Stuart Gentle Publisher at Onrec

The importance of AI policies in HR: A new frontier in workplace governance

Article by Daniella Pye, Senior Manager at Sellick Partnership

Artificial intelligence (AI) is no longer the work of science fiction; it is becoming an integral part of today's corporate ecosystem. While its applications span multiple departments, HR remains one of the key areas where AI is making a considerable impact. 

From talent acquisition to performance reviews, AI-driven algorithms are streamlining operations, enhancing decision making and improving the overall employee experience. But this technological integration raises the question: do companies now require policies on artificial intelligence in relation to human resources?

Why AI policies are essential

With AI penetrating HR functions, businesses must navigate a complex set of ethical, legal and social dilemmas. Algorithms may inadvertently perpetuate biases, infringe upon employee privacy, or raise concerns about data security. 

Therefore, where AI is utilised, a policy is not merely a good-to-have; it is imperative for fostering a fair and transparent work environment.

Ethical considerations

The lack of proper guidelines can result in AI unintentionally reinforcing workplace biases. For example, an AI-driven recruitment tool trained on a dataset that is skewed towards a particular demographic may inadvertently discriminate against certain protected characteristics of applicants. 

An AI policy can act as a safeguard against such ethical lapses by mandating scheduled reviews, audits, and even third-party evaluations of algorithms. This ensures ongoing scrutiny and adjustments to minimise bias and foster an equitable work environment.

Legal risks

The absence of AI-specific policies puts companies at risk of violating existing and emerging laws. Countries like the UK are increasingly focusing on legislation to regulate the use of AI in workplaces. The spectre of legal repercussions looms large, from hefty fines to reputational damage. Employers must proactively create AI policies that are in alignment with local, national, and international laws, and keep these policies updated to reflect changes in legal landscapes.

Employee satisfaction and trust

Transparency is crucial for building employee trust and satisfaction. When workers are aware that structured policies govern the AI in HR processes, they are more likely to perceive these technologies as fair and unbiased. 

Such transparency not only enhances employee morale but can also positively impact retention rates, as employees are more inclined to remain with companies they view as ethical and honest.

Elements of a robust AI policy


For effective governance of AI in HR, companies must clearly define accountability. This could involve setting up a dedicated AI Ethics Committee that works in collaboration with legal advisors and data scientists, or perhaps a joint effort between the HR and IT departments. 

Whichever the approach, accountability must be clearly attributed to ensure effective implementation and oversight.


Transparency in AI policy is non-negotiable. Clear guidelines should spell out how algorithms make decisions, the data sources they rely on, and the checks in place to prevent bias. 

Employees should also be proactively informed whenever an AI tool is engaged in HR processes that have direct implications for them, like performance evaluations or promotions. It is important to foster transparency in how a business is utilising the new AI tools within its processes. By doing so the credibility of the AI systems is improved allowing employees to buy into the new technology that will become fundamental to their roles within the company.

Data security and privacy

A robust AI policy is crucial for characterising the collection, storage and use of employee data. Such a policy serves a dual purpose: it not only ensures ethical practices within the organisation but also brings the company into compliance with existing data protection legislation, like Europe's General Data Protection Regulation (GDPR). This helps to safeguard both the company’s corporate integrity and legal standing.

Regular audits

Regular assessments are essential for gauging the performance of AI algorithms within HR processes. These evaluations serve to confirm that the algorithms function as designed and do not have any built-in biases. 

By continually monitoring and auditing the AI systems, companies can ensure they meet ethical standards and achieve intended outcomes, thereby maintaining both fairness and effectiveness in their HR practices.

Learning from others

Several leading organisations are setting examples by proactively implementing robust AI policies in their HR departments. Global technology giant IBM, has been at the forefront of this trend. They've established specific principles focused on the transparent and ethical deployment of AI in HR functions, setting a high benchmark for industry standards. IBM's commitment to ethical AI extends to providing employees with insights into how AI algorithms make decisions that may affect their career paths, enhancing trust and transparency.

Similarly, Salesforce has gone a step further by creating an entire Office of Ethical and Humane Use of Technology. This office serves as a watchdog, ensuring that the company's use of AI is not only ethical but also considerate of broader human and societal implications. Salesforce's approach reflects an understanding that ethical concerns surrounding AI are not just HR issues, but corporate responsibilities that demand comprehensive solutions.

These case studies highlight why developing AI policies in HR is both urgent and practical. They serve as guiding lights, demonstrating how companies can navigate the complex ethical landscape of AI in the workplace while fulfilling legal obligations and safeguarding employee trust.

As AI technologies continue to evolve, so too must the policies that govern their application within the HR domain. The need for AI policies is not up for debate; it's a necessity for companies striving for ethical, transparent and effective HR operations. By acknowledging the complexities and potential pitfalls of AI, businesses can better position themselves for success in an increasingly digital landscape.

With the rise of AI, companies are at a pivotal point where the lack of robust AI policies could lead to ethical mishaps and legal repercussions. As the adage goes, "forewarned is forearmed"; hence, a well-considered AI policy is not just advisable but essential.