Is AI Right for Small Business HR?

Published On: October 18, 2023By Categories: Business Management, People at Work, Workforce Development

The innovative technology may be the answer for some companies’ HR needs.

By Alexandra Walsh

It is safe to say that artificial intelligence (AI) is unlikely to replace employees at water well drilling companies anytime soon.

But it can take on some of the repetitive tasks that eat into employees’ productivity. In other words, AI allows a company to stretch its human resources (HR).

Most small businesses have only a few employees (or just one) focusing on human resources tasks. AI and machine-learning technology can maximize their productivity. This is especially true when the budget and resources are stretched thin. When this is the case, AI can significantly improve the effectiveness of a small company’s HR efforts.


For a small business to grow, it needs to bring in new talent. Various AI technologies can streamline the hiring process.

AI tools may allow job applicants to apply to open positions faster and more efficiently. This, in turn, makes a company seem more appealing to job seekers, especially younger, tech-oriented prospects.

AI tools can streamline the onboarding process. AI can provide insight and advice for new employees. This is important because onboarding is the first impression new employees have of a company.

Lots of companies today are struggling with rapid turnover and retention of employees. A superior initial onboarding experience is a recipe for employee loyalty.

With an AI-powered onboarding experience, new employees may quickly feel more comfortable at your company. In turn, it could help inspire them to produce better work performance and stay far longer.


The automation benefits that AI technology can bring to HR processes and procedures save time and energy on rote, monotonous tasks that would otherwise have to be completed by hand. This allows the person doing HR tasks to focus more on those complex human resource processes and problems that require a human touch.

For instance, AI tools can take over any automatic transactional or repetitive work an HR staff member normally needs to handle. With AI, a limited HR staff or single person will be able to handle a bigger workload and produce better results.

Not only does this improve work performance across the board, it also leads to a more satisfied HR staff. They will be able to balance their job tasks better, resulting in improved workplace performance and higher morale.

Personalized Communications

AI and machine-learning tools can make a big difference in making communications more personal.

Today, employees expect to be able to access HR resources and communications instantly. Using AI tools, an HR team can access personalized information about the employee they are speaking to. It allows those working in HR to connect more directly to your employees, leading to better outcomes.

As an example, some employees may feel nervous when the HR department contacts them. AI technology can create personalized communications that can be customized to alleviate employee concerns, reassure employees they have nothing to worry about, as well as be more direct with employees who prefer straight answers.

Most small businesses have only a few employees (or just one) focusing on human resources tasks. AI and machine-learning technology can maximize their productivity.


AI improves an HR team’s availability and efficiency. The right AI tools can direct employees to the resources they need.

AI enables a small business to provide constant availability for various employee needs. Chatbots, for example, can simulate person-to-person conversations quite well. With their help, just one HR person can manage a much larger workload.


Protecting confidential data is increasingly difficult for small businesses. Many don’t have their own in-house cybersecurity team, and sometimes former employees breach data confidentiality without realizing it.

AI solutions can automatically detect unusual activity within networks and send an alert. These advanced tools are particularly helpful in remote working environments. Some HR technology providers are already incorporating AI-based data security solutions into their products.


Diversity is something both employees and businesses want to see. According to Deloitte, a business management consultant firm, companies that encourage inclusive cultures have 22% lower turnover rates than those with teams whose members are all the same.

However, as recruiters are human, they can have biases even when their aim is to build diversity. Sometimes the wording in a job ad, for example, can discourage certain candidates from applying.

With AI, small businesses can make better choices and go beyond their typical hiring decisions.

Communication Skills

Sometimes job candidates are overlooked simply because they can’t explain themselves properly. Poor skills in communicating are often an issue in construction-related industries. Also, for many applicants, English is not their first language.

With AI, qualified applicants can improve their communication skills and avoid making frustrating linguistic mistakes. For example, an AI-based language learning solution is already training candidates in other markets to applying for jobs in the United States. A platform allows them to practice specific real-life scenarios, such as a job interview, with realistic AI robots.


People leave their jobs not just because they’re looking for higher pay or flexible hours. More than 40% of employees named the lack of opportunity for upward mobility as the number-one reason for quitting their jobs, according to a McKinsey report that helps companies identify and implement solutions for specific problems or challenges.

AI can match existing employees with new opportunities inside the company based on individual skills, interests, and preferences. According to some HR research and advisory firms, AI-driven internal talent marketplaces are key to talent growth and retention.

Is AI for Your HR?

If a company decides AI solutions are suitable for its HR department, it is not difficult to get started. Since many different management platforms and AI tools are available, getting started can begin immediately.

However, a company should do its due diligence and research and be sure that an AI HR tool is likely to mesh well with its current HR staff and its business needs.

Taking advantage of current tools is important. Using the latest technology can help a business stay ahead of its competitors and make the company a more beneficial place to work for its employees.

The rise of AI in HR is not without challenges. AI tools and HR software will add to a company’s operating costs. If a small business is running on a tight operating budget, it may need to evaluate further whether the benefits of AI for its HR department justify the cost.

Also, privacy concerns and potential bias in algorithms raise ethical questions. Striking the right balance between automation and the personal touch that small businesses are known for can be a sensitive undertaking.

Whether or not a small business implements AI into its HR depends on its business needs. Just like time-tracking software and customer management platforms, given the benefits, there are enough good reasons to insert AI and machine-learning tools into an HR department’s tech tool kit.

Alexandra Walsh is the vice president of Association Vision, a Washington, D.C.–area communications company. She has extensive experience in management positions with a range of organizations.

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