Human resource (HR) management constitutes a vital part of every business. Yet, HR operations have traditionally been highly manual. These manual tasks are monotonous and prone to errors. With the advances in AI and automation technologies, HR functions can increase their level of automation and the processes can be handled more efficiently improving employee satisfaction. Gartner shares that 17% of organizations use AI-based solutions in their HR function and another 30% will do the same in 2022.
What is HR automation?
HR automation is the process of increasing the productivity of HR departments by saving them from tiresome manual tasks and enabling them to concentrate on higher value-added tasks such as decision-making and strategy. By automating repetitive tasks, HR management professionals can capture, create, and update data and streamline various HR tasks for employees. This will help businesses to be more productive, rules-driven, and streamlined.
Which HR processes to automate?
Finding the best candidate for a job is a combination of routine tasks and strategic decisions. For example, screening resumes is a time-consuming task that can be done more effectively with automation. With HR automation, businesses can leverage AI to select suitable candidates from online pools. This allows human effort to be spared for tasks involving judgment calls.
You can read more about automating HR recruiting in our related article.
Onboarding includes substantial paperwork, signing contracts, completing benefits paperwork, and other required duties. The processing time for all the different documents needed can be reduced to a few hours rather than a week with solutions offering paperless onboarding processes1. This helps to ensure that newly recruited workers receive the appropriate equipment and system access grants promptly.
3. Time tracking for part-time/temporary workers
Validation and monitoring of each worker’s schedule can be a very time-consuming and inefficient job. By automating related data collection and validation, this process can be handled much quicker. HR automation tools can automatically review timesheets, provide insights like overtime working hours, and streamline approvals to manage payroll processes. American Cedar & Millwork shares that its HR department reduced time spent on time tracking by more than 75% with an HR automation solution2.
4. Performance Management
Maintaining employee performance records by receiving inputs from 360-degree feedback surveys and evaluating KPIs is a time-consuming task that involves sensitive information. Automation would
- save time for employees
- minimize data aggregation mistakes
- ensure that sensitive information is touched by as few people as possible
- take proactive action. For example, in case of low performance, these systems offer automated alerts and action plans which are predefined by managers.
Mazars, a global professional service provider (audit, accountancy, tax, and legal services), saved hours in completing the tedious and repetitive task of attaching performance review documents and emailing them to several managers by an HR automaton solution3. The solution enabled the company to track performance measures in real-time, enabling Mazars to have a full understanding of its workers’ KPI measures and act faster in case of declines in their performance.
5. Travel & Expenses Management
Travel & expenses management was a frustrating task before automation. Users had to go through piles of documents along with many Excel spreadsheets. The whole procedure needed to be repeated for any expense report, no matter how small it might be.
With automation tools and document capture tools, companies can track these costs by collecting travel receipts and verifying that they comply with the related regulations. As a result, the risk of accounting and compliance errors decreases, and employees can save time for higher value-added activities.
Check our article on travel & expense automation for more.
6. Leave Management
Manually calculating and approving leave requests is difficult, as the HR department must review the balance of leave, receive the approval of the manager, and record the leave for payroll calculation. This time-consuming procedure also makes it difficult for the HR management and staff to accept leave requests on time.
With automated leave approval systems, HR automation of leave management can help secure approvals quicker while also enabling employees’ leave records to be updated instantly. This will help companies monitor, handle, and authorize employee leaves much more efficiently.
When the employee is dismissed, the employee termination documents must be obtained and processed, the return of the equipment must be monitored, and action must be taken to ensure that the workers terminated will no longer receive pay and benefits. HR automation systems can bring a standardized and automated workflow to this process. Automation of the off-boarding process can make it much easier to complete all of these procedures and help avoid disputes that could cause legal problems.
8. HR Analytics
HR departments deal with large quantities of data from their wide range of responsibilities. Although it might not be hard for small companies, maintaining all employees’ data and creating insights from company data can be a great challenge for larger companies. HR automation can automatically collect KPI measures and relevant data to provide powerful insights for HR departments rapidly and reduce the chance of data loss or manual data entry errors.
How does automation help HR?
The main HR automation benefits reported by different companies include:
- streamlined efficient processes
- more accurate insights for better decision-making
- effective records management
- better resource allocation
- improved productivity
- consistent operations across locations.
What are the main challenges of HR automation?
According to Gartner, there are three main challenges for companies to implement AI and automation powered solutions in their HR processes.
1. Funding AI initiatives
Assessment of AI benefits is a big challenge for HR professionals. While some benefits like productivity or time saved can be measured easily, evaluating the impact on the employee or candidate experience is hard. To fund AI initiatives, businesses need to address critical challenges like improving data-based decision making, accelerating the employee experience or driving process efficiency.
2. Security and privacy concerns
As HR automation solutions collect large amounts of structured and unstructured data, they create ethical concerns about their reliability. These solutions need to be able to explain how they arrive at these decisions and how data is used to avoid brand and reputation risk.
3. The complexity of integrating AI into existing in-house infrastructures
Current AI and automation solutions for HR are mostly specialized, limited and singularly focused. Thus, these solutions are generally more complex and harder to integrate into existing IT infrastructures. Businesses need to evaluate these solutions carefully and should keep in mind that they might be replaced with integrable solutions when they are available.
How to assess HR automation vendors?
There are many automated HR systems available on the market today. When investigating a suitable system, you should ask for a demo of the software and its features. To check if a solution is suitable for your company’s HR processes, you should have answers to the following questions:
- Does this solution satisfies all my needs: You need to be sure that the solution fulfills all your HR needs. Thus, you should know if the solution is customizable to your needs. However, don’t forget that customization may cause higher costs. The needs of a company may include:
- Actionable insights generation for better and faster decision-making
- Omnichannel access
- Fully visible HR processes for auditing
- Automated alerts to keep employees on track and complete tasks on time
- Automated workflows that are in line with every HR process. We listed the relevant processes at the beginning of the article.
- What systems does the solution integrate with and how easy is it to integrate: You may have already been using different systems to manage your HR processes. This solution may need to work with those existing systems, or you need to choose an HR solution that handles many key HR modules. Integration of these systems might not be easy: it may require a large-scale data migration, or you can pay extra to a specialist for integration.
- Is your solution scalable: As vendors are keen to scale up, they might be unsure of scaling their customers down. The agreement should work in both ways, but vendors might not provide this option without being asked.
Which are the leading HR vendors?
After understanding what HR automation is and identifying your needs, you can start looking for HR automation vendors to handle your processes.
You can also check out our data-driven lists of HR solutions to find the option that best suits your business needs:
And if you have questions about how to automate HR processes of your business, don’t hesitate to contact us:
Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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