Can AI manage HR in small businesses? Sure. The way that most small businesses manage HR reactive, administrative, checking boxes, winging it, AI can absolutely do that. But HR can be so much more. What if human resources could actually drive a small business forward rather than just keep it compliant? That is absolutely a place where AI hits the wall. So here's what the real question should be. Do you want to manage HR in your small business like a robot, or like a real HR leader should? Let's talk about it. Welcome back to the HR Connection. I'm your host, Sabrina Baker, and this is episode 11 asking, can AI manage HR in a small business? It's a question that I get asked often. Is AI going to replace HR, especially in small environments? With new tools, technology moving at breakneck speed, it is easy to see why the temptation to replace everything that we can in a small business with AI exists. It feels like a lifeline to HR departments of one, CEOs trying to juggle many things, AI feels like that lifeline that can fix so many issues. And it can do a lot of amazing things. But here's the reality. HR is not just about processes. It is about people. And people are messy. They're nuanced. They're situational. There is no way that AI can completely replace that. But it absolutely can enhance it. We use AI in our business. We use it to supplement what we are doing. And today I want to talk about what it can and what it can't do inside of HR and how we use it to give you an idea of the fact that it can't make HR irrelevant. It's not going to completely push out the need for HR leadership and judgment. But it can absolutely be used to spearhead ideas and supplement what you are already doing inside your small org. Let me give you three reasons why AI cannot fully manage your human resources, why you should not rely on it 100% as your HR team. The first one is that it cannot interpret law. If we look at the administrative side of human resources, what's absolutely exist, you do have to be compliant. AI cannot interpret the law. It may be able to spit out the letter of the law. It may be able to tell you what the law says, but it is not going to be able to apply that to your unique situation. The industry you're in, the state that you're in, the history of that employee, and all of the other things that go into making the HR decision on how to apply that law. In the state of California, there are new laws all the time. And because they haven't been challenged in court yet, the interpretation of how they may end up is up for grabs. Even lawyers will say, because this hasn't been challenged yet, I'm not really sure what could happen. So let's interpret it this way and use our best effort. Our best guess here. And if that's happening with people, there's no way that AI is going to be able to interpret fully the letter of the law and tell you exactly what you need to do in any given situation. Especially if you are somebody who is managing HR, but you're not an HR person. And so you're prompting into that AI, may not give it all of the details that it needs to really be able to make the decision. It is not going to be able to interpret that law in a way that is going to make sense for you or maybe even be correct. The second reason that AI cannot manage your entire HR department is that it does not understand your culture. In small businesses, I've talked before how they are like small towns. There is a lot of nuance. There is a lot of personalization that happens in a small organization. And AI is not going to be able to understand your mission and your vision and your values. You can certainly input them, but it's not going to be able to completely interpret that in a human way to help you build the kind of culture and communication that you're going to maybe want in your organization. It can certainly give ideas, but you still need somebody to be able to interpret those ideas and execute on them. And so because in a small org that culture, that communication, that leadership style is really important, because if you have one toxic employee, one toxic leader, it makes it very big deal in a small environment. AI is not going to be able to help fix that. It can be an idea generator for sure, but it is not going to be able to tell you how to personalize and make the culture and communication of your small org into something that is really going to drive the business. And then the third reason why AI cannot manage your entire HR is that it cannot build HR strategy or infrastructure. Just like culture and communication, it can give ideas. It's a great idea generator. It's a great starting place. But you still need somebody who can execute on whatever it spits out. Somebody who has the time to sit down and say, what is the alignment here between the business goals and the HR goals? Again, ChatGPT, whatever AI you want to use, can give you ideas, but it's not going to be able to say, okay, this idea is the best one to go with based on the personalities we have inside this business, based on the industry, the location, based on all of these other factors this is the one that's going to work for us based on the the ideas that the founder or the CEO have for the business. This is what's going to work for us. You need complete alignment between human resources and the business in order to be able to use people levers to drive the business forward. And AI, again, can give you ideas. It cannot figure out which one of those ideas are best to execute. And it certainly can't execute for you. Now let's talk about the good news. There is a lot of things that AI can do very, very well and can supplement the HR team if that team is no one, if that team is a one-person team, if that team is a marketing manager, also doing HR. There are tons of things that AI can do to supplement