RedThread Research has unveiled its latest report, "AI and People Analytics Technology: Insights from the Starting Line," offering a comprehensive look at the evolving role of artificial intelligence (AI) in HR technology. The report explores the evolving role of generative artificial intelligence (Gen AI) and machine learning (ML) across people analytics technology, highlighting both opportunities and challenges for organizations seeking to leverage these tools. It synthesizes eight months of quantitative and qualitative research — drawing on surveys from 48 vendors and 171 customers, vendor briefings, practitioner roundtables, and ongoing discussions with RedThread members.
Sponsored by the RedThread Tech Consortium, this research finds that AI is primarily being used to address workforce management challenges, improve efficiency, and enhance decision-making. Vendors are using Gen AI to improve access to data and insights through natural language processing and analyze employee feedback and comments — but there are also critical shortfalls in areas such as risk management, ethics, and customer understanding.
"Generative AI is transforming HR technology in ways we're only beginning to understand," said Stacia Garr, co-founder and principal analyst at RedThread Research. "There's no doubt that it is poised to tackle some of HR's most persistent challenges — but right now, we are seeing a lot of talk about AI in these technologies and less clarity on how AI is solving leaders' critical business challenges."
Key Takeaways from the Report:
Broad AI Adoption — and Customer Skepticism: While 90% of vendors report using AI (ML and Gen AI), only 40% of customers recognize AI within their solutions, highlighting a significant disconnect in communication and implementation.
Use Cases Align. Usage Perceptions Don't: Vendors and customers agree on the top use cases for AI — like NLP and attrition analysis, but customers are less likely to say they're seeing them in action.
Traditional ML vs. Gen AI: Vendors prioritize Machine Learning for workforce management challenges like retention prediction, while Generative AI is more frequently applied to data accessibility and interpretation and optimization tasks.
Innovation is Strongest Among Small Vendors: Companies under $1M in revenue are leading experimentation with AI, leveraging agility for faster adaptation.
Ethics and Risk Management are Lacking: A notable gap exists in vendors addressing ethical concerns or creating the frameworks necessary to ensure internal and external ethical use of AI. Similarly, only half of vendors are ensuring SOC 2 certification for security and risk management.
"Our findings here highlight a gap between vendor capabilities and customer expectations," added Priyanka Mehrotra, co-author and analyst. "We see the need for more transparency, risk management, and practical applications of AI if vendors want to deliver more meaningful impact to employers and their employees."
Explore the Insights Further: RedThread Research invites you to join Stacia Garr and Priyanka Mehrotra for a Tech Consortium-sponsored webinar on February 4, 2025. This event will delve into the report's findings, offering actionable strategies for leaders across the HR tech ecosystem. Register for the webinar here.
Join the RedThread Community: In a landscape defined by rapid change, staying ahead requires access to the right insights and expertise. Companies and individuals can explore these findings further by joining the RedThread research community or the Tech Consortium. Visit http://www.redthreadresearch.com or email hello@redthreadresearch.com for more information.
About RedThread Research: At RedThread Research, we get it. Sure, we're experts in performance, people analytics, learning, and D&I – and we're well-versed in the technologies that support them. But we're also truth-seekers and storytellers in an industry often short on substance, and too full of #!%. Our mission (indeed, our very reason for existing) is to cut through the noise, and amplify what's good. We look for the connections (or red threads) between people, data, and ideas – even among seemingly unrelated concepts. The result is high-quality, unbiased, transformative foresight that helps you build a stronger business. To learn more, visit: http://www.redthreadresearch.com
