Generative AI’s Potential to Dramatically Increase HR’s Impact

Depending upon a company’s culture, HR can fall anywhere on a spectrum: from a transactional half-starved stepchild of G&A to a strategic force shaping an organization’s future.  With compliance requirements ever-increasing, and HCM cloud migrations consistently over budget and under delivered, and a raft of crises the last 5 years running, the obstacles preventing an HR team from truly leading business strategy can sometimes seem insurmountable.

And so the promise of HR Transformation, where HR truly aligns people, strategy and technology to achieve business objectives has been …elusive.

But as brilliantly shared in “The Coming Wave” by Mustafa Suleyman, Gen AI is not going to wait for us all to be ready and is unlikely to be contained.  The wave has already begun breaking in our personal lives, in our politics, and in our entertainment, and as McKinsey observes, it will soon have a material impact on our companies, our employees and our stakeholders.  Specifically, McKinsey’s research suggests a material change is coming both in a company’s number of employees and a company’s need to reskill their employees as Gen AI fully permeates the workforce.

So who should be anticipating this wave, who should be replanning the composition of the workforce and executing on the human and cultural transformation required as Gen AI becomes mainstream?  Ironically, research by even the most esteemed companies remains silent on this topic of reimagining the workforce and “jobs to be done” in a near-future world of bountiful AI.

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So, I’ll walk out on a limb with a pronouncement: I think the CHRO must lean into this transformation on behalf of the whole company, and not simply reactively enable functional leaders as they experiment and explore.  Because this AI wave is not going to just impact the Service department (where there is general consensus that we’ll see a dramatic impact in employment and reskilling), but every single department.  Every employee will need to adapt, and the culture will need to adapt. And thus the CHRO should be accountable.

Of course the CHRO must transform their own department, lead from the front, and begin ethically adopting Gen AI across their entire service line: Strategy & Planning, Recruiting & Resourcing, Shared Services, Comp & Benefits, Learning & Development, Performance & Career Management, all the way to Engagement and Employee Relations.  BCG has research suggesting where the greatest gains are to be had for HR with Gen AI, so there is a map readily available to be considered.

But the CHRO needs to rapidly escape this silo of the HR department, and sit at the center of this conversation for the company, leading the strategy on resource allocation and skills alignment, weighing in on the roles that will become obsolete, how to engage employees and and surfacing with line of business leaders the skills the organization will need as the landscape of the workforce changes.

When you consider that labor costs can account for upwards of 70% of total operating costs, HR is under more pressure than any other team to impact business outcomes. The team sits on mounds of data that provide insights into an organization’s biggest investment, yet that data has been largely siloed, and not applied in the most efficient way to unlock improved output, efficiency and growth in corporate performance. Thanks to Gen AI, we are at the precipice of a new age of HR, one where people insights are democratized—delivered to the right people at the right time to make better decisions about people and the work they do.  Not unlike how the CFO governs the responsible allocation of financial capital, the CHRO must lean in to drive the reallocation of human capital in a world of Gen AI.

So what might great look like for a CHRO in a GenAI powered world?  How would they prosecute their mandate, and how might GenAI support the transformation?

Leader and manager effectiveness is already the top priority for HR leaders in 2024, according to Gartner. So, it’s intuitive that the CHRO would begin with, “How can I make our company’s managers more effective with GenAI?”  In a McKinsey survey of middle managers, 86% of respondents said coaching employees and 56% said developing talent are the top two ways they add the most value to the organization.  Indeed, Visier’s own market research shows that 87% of managers interviewed agree that Gen AI tools will help them be better managers. With Generative AI, managers can have direct access to critical insights about their direct reports and other information pertinent to their role, such as how their team compares to the broader department or relevant financial goals like revenue targets. By equipping managers with access to insights about their team’s strengths, weaknesses, and potential, managers with GenAI’s help can design personalized growth plans that develop individual employees and also bolster the team’s collective expertise and performance.  Managers can also be coached by the GenAI to be ever vigilant on their at-risk talent, by having the GenAI tell them which of their top performers are reporting to ineffective managers, for example.

And the really audacious CHROs won’t stop at empowering every manager in the company – they’ll want to impact every employee in the company.  Employees are increasingly using generative AI tools like ChatGPT, Midjourney, and DALL-E to draft work emails, create graphics, schedule project milestones, and write lines of code. But with the CHRO’s support, GenAI could also be the personal coach to every employee, nudging them to ever higher performance, delivering real-time insights in a way that just hasn’t been possible or scalable to date.

And maybe, just maybe, by leading this corporate transformation with GenAI, the CHRO assumes their rightful place as the maximizer of people, strategy and technology in achieving business outcomes.  We will realize far more of our human potential by delegating the repetitive and the mundane to GenAI, so that we can focus our time and attention on our people executing our strategy.

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