the work that that person is doing. And I will be the first to admit that since incorporating AI into our business and our HR work with clients, we have seen our productivity, our efficiency, um, our clarity, our conciseness skyrocket. So it is absolutely a valuable tool and here are four ways that it can enhance what you're already doing inside of HR. The first one I've already kind of mentioned, it can be a great idea generator. If you need a policy, you need a job description, you need a, um, recruiting job ad, you need any documentation inside your organization that you don't already have, you need templates created, great. AI can spit out a great first draft. It can absolutely take inputs from you. You can prompt it with what you need. You can even input, uh, examples of maybe job ads on LinkedIn that you like. Um, or job descriptions that you like. You can input all kinds of things and it can spit out a wonderful draft for you. And it is a great starting point. We find inside our business that when we have projects for clients, um, that we always usually start from an AI space and we will go into AI and say, here's the new project that we have. It's a communication project. Or it's a focus group project. And what would a timeline, what would a good workflow for this project look like? So it is a great springboard for a lot of the things that you are doing so that you're not starting over from scratch each and every time. So an absolute wonderful idea generator. We certainly use it to, um, help us think through different scenarios. So if we have something going on with a client that maybe we haven't dealt with before, it's a little bit of, there's a little bit of nuance in there. We will put the issue into ChatGPT or whatever AI we are using and we will ask it to give us ideas. So it is a wonderful idea generator, a wonderful starting place so that you are not starting from scratch on whatever it is that you are doing. And that that creation of workflows, that creation of the first draft can be an immense time saver. The second thing that AI can do to help enhance your current HR practices is that it can be an immense communication tool. And I would say this is maybe how we use it the most. Um, we talk a lot in this business about the four Cs of communication, which is clarity, conciseness, confidence, and compassion. And, uh, AI is a wonderful place to be able to put in an email or put in a discussion that you have to have with somebody. Maybe you need to give some feedback. And put that into AI and have it refine it for you, have it make it more clear, have it make it more concise. Um, it is really fantastic at enhancing communication and anytime that I am building any kind of workflow where I'm going to need to create an employee communication plan from that, I will absolutely use AI to help me. So either I will put in prompts and have it create the communication myself, or I will type up the communication in the way that I think it should read and then put it into AI and have it, uh, clarify for me. I will often say, put this in the most clear terms at an eighth grade reading level, make it as concise as possible while still getting the message across. Here's the tone I want. Conversational, whatever that is, I'll put all of that in there. So either I'll let it create that first draft for me or I will put in my own email, my own writing and ask it to clean it up for me. But I think that this is one of the the most powerful ways that it can help us is in just making communication so much more clear, so much more concise, because I can tell you doing this for a long time that anytime we do engagement surveys, anytime we do focus groups, anytime we have complaints for employees, communication is always one of those top issues. So using AI to help you be more clear and concise can be an absolute game changer. Number three, of course, uh, it can save you time. So when you are, especially if you are an HR department of one or you're a hybrid HR leader, meaning you have a whole other job on top of HR, AI can be an assistant. It can be a wonderful personal assistant that's going to help you manage an inbox or help create agendas for you and workflows that work in your week. Um, it's going to be that, as we said, idea generator that can kick off ideas for you and kick off workflows that save you time. When you are trying to manage HR in a small environment, if you are one person and you are trying to do all of it, be all the things for everyone, then time is precious to you. And the the reason that we often don't see HR leaders in in small spaces who are able to be strategic, who are able to really think about how to align HR to the business, it's simply not a lack of knowledge or skill, but it's a lack of time. They just don't have time because they're doing all of the other administrative stuff on top of it. So AI can be a wonderful tool to help you save time in some of those administrative day-to-day tasks. Um, again, be that springboard to start ideas and workflows. So that you can gain back some of those precious moments that you can then use on things that actually drive the business. And then finally, one way that AI can absolutely help enhance your HR in a small business is that it can be a sounding board. Um, again, while it can't replace thinking and judgment, it can be a place to bounce issues off of and say, I'm facing this issue with a leader or I'm facing this issue with an employee or can you just tell me if I'm thinking of this correctly? And it will give you a response and it'll often give you a response that either leads you into more research or gives you more to think about. It should be conversational. So oftentimes if I'm using it for this situation, then I'm going to, um, think of it like I am talking to someone, who I