AI strategy vs. HR strategy. What do you really need?

Despite the rallying cry that every organisation needs an AI strategy, that is not correct. Sure, AI could end up being part of a corporate strategy, but some HR leaders have strategy, plans and technology all confused right now.

Yes, AI is a big deal these days, and it is all many vendors talk about. But AI mania has too many people running around looking for an AI strategy or an AI digital transformation plan. Yes, AI can impact certain functions in interesting and potentially powerful ways, but just because AI is rolling out now does not mean you just implement it without thinking things through first.

Too many leaders are using phrases like: “We need an AI strategy!” and that is so wrong. Why? AI is a technology—it is not a strategy.

Strategy vs. plan vs. tactics

A strategy takes goals, tactics and tools/technologies, and places them in an organised, thoughtful and focused effort. Anyone who has played the board game Risk knows you need an overall game plan to achieve global domination. Once the strategy is set, the decisions—the exact timetable, equipment, tactics, plans, etc.—are worked out next. The strategy sets the overall direction and goals to be achieved.

In HR parlance, HR strategies could be:

• Winning the war for talent, permanently and convincingly;
• Creating a competitive advantage by having the most efficient, low-cost and productive HR functions possible;
• Creating a work environment that triggers employees to stay years longer than they would otherwise;
• Eliminating previously undetected recruiting errors (PUREs);
• Becoming an employer of such renowned, consequence and desirability that the organisation will never wat for jobseekers;
• Positively impacting all constituencies like jobseekers, universities, rural markets, the communities we (or our suppliers) operate in; and more.

Setting strategic goals is crucial, as some strategies may prelude other strategies. For example, you might not be able to have a low-cost, efficient HR set of processes while also delivering a world-class employee experience. It is unlikely your organisation can have it all so pick the strategy goal wisely and get concurrence from the executive committee or board you get too invested in a strategy that lacks top-level support.

Once the strategic goal(s) has been decided, then it is time to flesh out the strategy. This addresses the “how” of the strategy. Here is where the term AI might get a mention—but it is not necessarily a requirement. That is a key learning point: AI could play a major, minor or no part at all in HR strategies. That means that the hysteria about having an AI strategy today might be a reaction to current events and not something that is actually aligned with the strategic aims of the organisation or HR.

For example, your organisation may want highly efficient HR operations. The big tactic for this might be the consolidation of HR operations and the creation of a shared services centre. That is a business model change more than a deployment of an advanced technology. Alternatively, your organisation might investigate a different tactic: the outsourcing of many tactical HR functions. Either way, AI may not be the top tactic to consider, although it will likely appear in some transaction-intensive processes.

AI, it turns out, may not be the all-pervasive technology to deploy in HR in every organisation. The smart, strategic HR executive must be careful in choosing the pieces of AI technology that have compelling business value and solid economic and strategic contributions to make. This means that the detail behind a great HR strategy must be nuanced and company-specific.

The AI-related plans need to be evaluated closely, as some may carry significant long-tail costs. Smaller employers may question the economics of bringing on board new employees (e.g. data scientists, data integrators, etc.) to cleanse data, tune large language models (LLMs), investigate anomalous results, etc. Smaller organisations may choose to limit their use of AI to one area like robotic process automation. It is basic economics, as the cost to deploy these new capabilities—especially when usage might be light—could dwarf the expected value.

Some AI tactics/technologies might also carry with them significant environmental costs/concerns. Energy consumption needed to power AI compute loads (and data storage) is significant, as is the potential water consumption needed to cool the corresponding compute devices. Sustainability impact and the uncertainty of vendor pricing regarding new AI technologies further complicate matters. Does your HR strategy align with the organisation’s ESG goals?

Another reality check is crucial to the smart deployment of AI and other advanced technologies as almost every organisation faces constraints on three fronts: time, people and capital. HR executives who think that these constraints do not matter could be in for a big shock. The current HR team may have little time to spare for these new efforts as they are already running quite lean from an employee perspective. Other parts of the organisation may have tapped the organisation’s technology budget and headcount. And there may not be time to get this done without disrupting year-end, payroll, benefits enrolment, campus recruiting or other scheduled activities.

AI discussions should lead to a frank discourse about which AI capabilities are the most desirable to implement. Your organisation may never implement fully all the latest advanced technologies coming from today’s HR vendors—and that is quite acceptable. You and your organisation must live within your time, people and capital constraints. And your organisation might not need all these capabilities based on what the strategy requires. Some HR strategies (like creating a great work experience or increasing retention) could require a small amount of input from AI capabilities but still be heavily dependent on leadership training, mentoring and other disciplines. AI use cases are therefore situational and resource-dependent.

