Artificial Intelligence(AI) Meets Performance Management

Imagine a world where right kind of employee is chosen for the job at a fraction of cost what we currently incur to hire someone. Imagine a workplace where employees are able to work to their maximum potential and any problem which they face can be addressed in real time and the solutions be guided with volumes of data. Imagine a world where employees won’t have to face the dreaded year-end ritual of getting appraised by their seniors or peers. All this and much more is possible now with the power of AI.

The future of performance management is here as artificial intelligence meets performance management. Performance management is usually defined as the set of activities which ensures that the performance of employees, organizational department are in sync with the organizational goals. It is often thought of as performance appraisal but in reality, it is much more, an appraisal is just a part of it.

Bad Hire

We all remember John Sculley, the CEO who was hired by Apple in 1983 and who upon joining fired Steve Jobs. Sculley, before joining Apple was the President of PepsiCo. He was actually wooed by Jobs himself to join Apple. But in the end, it proved to be a very costly hiring mistake by Apple. The decisions taken by Mr. Sculley caused Apple to lose its stock value by 2/3rd and Apple had to downsize its operations and fire many employees to stay afloat.

This was an example of a bad hiring at CXO level. But even in lower levels, cost of bad hiring can be extremely expensive for the company. According to a CareerBuilder post, 41% of companies say that a bad hire in the last year has cost them at least $25,000, and 25% of companies say that a bad hire in the last year has cost them at least $50,000. According to United States Department of Labour, the cost of bad hiring could be as much as 30% of the salary of the hired employee. For a small firm, a couple of bad hires and the firm may find it difficult to remain profitable. And it is not just the immediate cost. There are other implications too, such as a drop in morale of the other employees and these things are hard to quantify.
But the good news is, now with the help of technology of artificial intelligence, companies have been able to reduce their bad hires significantly. Companies are known by the employees they recruit and they spend anywhere from $137.50-$557.50 on hiring each candidate. This cost is augmented by the training cost which is nearly one-third of the cost incurred in filling a vacant place. Most of the companies such as HUL hire young graduates from the on-campus process and they go on to lead the firms at the international level in positions of CXOs. This is the reason why the top management is closely involved in recruiting new hires so that they can judge the acumen of future CEOs. This drives the need for the recruitment process to be unbiased and uniform.

Hiring Process

Use of Artificial Intelligence by automating the screening process grades the candidates uniformly to match the qualifying criteria. It reduces the unconscious human bias since Artificial Intelligence can be tuned to ignore demographic related information about candidate’s age, sex, and race. A hiring manager can enhance his efficiency by automating redundant and time taking processes using AI such as CV screening, interview scheduling, and communication with candidates.AI can help assess candidates and speed up the time to hire without sacrificing quality of hire. For example, AI can turn a 15-minute video interview into a set of 20,000 data points on facial movements, intonation, and word choice to assess a candidate. Joey Price, CEO of Jumpstart: HR, a managed HR services provider, thinks AI will be most helpful in drawing insights from the millions of data points to discover models for an ideal fit for the company, reducing errors and minimizing compliance fines. Artificial Intelligence is not a leap forward anymore, as more managers understand its unique importance and adopt it. Alicia Shankland, Principal at Huntbridge, an executive search and consulting firm, envisions AI will give us insights that can open up entirely new candidate pools by identifying a diverse set of experiences, abilities, and mindsets that are better predictors of success.

Training and Development

HR departments all over the world always find the ways to train their staff, enabling them to earn certifications, cross-train and learn new skills. What AI-enriched software programmes bring to the table, is that they allow staff to engage in self-directed progress with their training, at their own comfortable pace. It allows for faster development by introducing rewards and incentives based on each employee’s profile. The focal point of such a training program is to achieve a measurable return for the business relying on it. Tests and quizzes developed with A.I. may extend beyond the basic question-and-answer format and may adapt themselves based on individual progressions and needs and therefore measure an employee’s engagement with the training program more intuitively and intelligently. This would increase employee enjoyment of the program, as well as the program’s capacity to teach.

Motivation and Retention

By mapping individual employee’s current skill set and what they require to develop further, using AI managers will be able to incorporate customised training programs and yield better from their teams. While most of the HR managers face that attrition is the major problem plaguing their investment of skill building, training and hiring investment in the employee, George Elfond, CEO at Rallyware, a workforce engagement platform highlights that AI-based learning technology have seen impressive results, such as a 32% increase in employee productivity and a 43% increase in employee retention. We have seen how human resource management is imbibing AI into their activities related to all stages of an employee’s career with the company and progress by leaps and bounds.

Performance Review

It is common knowledge that employees dread the year-end review and feedback. But a not so common knowledge is that even the companies aren’t satisfied with the current performance review management. According to a recent study as quoted in, only 6% of the companies felt that their current performance management processes are worthwhile. They are aware that the current processes are marred with the subjectivity of the evaluator and there can be possibilities of biases while reviewing. And hence it is often seen that employees are never satisfied with the feedback that they get in such reviews and organizational goals are not met effectively.

BetterWorks is an AI solution provider to problems such as performance reviews and goal setting. Its current clients include BMW, GoPro, AOL, Shutterstock etc. It works effectively by providing 360o feedback and performance measurement. Because it relies on hard data, and it considers way more variables which a human HR can process, there are absolutely negligible chances of biases creeping in. The good thing about it is, it provides the performance review in real time. So, if an employee is doing something really good and is achieving goals then he can be rewarded instantaneously which acts as a positive reinforcement. And in another case where an employee is not able to achieve goals then intervention too can be provided in real time so that it doesn’t get too late before the problem goes out of hand. Also, many employees feel motivated when they are able to see how their contribution helps the company in achieving the organizational goals. By deploying AI, employees will be able to see how even their minutest of actions are affecting the bottom line of the company.

The best thing about it is, since BetterWorks implementation, there has been greater satisfaction and acceptance among employees about their feedback as now they know that it purely based on data and it is a continuous feedback and doesn’t come as a shock at the end of the year.

While some leaders and human resources professionals in organizations are questioning whether sensitive data about workplace can be exposed to the software of Artificial Intelligence, the only risk with using AI and big data in performance management is the possible breach of data privacy which needs to be safeguarded. Because so much data is being collected for each employee, it brings upon the greater responsibility to ensure that this data is used only for the purpose it was intended to and be kept confidential at all times.

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