Bain survey finds HR departments at large companies are embracing AI

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• The vast majority of human resources departments at larger
  companies plan to significantly increase their tech spending in
  the next two years, consulting company Bain found in a new
  survey.
• Much of that investment will go to artificial intelligence
  technologies.
• Some HR departments are already using AI and related
  technologies for things such as workforce planning and
  performance management, Bain found.
• But many HR departments are still relying on older processes,
  including paper forms, and most have had trouble getting the most
  out of the technology they’re already using.

Many corporate human resources departments are such technological
backwaters that they still rely on Excel spreadsheets or even
paper documents for many of their tasks or services.

But the vast majority of HR departments expect to make a quantum
leap in their IT systems in just the next two years, with many of
them embracing artificial intelligence to help with their
functions, according to a new study from consulting firm Bain.

“HR departments are rapidly adopting new technologies,” Michael
Heric, a partner with Bain’s Performance Improvement practice,
said in the report.

It warned, though, that “the appetite of HR leaders for more
digital tools may outpace their ability to absorb the tools.”

For its survey, Bain polled human resource executives and
managers at 500 large companies in the US, Germany, and the
United Kingdom. The companies, which each have more than $500
million in annual revenue, including both publicly traded and
privately owned organizations and represented a broad range of
industries from manufacturing to retail to healthcare.

Some HR departments still rely on paper forms

Many of the HR departments are still relying on older processes
for many of their services. Depending on the service, somewhere
between 23% and 31% of such departments still rely on manual
techniques, such as entering data into a basic spreadsheet or
relying on paper forms, the study found.

For example, 31% of HR departments surveyed still rely on manual
processes for career management of employees. Some 27% rely on
such techniques to manage compensation and benefits. And a full
quarter of HR departments even use manual processes to handle
their payrolls.

Bain

HR professionals expect to dramatically reduce their reliance on
such outdated techniques and processes within the next two years,
according to Bain’s study. By then, just 7% expect to be using
manual processes for career management or compensation and
benefits. And just 2% expect to be using such techniques for
their payroll.

Many departments are planning to up their tech spending
significantly in the next two years to replace or upgrade older
systems and processes. Some 57% of the HR leaders surveyed expect
to increase their department’s IT budget by between 1% and 10% a
year during that time period and a full quarter of them expect to
their annual budgets to go up by more than 10%.

Bain

Much of that investment will go toward artificial intelligence
and related technologies, according to Bain’s study.

The HR departments at most of the companies surveyed already have
bought into AI. Some 54% said they’re using artificial
intelligence in at least one of their functions. The most popular
places where they’re using it is in workforce planning and
performance management.

Bain

Some companies surveyed are already seeing success from using the
technology. Unilever, for example, is using AI to help with
screening job candidates; the technology has helped cut the
average time it takes to hire new people by 75%, according to
Bain.

“Artificial intelligence in all its forms … has already
demonstrated promising results,” Heric wrote.

Many plan to invest in AI

Other companies who haven’t yet invested in AI expect to do so
soon. Some 24% of the HR leaders surveyed said that while they
aren’t using AI yet, they expect to be using it in at least 1 of
their processes within two years. By then, majorities of those
surveyed expect to be using the technology in workforce planning,
performance management, compensation and benefits, and learning
and development.

But the rapid adoption of AI and other digital technologies, such
as cloud services, could cause problems.

As Reuters reported this week,
Amazon had to shut down an AI recruiting tool it had built
because they found the technology had emulated the unconscious
bias in certain people and was discriminating against women
candidates for engineering jobs.

And, as Bain noted, many HR departments have already had trouble
integrating new high-tech processes into their operations. Some
three-fourths of respondents said their tech systems have not
reached “optimal performance.” Meanwhile, many expressed
frustration with having too use too many digital tools; having to
work with too many different data source, which frequently
weren’t connected together; and having to try to figure out how
to use confusing interfaces.

“HR executives may be overconfident in how quickly they can make
the shift [to AI and other new technologies], given how rocky the
road has been so far in most HR departments,” Heric wrote.

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