A report from technology analyst firm Valoir has found that most companies are either already leveraging AI for HR activities, such as recruiting, learning, and talent management, or they plan to do so within the next 24 months.
However, there’s a significant gap in terms of policies, practices, and training for safe and effective AI adoption. Only 34% of organizations have a policy on generative AI (gen AI), and even fewer offer effective training.
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This result suggests that HR departments must prioritize developing robust policies, guidance, and training to ensure AI adoption maximizes benefits while minimizing risks within HR and across the rest of the organization.
What you need to know
Here are some of the key findings from Valoir’s research:
- Recruiting is the most common area where gen AI is used in organizations today, with more than 30% of organizations reporting usage and an additional 36% planning to adopt the technology for recruiting in the next 24 months.
- The rate of adoption of AI for training and development, core HR, and performance management has doubled in the past two years.
- Multiple HR areas are ripe for AI automation, including recruiting, payroll management, and performance management.
- The lack of AI skills and expertise is the biggest hurdle for AI adoption, as noted by 37% of HR organizations, followed by immaturity of AI solutions (15%), and regulatory or compliance concerns (15%).
- Only 34% of organizations have a policy on the use of gen AI, and even fewer have a policy on the ethical use of AI.
- Only 31% of organizations have training for the effective use of AI. This proportion has more than doubled since 2023, indicating progress. However, only 10% of organizations have a training or development program in place for workers whose jobs or roles are at risk of replacement.
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Understanding the value of AI in HR
HR leaders see the most potential benefit from AI in the areas of recruiting (25%), training and development (18%), core HR (11%), performance management (10%), and workforce management (10%).
Talent management, which was the third-ranked area for AI’s perceived value potential in 2023, fell behind core HR, performance management, and workforce management in 2025.
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The driver behind the increased value of AI in HR is that gen AI’s authoring, recommendation, and summarization capabilities have vastly improved in the past two years.
Data remains a challenge, especially accessing external sources. Data silos make it more difficult to apply AI for analysis without data harmonization and integration of multiple sources.
Potential risks for AI in HR
The use of AI in HR brings not just FOMO (fear of missing out) but also FOMU (fear of messing up). The intersection of people, data, and money leaves very little room for error.
The potential for errors when scaling AI-driven automation in recruiting, payroll, and performance management may lead HR leaders to pause their implementations to ensure data quality and AI governance policies minimize potential risks.
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The top areas of risk include payroll management (25%), recruiting (24%), performance management (22%), core HR (7%), and talent management (6%). HR leaders are also concerned about biases in AI algorithms due to poor model training, flawed data used to train the models, and poorly governed access to personal and confidential employee data.
Data compromises and security are risk factors, and without guardrails and training, applications and employees can expose confidential HR data to language models.
In addition, AIs can continue to deliver hallucinations. Biases and toxicity are risk factors. Placing a human in the loop continues to be a recommended practice to reduce these risk factors.
How different HR functions use AI
Recruiting leads other HR functions in adopting AI. Almost a third (30%) of recruiting staff use AI to support some activities. Training and development and talent management are the second-largest adopters of AI in HR.
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Valoir found that 65% of organizations are either currently using AI or planning to apply AI to recruiting within the next 24 months. Payroll management and benefits management continue to be the areas with the lowest adoption of AI due to the risks associated with using sensitive employee data.
Barriers to the adoption of AI by HR
The biggest barriers are a lack of AI skills and expertise (37%), immaturity of AI solutions (15%), and regulatory or compliance concerns (15%). In 2023, only 26% of HR leaders cited skills and expertise as the main barrier hindering their adoption efforts.
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Other practical reasons for slow adoption of AI in HR: resistance to change; poor AI marketing and messaging, and internal leadership advocacy; and lack of policies, training, and communication plans.
Valoir’s findings highlight just how far many organizations still have to go:
- Only 37% of organizations have a policy for using AI.
- Just 33% had a policy addressing the ethical use of AI.
- Only 31% had training for the effective use of AI
- A mere 9% had training plans in place for employees whose jobs might be displaced by AI.
The sense of urgency for adopting AI technologies in HR is growing rapidly. Valoir’s research highlights that organizations must work hard to realize the full benefits of AI. To learn more about the Valoir research, you can visit here.
