The End of HR As We Know It? AI Is Starting To Change Everything.
I just spent a week in London meeting with several dozen companies and most of the discussion was about AI. The overwhelming majority of the conversations were about how companies are struggling, pushing, and agitating about the implications of AI, both within HR and within their teams.
Coming from the CEO and CFO, HR team are under intense pressure to automate, improve their services, and reduce headcount with AI. Yes, we know AI is a technology for growth and scale, but the main message right now is “hurry up and do some productivity projects.”
And “Productivity,” as you know, is a veiled way of saying “Downsizing.”
So before I get back to HR, let me discuss downsizing.
It’s absolutely true that almost every company we work with has too many people. Why?
We have a sloppy way of hiring people, allocating resources, and managing work. We delegate “headcount” to managers and they go out and hire as many people as they can.
We don’t really teach (or incent) managers how to build “productivity,” we actually do the opposite. We tend to reward them for “hiring more people.”
The result is a problem I just talked about with a large advertising company: too many weird jobs and no consistency or structure to our work. This particular company has around 100,000 employees and more than 60,000 job titles. In other words almost every job is “invented for this person.” It’s insane.
The whole reason we have companies (and not individual craftsmen) is to build scale. If we expect every individual manager to figure out how to scale, we’re more or less designing low productivity into the business.
There are some simple models we use: call centers, global services groups, shared services, capability communities, and centers of excellence. But that kind of high-level productivity design is now becoming obsolete. In this new era of high-powered multi-functional agents, we need to go much further.
Elon Musk likes the “first principles” approach. Fire everyone and start from “first principles,” only hiring the people you urgently need to build, sell, and support your product. That may work in small companies but when you’re big there are too many “support services” to consider.
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One of the companies we are working with has “program managers” and “project managers” and “analysts” sprinkled all over the organization in random places. In other words, their core staff don’t know how to manage projects, programs, or data. So there’s a bunch of overhead staff doing this for them. Drives me crazy. This took place because there was no discipline in hiring, so each group “bulked up” with staff.
This is really business as usual. Organization design is an old, crusty, under-utilized domain so most companies barely think about it. IBM told me a few years ago that their “org design” strategy is to “hire a high performing executive and let him or her figure it out.” I hear that, it’s quite common.
The bottom line is this: if we want to get a sound ROI from all these AI tools and agents we have to get a lot smarter about “work design.” And that is not building org charts, it’s the basics of figuring out our workflows, areas of common and uncommon process, and where and how we can automate.
Most of our clients have tons of productivity systems already (ServiceNow, Salesforce, Workday, whatever), but they either don’t know how or don’t have the discipline to use them well. So they just keep hiring people.
As an engineer I see this visibly all the time. It’s very easy to delegate a “problem” to a person, and not think about it as “plumbing.” But it is plumbing. As Tanuj Kapilashrami from Standard Charter put it, we need to focus on plumbing first, then we figure out where to apply AI.
This means we can’t just cross our fingers and hope that the Microsoft Copilot is going to make everyone more productive. We need to look at business processes and skills at the core, and then literally reinvent our companies around these new AI tools.
And skills are very important. The reason companies hire a bunch of “analysts” and “project managers” is because individuals and existing managers just aren’t good at their jobs. We all need to learn how to project manage, schedule, and analyze work. That way these high-powered specialists can work on big things, not sit in staff meetings taking notes (where AI note-takers do this well).
(By the way, I have to guess that we’ll soon have AI agents for project management, program management, and functional analytics, so those staff jobs are going to be automated next!)
How Does This Impact HR
Let’s get back to HR. Given this massive effort to re-engineer and implement AI, where does HR fit?
Well fundamentally HR is tasked to build process, expertise, and advisory services around the “people processes” in the company. That means hiring, developing, managing, paying, rewarding, and supporting people. It’s a big mission, and when we start to focus on “productivity” then HR must be involved.
The general belief is that a “well run” HR team has about a 1:100 ratio to the company. In other words, if you have 10,000 employees you’re going to have around 100 HR people. And the HR team doesn’t just run around doing things, they buy and build HR technology for scale. So HR itself, as a “plumbing” type of operation, needs to be “lean and mean.”
