Hiring the right person comes with a hefty price tag. A SHRM survey reveals an average cost of $4,700 per hire in the US, with experts suggesting it could be significantly higher.
Globally, the situation is just as concerning. A UK survey highlights the talent crunch, with one in every two organizations struggling to attract and retain skilled workers. The demand for these workers far exceeds the supply, leaving traditional HR methods strained and often falling short.
These challenges call for a shift in how HR operates.

The old-school reliance on CVs and rigid job descriptions is fading. Thriving organizations are focusing more on the actual skills needed to do the job and hiring (and reskilling existing employees) in a more focused way to suit their business needs.

This shift opens the door to disruptive solutions. One such solution is Artificial Intelligence. AI as applied to Human Resources offers a game-changing approach to staffing, streamlining processes and uncovering hidden talent.

The AI Possibility in HR

AI continues to reshape the entire HR landscape, and the possibilities are constantly evolving. From analyzing thousands of resumes to unlocking insights during interviews, AI is changing the game. This shift towards a more innovative, faster and fairer recruitment process is exemplified in two primary areas. Far from being just another trend, AI can transform how HR functions.

"Our research says that 50% of the activities that we pay people to do can be automated by adapting currently demonstrated technologies. We think it’ll take decades, but it will happen. So there is a role for business leaders to try to understand how to redeploy talent. It’s important to think about mass redeployment instead of mass unemployment. That’s the right problem to solve.”

Michael Chiu, Partner, McKinsey Global Institute (MGI)

Let’s explore some of the key areas where AI is having a transformative impact in HR:

AI-Powered Resume Screening and Matching

AI can analyze massive numbers of resumes with unparalleled speed, identifying skills and experience that align with specific job requirements. This uncovers hidden gems traditional keyword searches would miss, expanding the talent pool and reducing time-to-hire. For instance, a recent survey found that 54% of firms using AI reported seeing significant cost savings and efficiencies in their hiring process. Additionally, AI streamlines content creation; the average training video production time was reduced by a staggering eight days (62%) using modern AI tools.

Enhancing the Interview Process

Tools that analyze facial expressions, voice tone, and interview transcripts offer insights into candidate emotions and engagement. These answers cover more ground than the cursory questions asked in basic interviews. When it comes to remote interviews which are so common today, AI also ensures authenticity by verifying identity and enhancing security for both HR and candidates.

Learning & Development

AI creates personalized learning paths for employees based on their skill gaps. This gives each person more power and increases participation. AI-powered chatbots offer 24/7 support and knowledge sharing, creating a more accessible learning environment. AI integration in Learning Management Systems (LMS) is rising. This percentage, which is presently 47%, is projected to increase substantially over the next few years.

Performance Management

AI analyzes performance data, spotting hidden bias in reviews. This empowers managers to give more frequent, actionable feedback, leading to fairer evaluations. AI also helps HR identify high-potential employees early, strengthening their talent pipeline.

Predictive Analytics

AI analyzes workforce trends, predicts skill gaps, and uncovers hidden factors driving employee turnover. This eliminates guesswork and provides HR with actionable insights, enabling proactive, strategic decisions that enhance the organization’s health. Take for instance Xerox Corp. They used predictive analytics to combat high attrition in their call center. Debunking the conventional wisdom that focused on experience, AI revealed the surprising truth: personality traits were the key predictor of attrition. This insight led to a revamped hiring process, slashing attrition 20%.

While AI’s applications in HR are far-reaching, let’s delve deeper into two use cases that showcase its transformative power in the recruitment process. The use cases discussed next demonstrate how AI addresses long standing challenges, unlocking efficiency, fairness, and hidden talent pools for organizations.

Revolutionizing Recruitment: AI Use Cases

Use Case 1: AI-Powered Resume Screening and Candidate Matching

The Problem: Traditional Resume Screening is Broken

Recruitment professionals are inundated with credentials in the current competitive labor market. Many of the hundreds of applications that are submitted in response to a typical job posting do not satisfy the bare minimum requirements. In 2018, recruiters scrutinized each resume for an average of 7.4 seconds before determining a candidate’s fate, indicating that the pressure was enormous. Today, things are significantly worse.

This hasty procedure is laden with challenges:

• HR teams may miss out on appropriate talent with closely matching skills due to volume overload.
• Making Decisions When You’re Tired: Recruiters become exhausted by the sheer volume and experience “resume fatigue,” resulting in hurried or shallow judgments.
• In the haste of hiring, recruiters often give preference to individuals who fulfill traditional roles, which unintentionally reduces the number of qualified applicants
• The Deception Factor: A shocking 36% of applicants acknowledge to some degree of dishonesty on their resumes, weakening faith in the entire process.
• Exploiting the System: “Resume hacking” to circumvent applicant tracking systems (ATS) distorts the situation even further, possibly preventing the most qualified candidates from reaching the human recruiter.

