Is it necessary? A framework for assessing the utility of A.I. in HRM practices

Abstract

Artificial Intelligence is expected to be a value-adding intervention in HRM processes; however, there is still a large gap between its perception of value-addition and its actual utility. In this article, we utilize transaction cost and resource-based views to build a framework to assess the suitability and potential adoption of AI-based tools in specific HRM processes. AI-based tools add value when they streamline operations and bring efficiencies by automating repetitive tasks. The transaction cost view in our framework assists in assessing the value created. Also, the resource-based perspective assists in understanding how AI builds the strategic capabilities of HR. We first review articles that look at the current state of AI literature. We then apply our framework to four critical HRM processes – recruitment and selection, performance management, training and development, and compensation and benefits. Based on our framework, we then develop propositions. Our propositions act as a roadmap for the strategic adoption of AI tools, ensuring smoother integration with existing HR processes. Our study adds to the HRM literature by providing a structured analysis of AI's impact on HR processes. We conclude by highlighting emerging issues that need future attention from practitioners and scholars.