Artificial intelligence is transforming the world of business – and is particularly impacting leaders and their roles. It delivers a wide range of benefits, from helping with better, faster, and more informed decision-making to automating more routine areas of their jobs. This frees up their time to concentrate on motivating and getting the best out of their people.
In this new AI-driven environment leaders will need to focus on developing new capabilities, not just around understanding, and using data, but also interpersonal skills to complement the power of technology in leadership. How is AI changing leadership and how is it being used?
How is AI being used in leadership?
Artificial intelligence for business leaders is being used in multiple different ways, including:
To improve decision-making
AI provides the ability to analyze huge amount of structured/unstructured information instantly. It can collect data from a wide range of sources, such as the internet, social media, company emails, and use this to support more informed and accurate decisions. Essentially it provides leaders with greater confidence that the decisions they are taking will be the right ones, backed by more complete information.
In an increasingly complex and fast-moving world this makes AI and leadership vital to business competitiveness. As AI collects, organizes, and analyzes data, leaders can focus on making the right decisions, rather than worrying that they are missing vital information.
However, while AI is increasingly powerful, it is vital that human leaders are still making the big decisions. They have the ethics and moral judgement to ensure that decisions are fair, ethical, non-discriminatory, and legal – areas that AI may not understand or act on.
Improving performance reviews
Employee performance reviews are driven by data. This is particularly true of 360 degree reviews, which bring together input from colleagues, managers, and reports. However, collecting and analyzing all of this information is a time-consuming process for the reviewer, with the potential that feedback will be missed or not understood.
AI removes all of this overhead, automatically collecting, grouping and analyzing feedback so that it can be presented to the reviewer. It enables true, in-depth 360 degree reviews, providing guidance for the reviewer during their discussion. It means that the reviewer can focus on building empathy and development opportunities, backed up by data, enabling sessions to be more useful for everyone. Based on the information collected, AI can also suggest areas for development or particular training courses that can then be discussed during the review. The whole process is streamlined for leaders and their reports, dramatically reducing the time required to collect and analyze performance review data.
Predictive recruiting and project management
In a complex and fast-moving world, it can be difficult for leaders to understand the skills and capabilities required in their team. Often gaps only become apparent after projects hit bottlenecks or fail to deliver success. By comparing teams and programs to the wider market, AI can provide recommendations of the skills required, and when they will be needed. This helps with both internal talent management (such as by highlighting employees with the right skills to join a project) and proactive recruitment to plug future gaps before they become issues.
More in-depth, personalized leadership training
Successful leaders understand that they, and their teams, need to be continually learning and developing. However, mentoring and coaching can be difficult and time-consuming, with managers struggling to deliver the personalized support required if they have a large number of reports.
By analyzing feedback and performance reviews, AI-based chatbots can provide digital coaching and mentoring, suggesting recommended training courses and areas for development. These chatbots provide AI leadership development, working with ‘their’ leader throughout their career, providing a personalized program that understands goals, strengths and weaknesses and helps accelerate development.
Leaders need to focus on leading. However, too often they spend large amount of their time on admin. For example, arranging meetings for their team can require them to check multiple diaries, confirm when employees are in the office and then book a room. Answering routine questions, such as around benefits and signing off vacation and leave forms can also be extremely time-consuming. AI removes administration overheads – such as by automatically arranging meetings or checking whether potential leave causes issues for the team. Chatbots can provide answers to routine queries, meaning they don’t need to be handled by leaders or HR teams. This use of AI in leadership frees up time and lets leaders focus on their main job, motivating and leading their teams.
Deliver personalized communications
Clear communication is a key part of the leadership role, ensuring that all employees and team members understand what is happening within the business. However, every employee has a different requirement around how they are communicated with, and the channels used to get messages across. In the past, leaders either had to manually tailor communications to each individual or rely on blanket approaches, knowing that it wouldn’t necessarily meet everyone’s needs.
Generative AI can help by delivering personalized communications, taking the leader’s message, and automatically adapting it for different audiences at scale. This personalisation helps increase understanding, buy-in and motivation from across the company by combining leadership and AI.
In this way, AI also helps to adapt communication within the company to the different generations in the working world.
What are the benefits of AI in leadership?
AI delivers four key benefits for leaders:
1. Enabling transformative leadership
Successful organizations understand the need to move from transactional to transformational leadership. Transformational leaders are inspirational role models who motivate their teams to develop and achieve. Combining artificial intelligence and leadership supports this change by streamlining leadership, removing administration. This allows leaders to focus on their people, which increases motivation and productivity and underpins business success.
2. Supports better leadership development
In a fast-changing world, leaders understand that they need to be continually developing their skills, filling gaps in their capabilities and improving their performance. AI helps achieve this in two ways. Firstly, it makes it easier to collect and analyze performance feedback from a wide range of sources, using data to pinpoint areas for improvement. This means that rather than 360 degree feedback exercises being annual events, they can take place as and when required by the leader or their manager. Secondly, AI can be used to recommend relevant courses, information, and behaviours for leaders to focus on, providing advice and mentoring to help improve leadership development.
3. Supporting proactivity and agility
Every business now operates in a volatile environment, with a combination of geopolitical factors, increasing competition and the need to be more sustainable all providing a range of challenges and opportunities to organizations. AI helps leaders better understand this world by collecting and analyzing vast volumes of data. This supports leaders in their decision-making, enables them to spot opportunities, providing early warning of issues, and even allows them to predict future events.