can ask a question and they'll give me their feedback and then we kind of go back and forth with it until I get to a place where I'm thinking it out. Again, you have to do the thinking and you have to have the judgment as the person in this conversation, but it can um cut out any emotion that you have. I think that's where the value in it being a sounding board is, is that it obviously doesn't have that emotion attached to it. So there are times in my business where I have gone to AI and said, you know, I'm facing this challenge in my business and I think I'm a little emotional about it and this is where I want to go and can you tell me what you think? And it will give me very rational responses that kind of cut that emotion out of it. So if you are an HR department of one, if you are a solo HR manager, and you have no network, although I would encourage you to get a network, and you can go back to episode seven and learn about that. But if you have no network, no one that you can reach out to, then AI can be a good sounding board for you to start to work through issues. Just remember, you have to do the thinking. You have to use your judgment. So please don't take whatever it says at 100 percent face value. So let's do a little real talk about how to use AI. There's a lot of questions around, is it okay to use AI with human resources and how do we do that? Are there ethical concerns? There are certainly biases that can be introduced. And I think we've all seen that. And I absolutely believe that human resources should be using AI where it makes sense. I also absolutely believe that there are biases and sometimes ethical questions around the use of AI. And so if you are managing human resources in a small environment, I would encourage you to be continually learning about this technology. Be continually reading and absorbing information about the way that you can use it in the best way for whatever it is you need, but that also removes the bias as much as possible, removes the ethical questions as much as possible. So a couple of things that we do in our business. So I have told my team absolutely you can use ChatGPT, you can use AI. We have other AI systems that we use, which I'll talk about in a second. Um, absolutely let's use it because it does make us more efficient. It does make us more clear. It does help us with ideas and things that maybe we wouldn't have thought of. So I want to be able to harness that as a small business that needs to grow and move quickly and, uh, be the best that we can be for our clients. I want to harness that, but I also want to be really mindful of the fact that we are human resources. And we have an extra obligation to make sure that we are ethical, to make sure that we are unbiased, and to make sure that we are using it in a proper way. So here are the rules inside my business. The first one and the biggest one is that we never input sensitive information into any AI. So we are never going to put in client names, even if we are using it to, um, review a handbook or review policies. We will strip out any client name or any identifying information. We would never, ever, ever put employee information into something like ChatGPT. We would never put their name, uh, address, date of birth, none of their sensitive information. If we were asking ChatGPT to spit out an offer letter for us to create an offer letter or something, we would just have it use, um, dummy words, dummy text for those places where we needed to fill in sensitive information, and we would fill that in separately. So the first way that I think you have to make sure you are using AI in all across all of your AI is to make sure that you really are, um, not inputting sensitive information. Now, there's times where the sensitive information is there. So we use a, um, artificial intelligence, um, note taker called MeKeek in our all of our meetings. We use it in our recruiting. Obviously, because that is recording meetings, it's getting sometimes employee names or employee information. We don't typically share super sensitive information on calls like that anyway. We're not passing back and forth social security numbers or dates of birth, those kinds of things would never happen. Usually in calls, there's no sense of that. But MeKeek absolutely has client names. It has, um, you know, it's going to have individuals that we're interviewing potentially information about them. And so we want to make sure that if we are using something, a certain software, AI software, I like to understand its privacy and protection. What does it have in place to make sure that it is preventing being hacked or, um, any of that sensitive information leaking? So while I can't think of a single system outside of an HRIS system, of course, that we are purposely constantly inputting personal data um, even though the small data that we do put in, I am always checking just to make sure that one, we have proper protocols in place in our own privacy and data security. And then that the software that we're purchasing does as well. With a public software, something like ChatGPT Claude, those things, we are never putting in any personal information ever. Um, and we will strip out anything that could identify either a client or an employee of a client. Just to make sure that that if something were to get leaked, it's not on us. Another piece of that is on many of these learning language models. You can turn off the learn feature and with my team, I tell them to always make sure that they are not using our data to learn. And that's just another security measure for us. So the first thing that you want to think about if you were going to start using AI is just make sure, as human resources, that you are not putting anything super sensitive or sharing anything confidential into an AI bot. The