October 21st, 2024 – By Jeff Reid, COO & CPO of SkillCycle
Performance management tools can help you track and measure what’s happening in your organization. They can help you leverage AI to bolster your efforts to increase employee and company performance.
The biggest challenge is ensuring data accuracy and consistency. AI-driven insights are only as reliable as the data they’re based on, so you must ensure your performance management systems capture meaningful metrics.
It’s also important to remember that data alone isn’t enough. Managers must use data to spark conversations, exploring the “why” behind performance metrics. This balance between data and human insight is critical to maintaining a human-centric leadership approach, where numbers inform decisions but don’t always dictate them.
In this piece on AI and performance management tools, we’ll dig into:
Few of us feel comfortable with AI taking full control over decisions, such as performance ratings or promotions. It’s a fair stance given AI tools’ known limitations, and it’s wise for leaders to proceed with caution before handing over control in critical areas.
People at all company levels have understandable concerns about AI. After all, 72% of Fortune 500 CHROs have predicted that AI will replace jobs in their organizations over the next three years, according to Gallup.
However, missing out on AI’s potential isn’t the solution. The answer is to recognize areas where AI can enable you to do more for more employees — with more consistency.
For example, where AI truly excels is in synthesizing large volumes of data, providing insights, and fostering reflection. It can offer personalized feedback, suggest areas for improvement, and clarify the next steps in an individual’s development.
There are two key areas where AI can enhance performance management. The first, which often garners the most attention, is AI making decisions, such as identifying top or bottom performers or recommending promotions. However, a second, more measured approach is using AI as an assistant to provide guidance, insights, and recommendations rather than acting as the final decision-maker.
Balancing these perspectives can help avoid letting AI make critical decisions about hiring, performance, and promotions. It may be helpful in areas such as recruitment, where AI assists with initial candidate screening, but it’s smart to keep a human decision-maker in the mix. While AI has shown promise in avoiding certain human biases, it has also revealed flaws in AI systems that can inadvertently perpetuate biases.
One significant trend is the increasing reliance on AI for decision-making in organizational efforts where appropriate. AI’s promise of higher productivity and greater efficiency is driving the adoption of systems that improve workflows and streamline HR tasks, such as onboarding and employee self-service.
There is great promise in what AI can empower by adding efficiency and increased effectiveness. Keeping a level approach to what AI can and can’t do well in your organization is wise as you add components to your HR tech stack.
For example, there’s a growing tendency to reduce management layers in pursuit of these efficiencies, particularly in tech sectors where AI enhances productivity. Companies are becoming flatter as they cut middle management, but it remains unclear how this will impact long-term leadership effectiveness.
To navigate these changes smoothly, focus on making managers more effective rather than replacing them. Many organizations struggle with properly training and supporting managers, leading to inefficiencies in leadership. While AI can assist by providing insights into team performance and feedback, human coaching and leadership development are critical.
Try to view AI as a way to support managerial effectiveness, not as a substitute for the nuanced leadership that managers provide. Investing in both AI and management training will help organizations maintain strong, adaptive leadership while embracing technological advances.
AI is highly effective at providing continuous feedback, identifying trends, and suggesting learning paths based on real-time data. It can quickly detect shifts in performance or skill gaps and offer recommendations for development.
For example, AI can personalize training by recommending courses or learning experiences that align with an employee’s strengths and opportunities for growth, which helps maintain a focus on individual development.
This use of AI could have a significant impact on your company’s growth. According to LinkedIn, 89% of learning and development professionals agree that proactively building employee skills will help organizations navigate the evolving future of work.
However, to keep the process employee-centered, humanizing the experience is crucial. No one wants to feel like their growth is dictated solely by a machine. The most successful approach combines AI-driven insights with human interaction.
AI can provide a roadmap, but human coaching is essential for developing critical skills. This blend ensures employees receive personalized, actionable feedback while benefiting from the nuanced guidance only people can provide.
Losing both time and talent are the most significant risks of delaying the adoption of new tools. Should you add every new tool to your HR tech stack? Likely not. A collection of disconnected performance management tools won’t enable your people to achieve their goals.
However, companies that delay adopting new technologies risk falling behind competitors leveraging AI and advanced systems to boost productivity.
If you’re not benefiting from these efficiency gains, you’re likely missing opportunities to optimize performance, which could leave your organization struggling to keep pace. Over time, this could translate into reduced competitiveness and lower profitability.
Additionally, there’s the risk of losing employees. Outdated systems can frustrate team members and contribute to turnover. While concerns about switching costs or change fatigue are understandable, especially after years of remote work shifts and new tools, employees are more likely to embrace changes if the technology is easy to use and offers clear benefits to them.
Team members will likely adopt solutions that simplify their work, provide tangible improvements, integrate human elements more quickly — and help you retain talent by creating a more supportive work environment.
Want more insights into the successful integration of humans and technology? Download our ebook: Breaking Down Barriers with HR Technology to learn more.
SkillCycle formerly known as GoCoach featured in Forbes
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