This is What An AI-Ready Organization Looks Like (i4cp login required)

Productivity

Generative AI isn’t going away.

And as many HR leaders have predicted, this evolving technology will continue to challenge leaders as its capabilities evolve throughout 2024.

The latest data from the Institute for Corporate Productivity (i4cp) on the status of AI in the workplace suggests both progress and inertia. Among the 1,300+ surveyed in Q4 of 2023, respondents from larger organizations (those employing >1,000 people) indicate that they are slow to adjust to AI.

But their HR teams are making progress and putting in place important people practices that support their workforce’s capabilities to effectively and safely leverage AI.

Organizations that aren’t AI ready—meaning they are not experimenting with or adopting generative AI (GenAI)—are statistically more likely to report having low market performance, levels of innovation, and productivity, and more toxic cultures.

Our research has found that three factors are critical to effective adoption of AI: communication, HR readiness, and strategic planning.

Leaders communicate clearly about employee use of generative AI

58% of companies have banned or not made clear how employees can use AI at work.

The importance of clear communication about whether generative AI, such as ChatGPT, Bard, etc. may be used at work, and direction about how and for what purposes it should be used, cannot be overly empathized. But the reality is that there is no clarity about this at all in many organizations.

A combined 58% of those surveyed from large organizations reported that their leadership teams have (1) not made it clear to employees whether they can use generative AI at work, (2) have expressly forbidden it, or (3) are watching on the sidelines before implementing. This has changed little since i4cp’s July 2023 survey on this topic.  

But just because organizations aren’t communicating with their workforces about GenAI, or leaders are indecisive about it, doesn’t mean employees aren’t forging ahead on their own—66% of those we surveyed say it is very likely or they are certain their co-workers are using publicly available tools for work without the organization’s knowledge. That is a major liability for companies’ intellectual property and sensitive information as some companies have learned—Samsung, for example, has banned employee use of ChatGPT and any other AI-powered chatbot following a data leak that was triggered by an employee uploading ChatGPT.

They have HR teams that leverage AI

Between July and December 2023, the percentage of organizations in which HR is currently experimenting with or using generative AI inched upward nine percentage points from 23% in July to 32%.

HR readiness to experiment or use AI is an important lever for HRLTs looking to improve their organization’s position on the generative AI maturity model.

When HR has established expertise on the subject, they’re more likely to be part of strategic decisions about AI and the workforce and the organization is more likely to have foundational practices (see the Nine Talent Strategies below) in place that support a workforce that can safely and effectively leverage AI.

The new data indicates that organizations with high levels of HR readiness are also more likely to offer training either to all or select groups of employees. Because such training stems from HR’s learning and development practitioners, it’s safe to say that HR readiness permeates the entire organization.

If HR is experimenting with or using AI, it’s a good bet they’re driving the training to ensure that other departments can too.

HR is part of—but not leading—the cross-functional team focused on AI strategy in HR

Given that HR’s readiness to wield AI is such an important lever with a cascade of benefits across the organization, it’s easy to assume that the top leader, the Chief HR Officer, should be in charge of making sure this happens. And that is the case at approximately 15% of organizations.

But i4cp’s data indicates that this is not the best structure. While the largest group of survey respondents (21%) told i4cp that no one is currently accountable for generative AI in their organization’s HR function, the second largest group (19%) reported having a cross-functional committee addressing AI that HR is a part of.

Our analysis found that these cross-functional committees are statistically more likely to be in place at AI-ready organizations than those in which the CHRO or a single HR leader is in charge of AI strategy in HR.

Multi-functional groups, which often include IT, finance, legal counsel, and communication leaders in addition to HR, can use their collective intelligence to build better strategies and policies, and their expansive network to secure greater buy-in and support enterprise wide.

They have implemented the Nine Practices of AI Innovators

AI-ready organizations are those in which leaders understand that structure and foundational processes have to be in place before GenAI can be effectively adopted. To that end, they are thoughtfully implementing AI solutions, and are statistically more likely to report having:

  • High market performance
  • Superior levels of productivity and innovation
  • Healthier cultures.

These organizations are experiencing increased levels of productivity, cost savings, and are adding new value in the form of enhanced or new products and services with the time saved.

i4cp has found that AI Innovators—those organizations more advanced in their adoption of AI tools—are more likely to engage in the following nine strategies. The latest data showed an increasing proportion of companies implementing all but one of these (which stayed relatively flat between July and December of 2023):

Nine Practices of AI Innvoators

These nine practices are strongly correlated with market performance and help organizations move further up the AI maturity model. Yet, no more than one-third of those we surveyed indicated that their organizations are doing any of these.

Moreover, they’re all statistically more likely to be in place in organizations where HR is using AI. This means that to become an AI-ready organization, HR must be ready too.

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