second thing that I tell my team and the way that we use AI inside this business is to start with AI, end with your judgment. We are never going to just copy and paste what AI says. There are times that people will come to meetings with me with reports and I can tell that it was spit out from ChatGPT and I'll say, this is all great, but what do you think about this? I want to understand your interpretation of what this is saying. And so you start with AI, as I've already said, it's a great idea generator. It's a great, um, starting point, a springboard. But you don't just copy and paste and deliver whatever it's spit out. You need to review it, go through it, and make sure that it fits your business, that it fits what you're trying to do, that it fits the people inside your organization. I cannot stress enough how that personalization and that, uh, individual connection in a small org, how important that is. I really can't stress that. And so if we are just copying and pasting or we're using AI as the final answer, we're going to miss that. And it's going to feel robotic. And so start with AI, use it as a springboard, but end with your judgment and make sure that you are reviewing and adjusting and adapting whatever it is it's creating for you to your business's vision, to its values, to its style, and to the people that work inside it. And then the last piece of advice around incorporating AI is to get really good at prompting. Take classes. Don't just try this. This is not something that I would just wing because the better you get at your inputs, then the better outputs you're going to get, of course. So with our team, we did a training on really good prompting for AI and what makes a really good prompt. And I don't consider myself an expert. I got to tell you, I question anybody who says they are a master expert because the things change so fast. I think it's really hard to be one. Um, but I am continually trying to read things, learn things, watch videos from people who have been doing it longer or are using it in different ways than I am to try to get better at using it. And so it's the the better you are at using AI from a prompt situation, the inputs that you put in, keeping in mind that sensitivity piece, but the inputs that you put in, then the better outcomes you're going to get and the more useful it's going to be. I have had people say, oh, well, we tried AI and it didn't really work for us. And when I would ask them why, I think it's maybe because they weren't using it in a way that was helpful. They weren't really inputting good information. They weren't giving AI enough to really be able to output something that helped them. So, um, absolutely, you can use it. You should use it, I think, in your small org. It's not going to replace HR, but it can be a great lifeline, a great supplement. You just want to make sure these couple of areas that you are are very mindful of the sensitive information that you are using it as a springboard and an idea generator, but not the final answer. Um, and that you are learning about it and that you are increasing your skills around it so that when new technology comes to you, when maybe your HRIS provider says they've now added AI in these areas, you know how to ask the right questions to make sure that it's good for your business, that you're using it correctly, and that you are removing as much of that bias or as much of that personal security issue as you possibly can be. Real quick, let me tell you how we use AI inside this business. I've mentioned a lot of this already, but we absolutely use ChatGPT as kind of an idea generator for us, workflow generator for me as CEO. I'm driving business projects and doing podcasts and I'm also then working with clients at times. And so I will use it to help me in all of those areas. I will help use it to help me create ideas for driving some of the business initiatives I'm trying to do or workflows around those. For the podcast, of course, I use it to help me with outlines and ideas for new episodes. And then with clients, if we are depending on what the project is that I might be working on, but a lot of times it could be leadership development or something like a big, great places to work project, then I will use it to help me create timelines and workflows, activities. You know, sometimes I'll ask it for fun activities that I can encourage participants to do. So it is absolutely something that I and all of my team use to help with, um, ideas and then first drafts of things. I would say my business partners, my generalist, use it a lot for first drafts of policies, first drafts of job descriptions, job ads, uh, offer letters maybe for new clients, any of those things that we need to create templates for, SOPs, um, absolutely ChatGPT is being used for that. We do, of course, turn off the learning, as I said, and we never, ever, uh, put in client information or employee information when we are doing that. We strip all of that out. The second thing I already mentioned was MeKeek. So this is, um, probably the biggest piece of software that we have in our business right now. Um, that is driven by AI. It is an AI note taker. So in any of the meetings that you have with anybody on my team, you will see MeKeek pop up. It is an extra participant. So it's obvious that it's there. You can ask at any time for it to be turned off and we will absolutely do that. But it has been an absolute game changer for us, especially in the recruitment process. To be able to have an interview, a pre-screen or a first HR screen with a candidate, and have MeKeek take the notes for us so that we can actually listen and engage and not have to sit and just take notes of what they say and then remember that for the hiring manager. We actually just get to sit and engage in the interview with