optimal Resourcing are experts in helping companies respond to industry transitions and stay competitive.

Established and managed by well-known global resourcing expert, Jude Mahony, we partner with companies, large and small, to build scalable, capable workforces that change and adapt as business and markets evolve.


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