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Generative AI Key to Improving HR Efficiency

As companies face significant uncertainty, including the potential for stalled global economic growth, high interest rates, and possible labor and skills shortages, HR teams expect to feel increased pressure, including a growing workload and the need to enable the success of business stakeholders, according to a new survey from The Hackett Group. HR leaders also see generative AI and other technologies as key to improving efficiency and effectiveness.  

In 2024, developing effective leaders remains the top priority for HR, marking its second consecutive year in the top spot, according to The Hackett Group. The need to create and maintain a high-performing organizational culture climbed three spots in 2024 to become priority No. 2. As organizations navigate these priorities, it is crucial to recognize the emerging need for HR business partners to incorporate leadership coaching at the highest levels. The Hackett Group’s research recommends that organizations carefully deliberate on how leadership development is integrated into the broader HR operating model. Considering these trends, the research calls for HR organizations to take proactive measures to align workforce planning and strategy with business planning, and enhance the experiences of employees, managers, and candidates–both critical considerations newly introduced to the top 10 priorities list for 2024. 

While HR workload volume is expected to rise by 7%, cost reduction is also a focus. The research finds that both HR operating budgets and staff are expected to drop slightly in 2024, creating significant efficiency and productivity gaps. Technology spending, which is expected to rise by 4%, is one way HR organizations are hoping to bridge those gaps. More HR work will also be apportioned to fully automated and self-service systems’ functionality, and HR executives expect global business services and HR shared services units to handle 3.5% more work, while centers of excellence, corporate HR and business unit HR will see over 2% increases in overall workload. 

The research recommends that HR organizations explore generative artificial intelligence (AI) as part of their HR operations digital transformation efforts. Although adoption is still maturing, generative AI has huge promise. Our recent research found that generative AI could yield a 40% reduction in selling, general and administrative (SG&A) costs and a 40% reduction in SG&A staff over the next five to seven years. The research found that 41% of HR organizations have implemented pilots or small-scale generative AI deployments, and a 7% growth rate is expected in 2024–higher than any other emerging technology.  

As Harry Osle, principal and global HR advisory practice leader at The Hackett Group, says, “HR organizations are placing increasing focus on using technology to improve efficiency and productivity, with a 19% growth rate expected in the adoption of cloud-based human capital management applications and significant growth expected in adoption of HR point solutions, generative AI, and agile orchestration.”   

“Adoption of emerging technologies enabled by AI is picking up, albeit at a smaller scale for now,” Osle continues. “As part of their digital transformation efforts, HR organizations are already cautiously trying out generative AI, particularly for low-risk activities such as answering common HR-related questions, chat-bots and creating consistent job descriptions. But the areas where generative AI will be used to streamline HR are numerous and include talent acquisition, onboarding, learning and development, employee engagement, and communications, which will free up HR resources to expedite strategic initiatives aligned to business needs. The effect is going to be tremendous.” 

The Hackett Group’s research is based on results gathered from more than 375 executives in finance, procurement, supply chain, HR, information technology, and GBS at a global set of midsized and large enterprises. 

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