AI in HR Management: Leverage technology to slash costs in 2026

AI has been the talk of the business world since the launch of ChatGPT in 2022. A survey from the World Economic Forum reported that 75% of businesses are planning on integrating AI into their workflows by 2028 or even sooner. The consensus is clear: With AI adoption on the rise, businesses that fail to find meaningful applications for AI are bound to fall behind. This marks the beginning of an AI transformation—a comprehensive process of integrating AI technologies into HR and organisational practices to drive innovation, improve operations, and foster cultural change.

The transformative impact of artificial intelligence (AI) on HR is profound. The potential applications of AI in HR span the entire employee lifecycle, from recruitment to retirement. Among HR departments that have begun using AI, talent acquisition is the highest priority with 64% of respondents reporting cost savings, followed by learning and development (43%) and performance management (25%). 

Human resources, and Human Resource Management (HRM) in particular, stand to gain an incredible boost in efficiency and cost optimisation

HR departments also play a key role in leading the charge in AI adoption by setting an example for other business segments to follow. As drivers of organisational change, HR has a unique role in familiarising employees with AI technology and supporting the development of technological skills to make the most of it. This process starts with an increase in the use of AI for key HR functions, highlighting the shift of the HR function from administrative tasks to a more strategic, value-driving role within the organisation.

Recruitment and hiring process

Given the global demand for top talent, and the urgency behind securing high-quality hires, it is no surprise that recruitment has seen the highest use of AI in HR in 2026. 70% of HR departments are already implementing, testing or scaling their use of AI for recruitment. AI is transforming the hiring process by improving efficiency, reducing costs, and streamlining each stage from talent acquisition to candidate screening.

AI is already being integrated into Applicant Tracking Systems (ATS) and is used to screen resumes a lot faster. This allows HR departments to choose from a larger talent pool, streamline screening parameters and reduce human bias without driving up costs. AI also streamlines the recruitment process by automating repetitive tasks and enhancing candidate management.

GenAI can provide interview assistance that enables recruitment teams to connect with a larger pool of candidates to find the right fit for their organisation’s needs. Some examples include using AI to record notes during live interviews and summarising key takeaways from interview panels. This reduces the need for multiple follow-ups, or additional resources.

How AI impacts recruitment is evident in its ability to personalise candidate interactions and automate administrative tasks, leading to a more efficient and positive candidate experience.

The use of AI can also improve the experience of candidates by generating pre-interview materials tailored to job roles, administering specialised screening tests, and sending actionable feedback after the interview.

Onboarding and offboarding

A comprehensive onboarding experience can boost employee retention by 82%. By combining the speed and cost efficiency of AI with a human touch, HR teams can provide a well-rounded support system to workers entering an organisation and ease their transition into their new role. Effective onboarding and offboarding processes also have a significant positive impact on employee morale, helping to create an engaging and inclusive work environment that motivates employees and encourages long-term retention.

AI assistants can guide new recruits with filling essential forms, create handbooks and organisational policies tailored to job roles or seniority, and schedule training sessions. This will reduce productivity losses in the early phases of onboarding and empower new employees to quickly integrate themselves into the organisation.

Similarly, offboarding processes can be streamlined to ensure a positive experience for employees and minimise the risk of losing important knowledge or assets. By using AI to tailor exit surveys to job roles, document the return of physical and electronic assets, remove access to organisational inboxes and ensure clearance compliance, HR teams can shorten offboarding timelines.

Workforce management and HR analytics

Ensuring effective workforce management with manual processes poses a significant challenge for HR departments. With limited access to real-time data, analysts struggle to accurately forecast workforce demands. Leveraging historical data in predictive analytics enables HR teams to make data-driven decisions, minimise bias, and ensure transparency and ethical considerations when planning for future workforce needs. They must also simultaneously balance the needs of employees and the organisation. These processes can be streamlined and automated with AI, allowing HR personnel to focus their efforts on edge cases and crisis management. 

As companies begin to rely more on freelance and contract workers, the challenge of integrating all contributors into the system is compounded. With AI, HR teams can automate standard processes such as processing payroll, monitoring productivity, and assigning projects. This automation leads to improved operational efficiency, enhancing overall organisational productivity and reducing costs. This frees up time and resources to focus on other areas such as employee engagement and personnel development that require a more hands-on approach. 

Powered by AI, workforce analytics can not only provide insights into past performance but can also predict potential losses in productivity based on real-time trends. This allows HR leaders to anticipate and plan for issues that may be impact their organisation and optimise workforce management. Effective workforce management can have a significant impact on organisational performance and financial health.