4. Increase team performance and collaboration
Even the best leader may not have a complete view of the skills and needs of all of their team. By analyzing data in everything from emails and conversations to reports AI is able to provide leaders with a full picture of their people. This insight allows leaders to adopt personalized, informed ways of managing and motivating team members that will help them develop and keep them engaged.
AI also helps with understanding potential silos across the organization that hold back collaboration. It can analyze emails to see who is working together across departments. Leaders can then step in and build bridges between departments and individuals who may not be collaborating effectively, improving performance and innovation.
What are the challenges of AI in leadership?
However, while AI delivers benefits, it also brings challenges for leaders, focused on three areas.
Managing employee concerns around AI
Goldman Sachs has predicted that 300 million jobs will be lost or disrupted due to the rise of AI. Clearly, the impact of AI is a major concern for employees across different sectors as every profession is affected, particularly white collar roles that were previously seen as impossible to automate. For example, worries about the use of AI are one of the reasons for the 2023 Writers Guild of America strike, which is impacting the US film and TV industry.
Incorporating AI into a company is a transformative change, which may be viewed with alarm by staff. The leader’s role is to manage this change, listening to staff and giving them an understanding of the benefits for them. Leaders need to create a culture that delivers the benefits of AI while still showing it values the human skills that its people bring.
It is also becoming increasingly important to provide job security – especially in these turbulent times.
Becoming an AI-driven leader
The rise of AI does not mean the end of human leadership. In fact, delegating decision-making and management to AI without a human in the loop is likely to lead to sub-optimal decisions. Leadership needs to bring together AI and the human touch. This combination demonstrates Moravec’s paradox in action – “What is easy for humans is difficult for AI, and what is difficult for humans seems rather easy for AI.” Leaders therefore need to focus on the human dimension in business, covering areas such as ethics, creativity, and interpersonal skills.
Leaders need to develop and focus on new skills
Every leader now needs to understand AI and to possess the right AI leadership skills to confidently use data in their role, whatever sector they are in. However, they also need to understand the limitations of AI and where using it can lead to issues. For example, the ChatGPT generative AI chatbot provides a wealth of information in response to questions but can suffer ‘hallucinations’ where it confidently gives inaccurate answers. It can also collect confidential information used in conversations and make this available externally if ground rules are not in place.
Leaders need to focus on developing creativity, empathy, and interpersonal skills, along with the ability to act as a bridge between technology and business/employee needs.
To achieve this Arden University recommends future leaders develop skills in four key areas:
- Self-leadership (self-awareness, self-management, and entrepreneurship)
How leaders should use AI in daily business
AI has the potential to transform the working lives of leaders, covering four key aspects of their role:
Leading teams and the wider organization
Leaders should use AI to streamline administration and automate routine activities. That will enable them to free up time to focus on human skills such as effective communication, building rapport with their people and motivating their teams.
They need to use AI to move from being a transactional to a transformational leader that is admired by their team and who acts as a role model. Failing to do this will put their position at risk. As Rob Thomas from IBM points out “AI is not going to replace managers but managers that use AI will replace those that do not.” This equally applies to leaders in the future world of work.
Building a human-centric culture
With AI increasingly prevalent across organizations, it is up to leaders to successfully manage the change that this brings. They need to integrate AI into the business and understand where it will be used. This needs to happen through a human-centric culture that is founded on collaboration, innovation, and ethical practices. This will ensure that AI is used responsibly and where it delivers best results, helping ensure its greater adoption alongside human skills.
Making better decisions
The decisions that leaders take can make or break an organization. However, until now often leaders were choosing strategy and tactics blind, as they didn’t have sufficient information to weigh up all the options. This could mean that the wrong options were chosen, or that opportunities were not taken as leaders did not have enough data to make a rapid decision. AI changes this, so leaders should ensure they embrace AI-driven decision-making across their working lives in order to improve their and the company’s performance.
Embracing data and feedback
As well as embracing data for decision-making, leaders need to tap into feedback to increase employee engagement and improve their own performance. By using AI to collect and analyze feedback on a continuous basis, especially through text analytics, they can better understand the concerns and needs of staff. This enables them to focus on improving the employee experience to increase performance, motivation, and retention. Acting on 360 degree feedback enables leaders to understand their own performance too, highlighting areas for growth and improvement, along with concrete advice on how they can fill any gaps.
A look into the future: How will AI change leadership in companies?
In short: While leaders will not be replaced by AI, their role will be impacted and enhanced in multiple ways. Instead of administrative tasks, the focus is increasingly on human skills such as empathy. The same also applies to human resources.
Many companies fail precisely because of this. They don’t know how to use AI, how to drive the change and how to use it for themselves. However, the rise of AI is just one of many challenges in today’s workplace.
Read our free whitepaper to learn what the challenges are today and turn your biggest pain points into profit.
AI is just one of the megatrends that is reshaping the world of work, alongside the need for greater sustainability, generational change, and geopolitical and economic turmoil. Download our full 2023 report on the Future of Work to learn what matters in these uncertain times and how companies should react now to be ready for coming workplace trends.
How Tivian helps your leaders
The world of work is undergoing unprecedented change. Successful organizations require strong, transformative leaders that are committed to listening to feedback, continually improving their skills, and mastering new technologies such as AI.
Tivian’s Leadership 360 software provides the insights that empower and grow your leaders at all levels of the organization. It puts feedback and insights into the hands of your leaders, 24/7. By collecting, analyzing, and sharing data on-demand or as part of regular performance reviews it highlights areas for individual development as well as building the wider skills and behaviours organizations need to succeed in the future of work. It even uses AI to recommend actions to take to drive improvement, bringing together technology and leadership development to drive effective, long-term results.