The HR department of an organisation plays a critical role in driving business growth and development by managing talent acquisition, employee wellbeing, and workforce growth and development. In recent years, the human resources (HR) field has undergone a significant transformation with the integration of artificial intelligence (AI) technological tools. Performance management is one area that generative AI has had a serious impact.

Generative AI uses the power of machine learning abilities and deep learning algorithms to create high-quality content in such a way that it will be difficult to differentiate it from content generated by humans. A recent survey reveals that 76% of Human resources managers believe that if a company does not adopt generative AI tools in the next 12 to 24 months, they will be left behind.

Generative AI has found its way into various HR functions such as recruiting, payroll, talent performance management, and more. Gen AI is now a crucial part of performance management. 

Let’s understand how HR is using generative AI in performance management.

How HR is leveraging generative AI in performance management 

Generative AI has transformed the way employees receive feedback and training. With chatbots or virtual assistants powered by artificial intelligence, HR professionals can provide real-time feedback and training to employees. Performance appraisals used to be subjective and time-consuming processes. 

Generative AI can largely automate performance reviews. With its algorithms, AI analyses performance metrics of employee, feedback, customer reviews, and peer feedback to produce detailed and unbiased performance reports.

Within a twinkle of an eye, generative AI algorithms can analyse large quantities of employee data to identify patterns and trends. This will enable HR departments to make decisions that are data-driven regarding talent performance management. Within a twinkle of an eye, generative AI algorithms can analyse large quantities of employee data to identify their patterns and trends. This will enable HR departments to make decisions that are data-driven regarding talent performance management.

Generative AI like ChatGPT makes it easier for personalised development creation plans for employees dependent on their performance reviews. For instance, AI algorithms can suggest targeted training programs, courses, or mentoring opportunities. It achieves this by analysing individual career aspirations, strengths, and weaknesses. 

Unconscious bias is one of the prevalent challenges confronting performance management in HR. Generative AI as a smart digital tool can help prevent bias by proffering objective and well-informed insights. 

Performance data analysis without biases can identify patterns and trends human evaluators might miss. Generative AI in performance management can greatly boost employee engagement and satisfaction. It can offer employees performance statistics and insights on areas for improvement.

How HR managers can use generative AI to cultivate better talent

Generative AI can help HR managers become more effective by providing insights into their talent pool, identifying skills, and pointing out loopholes. These insights enable managers to enhance employee development, recognize achievements, automate check-ins, suggest skill development areas, and align employees' career goals with opportunities. However, relying solely on generative AI to assess strengths, weaknesses, and relationships is flawed, as AI can make mistakes. 

The power of combining human intuition with generative AI is quite crucial. This partnership should be led by humans responsible for people management. AI doesn't replace the human element in performance processes but enhances it by automating administrative tasks. 

Managers can gain a complete view of employees' contributions without sifting through incomplete data. This allows managers to focus on understanding data, receiving recommendations, and making informed coaching decisions. A manager's emotional intelligence is irreplaceable, and generative AI provides timely insights for meaningful conversations.

Gen AI is becoming essential in HR and beyond because it handles repetitive tasks quickly and accurately, boosting productivity. However, the benefits of AI must be weighed against risks like leaking of information, unknown sources, copyright issues, plagiarism, reduced human interaction, lack of critical thinking, uniform content in performance reviews, and unconscious bias. 

Effective change management is vital for generative AI adoption, including communicating benefits and risks. Leaders should anticipate potential issues and establish guardrails for governance, privacy, and security. Without a solid change management plan, organisations may struggle to implement AI technology effectively.

Generative AI's areas of improvement

Generative AI algorithms rely on the quality of the data they are trained on, therefore, organisations must ensure this data is accurate and free from bias. Regular audits and continuous monitoring can help maintain accuracy and fairness. 

Leaders must create clear guidelines and frameworks for the safe use of Gen AI in the workplace. Proper infrastructure and processes protect sensitive employee and company data, especially in performance management and goal-setting, which often involve proprietary and financial information.

Employees may resist the introduction of AI in performance reviews. Leaders need to be transparent about the purpose and benefits of generative AI. Training employees on the acceptable use of generative AI and its impacts is essential. Diverse representation in the datasets is crucial to reduce bias in the algorithms.

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• Women face hurdles in reaching senior AI roles - How can this change?

HR must guide AI use in performance management

HR, managers, and employees can use these generative AI tools to reduce busy work, allowing more time for mentorship and supporting personal and company goals. Nevertheless, a lot of challenges exist.

HR must establish a system for AI in performance management. This system includes teaching when and how to use generative AI without privacy concerns and how to prompt it correctly, with ongoing training as technology evolves. This approach empowers workers to use AI safely and accurately, benefiting employees, managers, and the company.

If you have any queries, want to pitch your story, or share feedback on our content, please feel free to reach out at samriddhi.s@gopeoplematters.com. We look forward to hearing from you!