If your CEO wants you to hire 50 top notch AI engineers you can’t just start phoning everyone you know: you must decide precisely how you’re going to do this in a scalable, efficient, and highly effective way. (AI engineers are rare, they’re hard to hire!)
So your little HR team has to think about productivity. Should we outsource this? (Which is a cheap and dirty way to look productive.) Should we buy a talent intelligence or sourcing system? Should we hire three high-powered recruiters? You know where I’m going. We have to find a way to “be productive” while we try to “make the company productive.”
This means we, as a support and advisory function (HR professionals spend a lot of time coaching and supporting managers) have to stop creating forms and checklists and implement AI agents as fast as we can. Why? Because so much of our work is transactional, workflow-oriented, and administratively complex. And AI can do a lot of amazing things, like “assessing the skills of an AI engineer” for example.
(Our AI Galileo can literally evaluate a recorded interview and give you a pretty good assessment of an individuals skills, mapped against the Lightcast, SHL, and Heidrick functional and leadership models.)
Let’s assume we do this well, and HR technology vendors give us good products. We wind up with amazing recruiting agents, AI agents for employee training, onboarding, and coaching, AI agents that help with performance management, AI agents for succession and careers, and AI agents that deal with all the myriad of personal benefits and workplace questions people have. Where do we end up?
Do we “automate away” our own jobs?
Well, in a way the answer is yes.
AI, through its miraculous data integration and generation capabilities, can probably do 50—75% of the work we do in HR.
All this is far from built out yet, but it’s clearly coming.
(We just talked with a large pharmaceutical company that is “all-AI” and they manage a team of 6,000+ scientists and manufacturing experts with only ten people in learning and development. They’ve automated training, compliance tracking, onboarding, leadership support, and all the details of training operations.)
Could you do all that for a fast-growing 6,000 person company with 10 people? I doubt it. Most companies would have more than 10 people in sales training and sales enablement alone.
So here’s my point. HR, like other functional areas in our companies, is going to have a real-life identity crisis. If you can’t figure out how to move your HR function up the maturity level quickly (check out our Systemic HR maturity model) someone’s just going to cut your headcount (the Elon Musk approach). Then you’ll be figuring out AI in a hurry.
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(Galileo can assess your HR maturity with its “consulting mode,” by the way.)
I’m not saying this is easy. The AI products we need barely exist yet. But the pressure is on.
You shouldn’t wait for the CFO to point his “productivity gun” in your face, you have to get ahead of this wave. Start pushing yourself to fix plumbing, check out the new tools in the market, get your IT team involved, and redesign your work using your own expertise. Many surprisingly good things will happen.
The Rise of The Superworker: Four Stages of AI Explainer Video
Let me give you an example.
A few years ago Chipotle adopted an AI-based agent system for recruiting, effectively automating a complex workflow for hiring. Not only did it save millions of dollars, the “speed and quality” of hiring went up so high the CEO talked about it as their top “revenue driver” with Jim Cramer on CNBC.
In other words this “identity crisis” in HR is a good thing.
Our recruiting, training, and employee services groups are too big. AI can automate enormous amounts of this work. So my advice is this. As the AI wave sweeps across your company, get out your old “org design” book and start redesigning how your HR team operates right now. Then you can go to the AI vendors and tell them what you want. That’s the secret to keeping HR in tip-top shape.
Will HR go away? Well a lot of the process, data management, and support roles will absolutely change. And yes, employees and job candidates will happily use intelligent bots instead of calling their favorite HR manager.
But as a Superworker, you, as an HR professional will do more interesting things. You’ll become a consultant; you’ll manage and train AI systems; and you’ll have much more real-time information about the strength and weaknesses of your company. We’re just going to have to lean into this AI wave to get there.
As AI agents arrive, it’s time to seriously re-engineer HR. And this time it’s not a transformation, it’s a reinvention.
Bottom line is this. Don’t wait for Workday, SAP, or some other vendor to “invent” a tool that changes your HR operation. You should do it yourself first and bring your IT people with you. That way you’ll buy and build the AI systems you need, and the result will be a new career, an even better HR function, and the opportunity to help your company move from “hiring” to “productivity” in the future.
Additional Information
Busting Bureaucracy: Are Layoffs The Only Way To Go?
The Road To AI-Driven Productivity: Four Stages of Transformation
Job Redesign Around AI: Work Intelligence Tools Arrive
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