Tactics must align with the available resources and the business’ economics. They also might consider matters like convergence (will this AI effort come online while it is still technically current and capable of delivering outsized value?) and precedence (does another project have to be completed before HR can move forward with its AI efforts?).

Tactics/technologies are the things that will make the strategy come to life. Plans are the orderly, thoughtful structure that helps HR teams realise the goals implicit in the strategy.

Overlooked HR strategy components

When developing an HR strategy, business leaders can make mistakes. For example, they may overlook matters such as:

• Is a new deployment model, like a centre of excellence, for HR needed?
• Is the technical debt in all of HR’s current solutions something that must be dealt with first?
• Are critical integrations to/from HR applications missing or broken?
• Are key functions, such as campus recruiting, still not automated?
• Are there different data meanings and data repositories throughout the organisation?
• Are there pockets of data that still are not real-time?
• What kinds of non-financial data (e.g. ESG) should be part of HR’s mandate but are not in a great state? For instance, the data is too old, too annualised or too averaged.

Slapping AI on top of this dysfunctionality is not a best practice. For AI tools, it will likely trigger the decades-old phenomena of “garbage in, garbage out”. The big, overlooked AI consideration is the amount of cleanup or renovation work required to become AI-ready. That work takes time, money and people to complete. If AI is one of your HR strategy tactics, are you prepared to do the work to get everything ready?

What people likely mean when they say they need an AI in HR strategy

When people say this, I suspect they are really expressing their need to get smarter about AI generally and how AI can impact (positively and negatively) HR. What they want to know are answers to questions like:

• What are the different flavours of AI—agents versus generative, for instance—and how are these best used in HR?
• What specific risks, data requirements and privacy concerns should we be bulletproof on?
• What AI activities should HR, HR IT, IT and legal be responsible for?
• How will vendor pricing of AI capabilities affect our HR IT budget?
• Where should we find AI tools embedded in HR application software?
• How do we capture, research and resolve aberrant AI behaviours/results?
• How do we protect the sensitive, personally identifiable information of our employees and jobseekers?

Getting answers to these kinds of questions is a legitimate business need—and the answers are clearly requisites for developing a sound HR strategy.

AI is not the only business need people want ‘strategies’ for

Software vendors are always on the hunt for the next technology or innovation that will drive new software sales or trigger major product upgrades. Change is what drives their top line even higher. They have certainly been bust the last two years flogging AI as an absolute business necessity, but do not forget they also tried to get your organisation to develop other “strategies”. It seems like just yesterday that your organisation needed:

• A multi-cloud strategy;
• A modern cloud platform or architecture strategy;
• A single, global suite of application software strategy; and
• A digital transformation strategy.

Technology vendors will always be excited about new things, but organisation and HR strategies might need to stay relatively constant, with only some adjustments to the tactics and plans. That is the key lesson in all of this: You really need to know what your strategy is and how to stay true to it while embracing some new tactics and innovations, as it makes sense to do so.

READ MORE: Harnessing AI for a people-first approach to customer experience

AI is not exclusive to your businesses, and your AI thinking needs to be broader. You should never look at any new innovation in isolation. The best HR strategies will be those that look at AI as not just an advanced technology your organisation can exploit but also as a technology that jobseekers, regulators, customers, suppliers, contractors and more will use. And they will use AI in amazing, creative and business-altering ways. Any HR strategy needs to assess how citizen AI tools will forever alter processes like recruiting (e.g. AI tools that rewrite a jobseeker’s resume to match your organisation’s job description or permit a jobseeker to apply to thousands of open positions every week). Is your HR strategy looking at AI in an expansive way?

Your HR strategy effort will need team members who are technically cosmopolitan, possess great EQ and use game theory to anticipate how others will react to the new capabilities that AI and other advanced technologies will bring to your organisation’s doorstep. These are the team members who can help make your next HR strategy one that will be long-lived, relevant and capable of delivering the value your business case demands. Incremental thinking will not deliver to that standard.

Bottom line: If you start your strategy ideation effort with a technology like AI, you have a technology searching for a business problem to solve. That is backwards: Start with where you would like to drive your organisation and build out the details from there.

About the Author: Brain Sommer, award-winning author, consultant, and Founder of TechVentive, will deliver the opening keynote at HR Tech Asia, taking place from 5-8 May 2025. To learn more about the event, click here. This article was first published on HR Executive.