them and probe and dig in, um, and not waste a minute taking notes because we are recording the meeting and MeKeek is going to summarize those notes for us. It then sends us those notes, which we forward directly onto the hiring manager. So rather than us having to summarize or detail why we like this person or why we don't, we're able to just forward that right onto the hiring manager. They can actually see the pre-screen, they can hear the answers, or they can just read the summary of notes if they want to. And then make their decision on what they want to do next. That alone has been such a time saver, but also um, what an amazing way to go back and remember things that you may have forgotten. Remember things that you are in a meeting and you think, oh, what did they tell me to do there? I forgot. And you go back to the meeting. So my entire team loves MeKeek. There's lots of different, uh, versions of this. MeKeek is just the one that we use. Um, and we'll put a link down in the the show notes so you can see how that works. But there's lots of different AI note takers you can use. I think many of them are just fine. Um, but we really find that to be a game changer for us. We also many of our clients, we use the systems that they're in. So they have their own HRIS system, whatever systems they're using. We just come in and use those same systems and there is AI baked into a lot of those. And so especially around the recruitment process, you'll see a lot of AI and we will use that at the client's discretion, meaning that if they have an HRIS system and it has AI baked into the recruiting process, if they're comfortable with using that, then we will dig in to learn how is best to use it. Uh, what how do we make sure we're maintaining privacy and security? How do we remove any potential biases? You know, what do we need to do to make sure that we are are working against any bias that AI could have? And we will use AI in that way. And it typically does revolve around um, the recruiting process. But that's not for all clients. That's really based on their comfort level. We use it internally for our own use, both uh, chatbots, um, ChatGPT, MeKeek, things like that, uh, certainly right now we're looking into more project management software that is driven by AI. As a small org, I think it's important that we do leverage technology as much as possible. And if you're managing human resources in a small environment, leveraging technology is how you get your time back. And so um, we we believe, I believe as a business that it's important to use it, but I don't want to force that on clients. So if they have a system that has AI, but they don't really want to use it, then we won't. We'll find a different way to do what we need to do. But right now in the recruitment process, there's so much AI that is coming out and being delivered from just being able to do even full pre-screens of somebody through AI, having kind of an AI interviewer, uh, give somebody a call and ask them some questions. And so this is going to be ever evolving and I think it's going to be really interesting to see where it goes, but I'm excited to think about how we can incorporate this into what we're doing as a small org to be able to help us move faster and more efficient for the work that we're doing. Here's the bottom line. AI is a tool. I think you should absolutely use it. It can lighten the load 100 percent. If you are an HR department of one, if you are a hybrid HR person doing two functions, if you're a CEO just trying to do that on top of everything else, then it absolutely can be a time saver for you. But can it replace or manage your entire HR function? No. Because it cannot replace the judgment, the empathy, the personalization that small orgs need in order to be able to drive the business forward. AI cannot do that. So while it can be used to generate ideas, to save time, to be clear and concise in communication, you still have to have somebody who can execute well on whatever it is saying might be the best idea. And that person is usually somebody who can interpret the nuance of the business, the personalities inside it, the law for the compliance piece, making sure you have somebody that can do that is going to be really, really important. But I do think you should use it. So if you are an HR department of one, you're in a small org, maybe you haven't used AI yet. I think you should try it. I would encourage you to, uh, get a free account on ChatGPT or whatever AI you feel comfortable with. And start playing around with it and start asking it to generate ideas for you or workflows or enter in maybe some, uh, roadblock that you're facing in your organization and see what ideas it can give you. I absolutely think that there is a huge benefit to having it inside an organization, but I do not think that it's going to replace human resources or many of those functions where you have to have not just the idea, but the execution with empathy. I don't think it can do that. Next episode is going to be, uh, a three-part series. I'm really excited about it. It is going to be speaking to the three business partners inside of my organization, my payroll manager, and then two of my other client business partners who are going to be talking about all things payroll, all things HR tech, uh, we're going to be talking about benefits and we're going to be talking about employee relations. And this is then coming in and talking about exactly how they do this inside of the client organizations that we work with every single day. So you are not going to want to miss that if you're not subscribed already. Please do so that you are notified when those, uh, episodes are released. Um, and I'm so glad you're here. Thanks so much for being with me on the HR Connection, and we'll see you next time.