AI is particularly useful for identifying skill gaps and assigning relevant training materials to employees. Jobs roles are increasingly becoming highly specialised, and this poses a challenge to HR professionals who are not equipped with the same degree of domain knowledge. Using AI to tailor learning and development ensures that employees are regularly upskilling and reskilling to cope with market demands. AI-driven learning solutions also help organisations manage and optimise training costs by tracking ROI and aligning training investments with business goals.

AI-powered analytics for learning and development also support strategic decision making in HR by providing actionable insights for planning, risk management, and aligning talent strategies with organisational objectives. However, it is crucial to understand AI's limitations to ensure responsible and effective use in HR analytics, maintaining the necessary human oversight and contextual judgment.

Administrative tasks and functions

According to a recent study, employees waste up to 40 million hours each month on HR-related tasks across large companies combined in the United States and the United Kingdom. From recording time, to requesting PTO, to accessing benefits, employees around the globe are increasingly demanding a centralised, intuitive user experience to complete their administrative tasks. AI can automate repetitive tasks and automate routine tasks, saving significant time and resources for both employees and HR professionals.

HR departments are burdened with the oversight of these tasks and comapnies expend considerable time and resources to ensure compliance. Automating routine tasks, such as onboarding and document processing, helps reduce administrative workload and allows HR to focus on more strategic initiatives. Payroll management is another key area where automation streamlines HR administration, controls costs, and improves operational efficiency. AI-powered HCM solutions can reduce the overhead costs associated with internal administration by automating core HR functions. 

They also improve employee experience by providing a standardised process to complete everyday tasks. AI powered HCM solutions optimise HR processes by automating routine tasks, improving data management, and streamlining workflows. These solutions leverage technology to enhance efficiency and transform traditional HR operations into strategic functions. AI chatbots and virtual assistants can instantly answer queries from employees about leaves and benefits, reducing the need for manual intervention.

AI chatbots and virtual assistants can instantly answer queries from employees about leaves and benefits, reducing the need for manual intervention. HR AI plays a crucial role in enhancing employee experience by streamlining communication and providing actionable insights.

AI-powered HR tools help track goals and achievements of employees and can generate congratulatory emails, allowing HR teams to provide timely feedback and recognition. It is important to train HR teams to effectively use these AI tools, ensuring they understand both the technical and ethical aspects of AI in HR.

AI can create and administer employee surveys and produce insightful reports that facilitate agile people management. Sentiment analysis can be used to interpret employee feedback from surveys and communications, providing deeper insights into workforce sentiment.

Integrating AI in HRM does more than just cut down on overhead and labour costs associated with HR functions, it also improves overall productivity by helping HR transform into a strategic powerhouse that drives organisational change.

Employee engagement and turnover

Employee engagement and turnover are pivotal factors that directly influence business outcomes and the overall success of any organisation. For HR professionals, fostering a productive workforce and minimizing employee turnover are not just HR functions—they are essential business objectives that drive financial performance and long-term growth.

By leveraging AI tools such as machine learning and natural language processing, HR teams can analyse vast amounts of workforce data to uncover patterns and trends that impact employee satisfaction and retention. AI-powered HR analytics provide data-driven insights into employee preferences, sentiment, and behavior, enabling HR leaders to design targeted strategies that boost engagement and reduce turnover.

Implementing AI systems to automate repetitive administrative tasks—such as maintaining employee records, benefits management, and payroll processing—frees up valuable time for HR professionals. This allows HR departments to focus on strategic initiatives like employee development, personalised employee support, and flexible staffing models, all of which contribute to higher job satisfaction and a more engaged workforce.

Effective employee retention strategies not only reduce the major costs associated with frequent recruitment cycles but also help preserve institutional knowledge and ensure business continuity. By utilizing advanced analytics and predictive analytics, HR managers can assess candidates’ skills more accurately, identify top talent, and proactively address factors that may lead to employee turnover.

Moreover, as HR departments operate in an increasingly data-driven environment, ensuring data security and secure data storage is paramount. Protecting sensitive HR data builds employee trust and helps organisations comply with regulatory requirements.

Generative AI and other advanced AI systems can further enhance employee engagement by enabling HR teams to deliver personalised support, analyse sentiment through employee surveys, and develop initiatives that align with employee growth and business strategy. Understanding AI’s limitations while leveraging its strengths allows HR professionals to make informed, strategic decisions that maximise business value.

Ultimately, prioritizing employee engagement and retention is not just a luxury—it is a necessity for organisations aiming to achieve significant cost savings, maintain a productive workforce, and drive sustainable business success. By embracing artificial intelligence and automating repetitive tasks, HR leaders can transform HR operations, deliver measurable business outcomes, and create a positive, engaging workplace culture.

Are you looking for AI-powered, seamless HRM solutions to transform the way you manage your people? Zalaris provides professional consulting services and a wide suite of solutions that are customised to meet your organisation’s unique needs. Get in touch with an expert today!