So you want to do AI for HR? Keep Moving Forward!

This is Part Two in our Three-Part series on leveraging AI solutions for HR

AI solutions help to automate routine HR tasks, streamline people operations, surface data, and people insights faster. Now that you have defined your needs and set your goals, how do you ensure you're investing in the right AI solution for HR and your employees? And how do you set your budget for AI solutions that drive the employee experience?

Not all AI vendors approach AI with a lens towards business governance, ethical considerations and legal compliance in the same way. In part two of this three-part series on leveraging AI for HR, we’ll guide you through what to consider when purchasing AI solutions for HR, from how to evaluate vendors to the costs of AI.

Part 2: Evaluating AI Vendors – What HR Leaders Need to Know

In Part One of "So You Want to Do AI for HR? Let's Get Started," we shared how to identify your pain points and needs that AI can solve, so you can set goals and ways to measure outcomes.  

In Part Two,  we'll discuss considerations when choosing the right vendor, including capabilities, security, costs, and long-term maintenance and support.

1. Key Criteria for Evaluating AI Solutions

A. Core Capabilities – What Can the AI Solution Actually Do?

When meeting with AI solution providers, take time to learn the following:
✅ Type of AI: Is the solution leveraging Large Language Models (LLMS) and Generative AI? Is the solution a chatbot interface for employees or an AI agent or a fully autonomous system?
✅ Automation Capabilities: Can the AI handle repetitive HR tasks, such as answering employee inquiries, automating communications and engagement workflows?
✅ Accuracy & Context Awareness: Does the AI understand HR and company-specifics terms? Can it distinguish the unique payroll, benefits, and labor law questions from employees based on their geographic location?
✅ Multi-Channel Support: Can employees interact with the AI through SMS, Slack, Microsoft Teams, or web chat?
✅ Personalization: Can the AI tailor responses based on an employee’s role, department, and location?

🚩 Red Flag: Some vendors sell “AI” solutions that are actually rule-based chatbots with limited learning capabilities.

B. Ease of Implementation & Integration

AI should fit seamlessly into existing HR and IT ecosystems and be easily accessible to employees. Consider:
✅ Integration with Key Systems: Can it integrate with content management systems, support ticketing systems, or other enterprise software?
✅ Customization Options: Can the vendor adapt the AI to company-specific policies, workflows, and branding?
✅ Time to Go Live: How long does it take to deploy the solution? (Weeks vs. months or years?)

🚩 Red Flag: Some vendors require heavy IT involvement or weeks of training data before the AI can function properly.

C. Security, Compliance & Data Privacy

Given that AI will handle company and employee data, vendor security is critical. HR leaders should ask:
✅ How is employee data stored and protected? Does the solution provide the option to anonymize employee information?
✅ Does the vendor comply with industry regulations? (e.g., GDPR, SOC 2, AI regulations by state and country).
✅ Does the AI prevent biased or legally risky responses? How does the solution ensure accuracy and oversight by the business users?
✅ Can we control and audit AI-generated responses? How can we see the results? Is it data we can view in a dashboard?

🚩 Red Flag: AI vendors that do not provide transparency on data security, compliance, or AI decision-making should be avoided.

D. AI Training & Ongoing Learning

To remain effective, AI must continuously improve. Evaluate:
✅ How does the AI learn? (Pre-trained HR models, company-specific training, ongoing updates)
✅ Can HR teams manually correct or retrain the AI? As subject matter experts, having the ability to improve results is key.
✅ How often does the AI update to reflect new laws, policies, or company changes? Being able to update information as it changes is key.

🚩 Red Flag: AI solutions that do not evolve over time will become outdated and ineffective.

E. Reporting & Analytics – Measuring AI’s Value

HR leaders need clear metrics to justify AI investments. Look for:
✅ Detailed insights into employee engagement with AI (e.g., top questions, peak usage times)
✅ Response accuracy tracking (so HR can improve AI-generated answers)
✅ ROI measurement tools (e.g., time saved, reduced HR workload, improved employee satisfaction)

🚩 Red Flag: If an AI vendor cannot provide analytics or prove its impact, it may not be worth the investment.

F. Customer Support & Vendor Reliability

AI is not a set-it-and-forget-it solution—it requires vendor support. Consider:
✅ Is customer support available 24/7?
✅ Do they offer a dedicated customer success manager?
✅ What is their track record with similar-sized companies?

🚩 Red Flag: Vendors that provide minimal support or lack experience with companies of your size may lead to a poor implementation experience.

‍

2. Common Pitfalls When Choosing an AI Vendor

🚨 Overlooking Hidden Costs

Some AI solutions appear affordable but have additional costs for training, integrations, or premium support. HR leaders should request a Total Cost of Ownership (TCO) estimate.

🚨 Buying a One-Size-Fits-All Solution

Generic AI solutions often fail to meet HR’s specific needs. Look for HR-specialized AI vendors instead of general-purpose AI chatbots.

🚨 3. Expecting AI to Work Perfectly from Day One

AI requires fine-tuning to align with company policies and HR processes. Vendors should offer a customization period for optimal performance

‍

3. Building a Business Case that Aligns to your HR Strategy

The best AI vendor is not just a software provider but a strategic partner that helps HR teams improve efficiency, reduce costs, and enhance the employee experience. Building your business case to ensure stakeholder involvement and securing a budget for your AI solution includes the following steps:  

- Define Clear Objectives: Link your AI investment to measurable business outcomes—such as reduced HR workload, faster response times, or improved employee satisfaction.
- Engage Stakeholders Early: Involve leaders from HR, IT, Finance, and Legal to align priorities and ensure compliance.
- Calculate Total Cost of Ownership: Include not just upfront costs, but training, customization, integrations, and ongoing support.
- Measure and Communicate ROI: Track KPIs such as time saved, reduction in manual work, and employee engagement to demonstrate the value of your investment.
- Plan for Change Management: Ensure you have a plan to train HR staff, communicate changes to employees, and gather feedback for continuous improvement.

‍

Key Takeaways

Selecting the right AI solution for HR is about more than just features and price. It’s about finding a partner who understands your needs, prioritizes security and compliance, and provides ongoing support for your evolving workplace.

Before you choose an AI vendor, remember to:
- Evaluate capabilities, integration, security, and support.
- Watch for hidden costs and generic, one-size-fits-all solutions.
- Build a strong business case aligned with your HR and organizational goals.

‍

Stay tuned for Part Three**, where we’ll cover best practices for implementing your chosen AI solution, ensuring smooth adoption, and maximizing long-term value.

Ready to take the next step? Contact us to learn how our AI-driven HR solutions can transform your employee experience.

‍

For more insights on leveraging AI in HR, revisit Part One of this series.