The billions of dollars that investors have poured into AI startups over the past 18 months reflect more than just optimism about future enterprise demand. That demand is already here, and the data indicates it’s growing quickly. Many enterprise machine learning projects are still in the pilot stage, but AI-powered software is already finding its way into the hands of professionals across core business functions such as finance and HR.

The role of AI in the HR department was a focus of an expansive market study published on March 19 by Randstad, the world’s largest talent services provider. The survey was commissioned by the company’s Randstad Enterprise business. The 2024 Talent Trends Report draws on survey responses from over 1,000 C-Suite executives and talent leaders, which amounts to one of the most comprehensive looks yet at how AI is reshaping the way companies manage their HR operations.

Boardroom Insight caught up with Sam Schlimper, the managing director of Randstad Enterprise’s advisory group, to dive into the numbers. We learned more about the business considerations that are leading HR teams to prioritize AI in their IT budgets. Looking beyond technology, we also zoomed in on several of the other trends and challenges that are shaping talent leaders’ decision-making this year. 

Tracking AI adoption in the HR department 

Earlier research suggests the adoption curve of generative AI is growing at a faster clip than many earlier enterprise technology trends. Based on Randstad Enterprise’s newly published data, HR is one of the areas where that momentum is coming to bear. According to the 2024 Talent Trends Report, the number of talent leaders investing in two popular AI-powered HR automation use cases more than quadrupled over the past year. 

Boardroom Insight: The survey responses showed the percentage of talent executives investing in AI search and match rose from 14% to 66% in a year, which is quite the increase. In terms of the productivity impact, how is AI helping HR teams move faster?

Sam Schlimper: AI accelerates HR processes by automating time-consuming tasks and augmenting, in many instances through data analysis elements. We still see that humans are in the driving seat, and most organizations have this as a principle, so AI is not making decisions.

This automation, along with the use of Generative AI to produce written materials required in talent acquisition and management, enables HR teams to focus more on strategic and human elements like candidate engagement and relationship building throughout the talent lifecycle and more in-depth work like adopting skills-based practices, work design and mobility changes. 

It also frees up time, which is a key aspect to consider when considering where this capacity should and could be spent. HR teams are not only moving faster but also more effectively, with AI streamlining the recruitment cycle and enhancing overall work planning capabilities.

Boardroom Insight: The report found most of the surveyed executives believe AI is “capable of finding needs and gaps within their workforce.” How can AI help in these areas?

Sam Schlimper: AI helps identify workforce needs and gaps by analyzing vast datasets on performance, skills, and employment trends. Combining the ability to look at internal data sets with external market information widens the intelligence and outputs provided. Through predictive analytics, it forecasts future skill requirements and identifies existing skills within the organization. 

Machine learning algorithms can detect patterns and anomalies in employee skills, productivity, and development needs, suggesting areas for upskilling or reskilling. AI-driven tools also match internal talent to emerging roles, highlighting gaps in the current workforce and informing strategic hiring to fill those voids. By providing real-time insights and actionable intelligence, AI enables executives to make informed decisions on talent management, workforce planning, and development strategies, ensuring the organization remains agile and competitive. 

We find organizations are at varying maturity levels, and there is a wide range of approaches and progress on this journey. There is much to learn still.

Skills ontologies and the talent gap

Besides the state of AI adoption in their teams, Randstad Enterprise also asked HR leaders about their other priorities this year. The survey provides an update about the oft-discussed skills gap, which appears to be widening rather than narrowing at many organizations. Schlimper explained what steps companies can take to address the challenge. Skills ontologies, information repositories that HR teams use to track the internal expertise available to their organization, also made an appearance.

Boardroom Insight: Skills ontologies are another resource increasingly showing up in HR orgs’ toolboxes. What role do they play in recruiting with regard to the challenges they address?

Sam Schlimper: Skills ontologies are not new but are a key component of moving towards a skills-based organization. They’re particularly useful for talent teams because they provide a frame for skills to be used across the talent lifecycle. 

Skills ontologies prioritize skills over credentials and help bridge the skills gap, strengthening the organization’s competitive edge. Crucially they can also reduce biases and broaden the talent pool removing artificial barriers to hiring, promotion and mobility, thereby offering a pathway for diverse candidates who might fall foul of traditional hiring approaches. When used to support internal mobility, the work to map existing skills within the organization promotes career advancement and retention. 

Not all ontologies work in the same way, and an HR team needs to ensure it isn’t just a tickbox exercise towards skill-based hiring, generating the same results in a different way. They should also be cautious about thinking that technology alone will move them to getting results.

Boardroom Insight: Another data point that stood out is the 72% of leaders who said their orgs don’t merely have a skill gap but that this skill gap is widening. How can a company and its external talent services partner go about tackling this challenge?

Sam Schlimper: What we’ve seen being done isn’t going far enough. Greater investment in continuous learning and development programs to upskill and reskill existing employees is required. This will, in turn, enhance their capabilities to meet evolving business needs.

Simultaneously, they should leverage data analytics to identify skill shortages and forecast future requirements precisely. We have also seen that adopting a skills-based hiring approach can also widen the talent pool by focusing on competencies rather than just credentials. However, this alone doesn’t fix the skills gap as it requires hiring managers to nurture talent that has potential but not credentials or experience. In the early careers area, more can be done by fostering partnerships with educational institutions and utilizing apprenticeship programs to ensure a steady influx of talent equipped with the necessary skills.

While these steps can effectively narrow the skills gap, positioning the organization for future success, we are in the midst of testing economic times globally, and history shows talent is less likely to switch roles, preferring for stability. In saying this, talent still feels the same, and those organizations that listen, understand, and act with talent in mind, despite economic conditions, will have a strong competitive advantage.

The research

Randstad Enterprise says this year’s Talent Trends Report, the ninth published to date, was the largest ever. The company surveyed 1,076 C-suite and human capital leaders across 21 markets. The participating executives were surveyed online via external panels held in the fourth quarter of 2023.

text

text