While much of the animated conversation about artificial intelligence has focused on the frightening ways AI could disrupt social institutions—or much worse—what’s often overlooked is how much businesses are already using it. In fact, HR is among the most popular areas where companies apply the technology. 

In a survey, 42% of HR professionals at companies with more than 5,000 workers said they use AI and other automation to support HR activities, according to a 2022 poll of HR leaders by the Society of Human Resource Management (SHRM). The top areas for using AI: recruiting and hiring, learning and development, and performance management. Even so, more than half of the AI-using professionals said they have run into challenges with it, including AI accidentally overlooking or excluding qualified candidates. 

How can companies use AI in ways that are both more inclusive and effective? They could focus much less on credentials and more on skills and aptitude. “We think competencies level the playing field,” said Katie Hall, CEO and founder of Claira, a workforce management platform powered by AI that measures workers’ competencies to improve hiring, engagement and employee retention. “Everyone everywhere has competencies. We think that the system has to change and be set up in such a way that we don’t make permanent mistakes with the AI revolution that’s coming.”

Skills-focused hiring and career development is catching on across many industries. Among the reasons for this, according to recent Deloitte data: The majority of employees focus on team and project work that fall outside their job descriptions; more work is performed “across functional boundaries,” and adopting a skills-based approach gives organizations a 57% better chance at being “agile.”

Claira takes this outlook a step further. Workers don’t only have everyday skills that are on conspicuous display when they carry out tasks. They have “invisible” ones as well, including, as defined by the Society for Human Resource Management, empathy and compassion, a sense of curiosity, and listening skills.

“If you’re a musician or you like to cook in your free time, that means you like directions,” says Hall, offering an example of her own. “You like to do things in a specific order and you’re very rigorous about following protocols.” 

Claira’s AI is built to identify these “invisible competencies,” as Hall calls them, that paint a more vivid picture of not only a candidate’s kaleidoscope of capabilities, but also those of employees already on a team.

“If you can unlock each individual,” by considering all of their competencies, those visible and invisible, “then you have the opportunity to really maximize your whole workforce,” Hall says.

Her company has accumulated data to quantify how much companies don’t do this. On average, employers are utilizing only 40% of their workforce’s potential, according to Claira research, reflecting slack of 60% that they could better maximize to cut costs—in large part because they’re unaware of their employees’ competencies. 

“There are a lot of opportunities to cut costs and create efficiency in HR,” said Hall. “We heard from one of our companies that they found someone internally who could do the things they had listed on a job posting, so they took the posting down and just used the person they already had on the team. What did that save? A hundred grand?”

The way Claira works is it plugs into an organization’s HR software, which includes applicant-tracking systems, and creates from all the résumés and other items a “competency library that suits the business,” as Hall described it.

“We have like 20,000 competencies in the back of our software,” said Hall, “things like ‘manage a team of engineers,’ ‘listen with empathy’ and many others, and we’ll tune the dataset.”

Then, Claira onboards an organization’s employee base through a brief questionnaire. The AI selects competencies for the workers based on their answers. 

“We’re also translating the text that comes into competencies, which is part of the secret sauce,” Hall says. “We’re trying to make it really easy for customers to adopt the new way, and technology is what’s filling the gap and allowing us to meet them where they are.”

With all this in place, Claira can also help an organization identify hard skills a current employee has that they just don’t utilize in their current roles. “We uncover that people may have taken a coding class,” says Hall. “So there are people working in a division of the business and their managers have no idea that they have coding skills.”

If that could be realized, the employee could be positioned more advantageously, where their full suite of skills are leveraged. “And if you align people to their work better, they’re happier, right?” Hall said. “That’s a big retention metric, and we see about a 20% retention bump.”

In fact, with this kind of program in place, a people manager might even realize some of their workers can become AI programmers—jobs that will be increasingly in demand going forward and will logically replace many outdated ones. “Think holistically,” advised Hall. “It’s not just people anymore. ChatGPT is part of your workforce. So is your hardware. You’re going to have to start training the models and managing your workforce in a way that includes both humans and machines together, so there will be a lot of new competencies emerging, like programming and maintaining the software, stuff like that.”

She says further integration of AI is “inevitable,” no differently than any of the other tools and solutions adopted by companies through the years. But Hall also understands the skepticism and fear associated with AI’s rise in prominence. 

“Humans are funny. We’ve known this was coming for a long time; we’ve been talking about AI for years and it still surprised us,” Hall said. “We’re either going to do AI right or not, and that’s scary, but we have an opportunity right now to get it right.”

Editor’s note: From Day One thanks our partner, Claira, for supporting this sponsor spotlight.

Michael Stahl is a New York City-based freelance journalist, writer, and editor. You can read more of his work at MichaelStahlWrites.com, follow him on Twitter @MichaelRStahl, and order his first book, the autobiography of Major League Baseball pitcher Bartolo Colón, at Abrams Books.