How AI Transforms the Process

AI-powered resume screening isn’t just about automation; it’s about intelligence and uncovering hidden potential. Here’s how it works:

• Natural Language Processing (NLP): AI goes beyond keywords, analyzing language, context, and even skills expressed in different ways. This uncovers candidates who might be missed with traditional searches.
• Skills-Based Matching: By mapping a candidate’s true skills to the specific job requirements, AI highlights those with relevant experience, regardless of their job title or how their resume is formatted.
• Unconscious Bias Mitigation: Well-designed AI systems can focus on objective criteria like skills and experience, reducing reliance on factors that can lead to bias. This opens the door to a more diverse talent pool.

Real-World Examples

Siemens: AI’s ability to analyze candidate profiles, resumes, and online assessments offers the potential to streamline the initial screening process and efficiently match candidates with open positions. Siemens capitalized on this with their AI algorithms, emphasizing how the technology may identify qualified applicants who may not meet traditional search criteria.

Key Benefits

• Save Time, Reduce Costs: AI streamlines the initial screening, allowing HR to focus on the most promising candidates.
• Discover Hidden Gems: AI finds candidates who may not fit the traditional mold but possess the right skills and potential.
• Promote Fairer Hiring: By focusing on objective criteria, AI can mitigate bias and expand the pool of qualified candidates.

Use Case 2: Enhancing the Interview Process

The Problem: Traditional Interviews Have Limitations

While interviews are an essential part of the hiring process, they can be subjective and prone to biases. Even with structured interview questions, a candidate’s personality, demeanor, and communication style can overshadow their true potential. Additionally, in the age of remote work, video interviews make it harder to gauge a candidate’s authenticity and engagement levels.

How AI Can Help

AI-powered tools bring a new level of objectivity and insight to the interview process. Here’s how:

• Identity Verification: In remote hiring, AI-driven identity verification tools can confirm that the person being interviewed is indeed who they claim to be. This prevents fraud and ensures a fair process.
• Analyzing Nonverbal Cues: AI tools can analyze facial expressions, voice tone, and body language. While this shouldn’t be the sole factor in decision-making, these insights can help interviewers understand a candidate’s nervousness, enthusiasm, or potential discomfort with certain questions.
• Sentiment Analysis: Sentiment analysis tools examine word choice, phrasing, and tone of voice during interviews. This helps interviewers understand a candidate’s enthusiasm, confidence, and overall attitude. This provides objective insights for fairer evaluations, better feedback, and can even help tailor the interviewer’s approach for a more positive candidate experience.

Real-World Examples

A growing number of companies across sectors are adopting AI-powered interview tools. This includes:

• Domino’s: Their focus on AI analysis of facial expressions, body language, and word choice highlights how AI can standardize the process and potentially reduce human biases. Domino’s streamlined their hiring process significantly, making it a compelling example for companies with a large number of applicants (approx. 13,500 employees).
• Electrolux: Electrolux demonstrates the diverse benefits of AI, not only for candidate analysis, but also for application conversion rates, scheduling efficiency, and reduced time-to-hire. Their statistics paint a clear picture of success (approx. 51,000 employees).

Key Benefits

• Deeper Candidate Insights: AI aids interviewers in going beyond surface-level impressions, leading to better-informed hiring decisions.
• Enhanced Candidate Experience: By using AI to identify strengths, interviewers can tailor their approach, making candidates feel more understood.
• Promoting Fairness: Though it cannot eliminate bias entirely, AI can highlight patterns or tendencies in an interviewer’s behavior to encourage fairer evaluations.

Some call it magic, you know it is planning

History teaches us that technological change in the workplace often sparks both optimism and apprehension. The early days of HR tech were no different, with fears of job losses offset by the promise of efficiency and strategic focus. Yet, over time, the benefits of technology in HR became undeniable.

Today, AI marks a new chapter in this evolutionary tale. AI offers the tools to make this shift, streamlining processes, uncovering hidden talent, and reducing bias. Companies that embrace this potential will outpace their competitors by attracting top talent. As John Frémont, ex-Chief Strategy Officer, Hypergiant notes,

“What looks like magic to your competitors in five years is just your good planning.”

The future of HR is here, and AI is the catalyst for success.