The Evolution of Data-Driven and AI-Driven HR
The pulse of any organization lies not only in its products or services, but also in its people.
At the heart of employee management, development and retention is human resources (HR), a function that has grown far beyond its rudimentary beginnings.
HR now acts as a compass, guiding businesses through the changing landscape of the corporate world. Based on my new book’Data-Driven HR: How to Use AI, Analytics, and Data to Improve Performance» (2nd edition), let’s explore the evolution of HR by focusing on its past and present and also providing insight into what lies ahead in the future of work.
The beginnings of HR
The late 19th century was a time of enormous technological and societal change, driven in part by the Industrial Revolution. Industrialization accelerated at an unprecedented pace and many previously manual processes became mechanized, radically changing people’s daily work.
Business owners, now in charge of large workforces, hired people to manage employee relations, leading to the birth of HR departments. Initially, HR was responsible for “personnel management”, including basic administrative functions such as maintaining employee records and managing salaries (as opposed to taking care of people).
HR departments of this era were primarily reactive, dealing with problems as they arose rather than developing proactive strategies for better working conditions or employee satisfaction. There was little anticipation of employee needs or wants. The main concern was to ensure the smooth running of operations.
During the Progressive Era – a period of social activism aimed at overcoming poverty, corruption and labor exploitation – human resources focused on managing employee relations and handling grievances. Human resources professionals were also responsible for ensuring that organizations complied with labor laws.
In the 1960s and 1970s, HR began to focus on organizational development and strategic planning. Human resources professionals have worked to align their departments’ practices and processes with their organization’s goals.
In the 1980s and 1990s, HR continued to evolve. Human resources departments have begun to view employees not only as “staff” but also as valuable human resources that can contribute to the overall success of the organization. During this time, we have seen a greater emphasis on performance management and employee development.
The adoption of HR information systems (HRIS) has also allowed HR professionals to access large amounts of data and automate typical HR functions such as record keeping and benefits administration. This has paved the way for a new era of data-driven HR.
HR in the digital age (21st century to today)
In the early 2000s, talent management systems enabled organizations to better track and manage employee performance and development. Through these systems, HR professionals had access to sophisticated data analysis tools that allowed them to make more data-driven decisions regarding talent management.
The introduction of Big Data has gone even further, evolving HR into a more data-driven function. With the ability to collect, analyze and interpret large data sets, HR departments could gain deeper insights into employee performance, satisfaction and engagement. This has paved the way for predictive analytics, allowing HR professionals to anticipate problems and proactively resolve them.
At the same time, digital innovations such as artificial intelligence (AI), machine learning, people analytics, blockchain and virtual reality (VR) have begun to redefine the HR landscape. AI and machine learning have automated mundane tasks and helped HR teams personalize learning and development programs, while people analytics have offered a magnifying glass on workforce trends work and behavior of employees. At the same time, blockchain has improved data security and virtual reality has created immersive and realistic training scenarios.
An unforeseen challenge – the COVID-19 pandemic – has continued to push the boundaries of modern HR. The transition to remote work required a massive adjustment to human resources practices. HR professionals have had to innovate to keep distributed teams engaged, productive and mentally healthy. This change, difficult as it may be, has broadened HR’s horizons and cemented its importance in managing modern workforce dynamics.
The evolution of HR: reflecting on the past, preparing for the future
Over its decades-long evolution, human resources has become an essential strategic function for organizations of all sizes.
HR has moved from managing employee needs and shaping organizational culture to leading digital transformation and introducing data-driven decision-making. As the HR field continues to evolve, harnessing the power of data will be paramount.