HOW ARTIFICIAL INTELLIGENCE IS TRANSFORMING HUMAN RESOURCE MANAGEMENT?

Authors: Gala Šikoparija, Jelena Ćulibrk, Bojana Jokanović, Nenad Medić

Abstract

Traditional procedures, manual processes, and intuition are no longer sufficient for navigating the
complexities of modern, dynamic workforce management. Artificial Intelligence (AI) is increasingly
applied in human resource (HR) management due to its immense potential to enhance business
operations and create new value for consumers, employees, the environment, the community, and
companies themselves. Continuous research in this area, which remains limited in Serbia, could establish
the groundwork for HR development and training methods. Globally, significant attention is given to this
topic, underscoring its relevance and importance within management. The application of AI has a
substantial impact on company growth and development, achieving greater effectiveness, efficiency, and
innovation—provided it is used properly, ethically, and with the necessary understanding and
knowledge. Otherwise, as in all fields, improper use by individuals lacking adequate expertise and
creativity can lead to misuse or harmful outcomes.

The application of AI in HR management has been minimally examined and analyzed in Serbian
theoretical and practical contexts. However, interest in studying the development of HR management
through AI implementation is growing. This paper aims to raise awareness among HR managers and
other employees in Serbian companies about the significance of applying AI in HR management across
all its phases, from recruitment to employee development and talent retention.

Keywords: human resource management, artificial intelligence, company, employees.

1. Introduction

Human Resource (HR) management encompasses activities related to managing people within
organizations, including planning, recruitment, selection, training, leadership, career development,
employee motivation, performance evaluation, rewarding, and improving communication between
employees and HR departments. These activities aim to enhance engagement, foster creativity and
innovation, promote teamwork, retain talent, and provide organizations with a powerful tool to respond
to complex and dynamic environments while achieving excellent organizational results.
Managing human resources is more complex than managing technology or capital. Organizations
proficient in managing their human capital hold an advantage, as effective acquisition and development
of human resources is a challenging and time-intensive process. Broadly, HR management refers to any
approach to managing people. According to Dessler (2007), HR management involves policies and
practices focused on recruitment, screening, training, and career development within organizations [1].
Armstrong (2011) defines HR as a strategic, integrated, and coherent approach to the employment,
development, and well-being of individuals in organizations [2]. Boxall and Purcell (2011) describe HR
management as a process comprising activities related to managing employee relationships within
organizations [3]. Research predicts that implementing AI in HR will enable broader activity scopes and
methods, faster information flow and processing, enhanced motivation, creativity, and employee
efficiency. Consequently, this can significantly improve organizational efficiency and business success.
Modern corporations increasingly turn to AI as a partner in transforming HR functions to create more
efficient and engaged work environments. AI introduces a new dimension to HR, offering corporations
opportunities for efficient recruitment, improved talent retention systems, and enhanced workforce
engagement—ultimately resulting in a significant competitive edge. AI has rapidly become a part of
modern corporate strategies. For effective implementation, deeper understanding of AI is necessary.
Over recent decades, AI has become a key factor in transforming various industries, particularly HR
management. This transformation results from years of technological advancement and organizational
needs for efficiency improvement. The introduction of AI into HR dates back to the early 2000s, when
software tools first utilized basic algorithms to analyze employee data [4]. Pioneers like Thomas H.
Davenport and Josh Bersin highlighted AI's potential to improve recruitment, training, and performance
analysis processes. Their work laid the foundation for understanding how AI can help make better
decisions and reduce biases in HR processes [5, 6]. Davenport and Wendy A. Hochwarter’s 2019 study,
"Artificial Intelligence in Human Resource Management: Current Applications and Future Research
Directions," identified key areas for AI application in HR, including recruitment, development, and talent
retention [7].

Key developments leading to AI integration into HR include:

1. Growing data volumes on employees, analyzable via AI [8].

2. Demand for more efficient HR processes [9].

3. Desire to provide personalized employee experiences [10].

AI’s integration into HR marks a revolutionary shift, transforming how organizations manage their most
valuable asset—their employees. Early AI applications focused on recruitment and selection, automating
candidate searches, resume reviews, and scheduling [11]. Over time, AI expanded to other HR functions,
including:

Development and Training: Personalized training and development plans tailored to employee needs
[11].

Performance Management: Data-driven performance analyses to guide management decisions [11].

Modern organizations embracing AI witness enhanced efficiency, cost reduction, and increased
employee satisfaction. For instance, IBM’s Watson platform analyzes employee data to suggest career
development strategies, while SAP SuccessFactors optimizes recruitment and performance evaluation
processes [11].

2. AI in HR Activities

AI’s integration into HR activities signifies a transformation in workforce management, impacting key
areas such as planning, recruitment, selection, career guidance, motivation, performance measurement,
and rewards.

Planning

AI Application: Analyzing workforce data to identify patterns and inform workforce planning decisions
[8].

Current Use: Companies like Meta and Apple use AI for workforce planning improvements [9].

Effects: Enhanced accuracy in workforce forecasts, reduced planning costs, and improved business
results [8].

Recruitment

AI Application: Automating candidate search, resume screening, and interview scheduling [8, 11].

Current Use: Companies such as Google, Amazon, and Microsoft utilize AI for recruitment automation
[9].

Effects: Improved efficiency, reduced costs, and higher quality of hires [8].
Selection

AI Application: Assessing candidates to identify those best suited for roles [8, 11].

Current Use: Unilever and PwC enhance selection processes using AI [9].

Effects: Increased accuracy and objectivity in selection, lower costs, and better-quality hires [8].

Career Development

AI Application: Personalized career development plans for employees [11].

Current Use: Companies like Oracle and PwC employ AI for career development enhancements [9].

Effects: Improved learning and development opportunities, increased employee engagement, and better
business outcomes [11].

Motivation and Performance

AI Application: Analyzing engagement data to identify motivational factors [10].

Current Use: Tesla and Salesforce utilize AI to improve employee motivation [9].

Effects: Enhanced employee engagement and motivation, resulting in improved organizational

Rewards and Valuation

Current Use: Unilever and Deloitte employ AI for better reward systems [9].

Effects: Objective reward decisions, improved employee satisfaction, and alignment with corporate
goals.

Conclusions

AI is revolutionizing HR management, transforming recruitment, development, and retention processes.