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No matter the field, it’s the people that make or break companies. Yet historically, HR has been treated as an administrative cost center rather than a strategic department that drives productivity and value.

That sentiment is changing. Today’s technology-driven world is constantly changing, and there is a continuous scarcity of high-value talent in ever-changing fields. This, together with millennials’ different expectations about their jobs, puts pressure on companies to adjust how they handle their human capital. And while employers have realized that retention is key for their success, they are still struggling to increase it. Why is retention so hard, and what can companies do about it?

The answer to the first question is that HR data is hard to harness. As for the second: AI startups are uniquely qualified to unlock the potential of such data.

It’s all about the data

We’ve all heard about Google’s free lunches and Facebook’s on-site haircutting services. But while free food, beautiful offices, and high compensation packages make the headlines, data-driven policies have been key to becoming the best companies to work for, while amassing strong profits. Data allows such companies to understand what employees crave and how they can develop and perform at their best. But all companies have HR data, so the results should be easy to replicate, right?

Wrong! HR data is notoriously incomplete, inaccurate, unrepresentative and worthless. According to a Deloitte study, only 8 percent of organizations report that they have usable data from HR, and only 9 percent believe they have a good understanding of what domains of talent drive performance. The Harvard Business Review also reports that 60 percent of performance data currently gathered is known to reflect management biases. This requires companies to rethink their HR data strategies to be able to harness its potential.

The promise of AI

AI solutions are known to require considerable amounts of data to work, so does this mean HR is just not suited to AI solutions?

Not so fast. In fact, I believe exactly the opposite — AI is the answer to the HR data challenges. And startups will be the key driving force, through their nimbleness and focus. AI startups can help overcome the HR data problems in two key ways: better data acquisition and processing, and better intelligence.

AI startups know that they need data, so they are wired to think about how to acquire and process it in a scalable way from day one. Besides that, recent developments in AI allow for processing of data previously out of reach, such as image, text, and video. AI startups build focused solutions that break walls across data silos, can process new types of data, and provide actionable insights across HR activities. This provides unparalleled intelligence about how to better acquire, develop, and ultimately retain talent and helps companies act upon it.

AI companies have an incentive to find and analyze clean data across the enterprise. If they are successful, they not only solve employers’ data challenges, but they also create a sustainable competitive advantage for themselves as they build valuable proprietary datasets that continuously improve the value of their products.

Enabling human capital

By solving companies’ data challenges and harnessing its potential, AI is the key to move HR from a cost center to a core strategic asset. It lets employers form a holistic view of each employee and create personalized recommendations and action plans across activities, such as career development, employee collaboration, and recruitment, which address the needs of the 21st-century workforce.

This has created a delicious irony: While many fear that AI will destroy jobs if appropriately applied to HR, the reality is that AI can not only boost productivity, but also significantly improve employee satisfaction, engagement, and career development, ultimately helping both people and enterprises succeed.

Rudina Seseri is the founder and managing partner of Glasswing Ventures, a venture capital firm focused on startups that leverage artificial technology to create new consumer and enterprise products and platforms.


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