Impact of Artificial Intelligence on Workforce Engagement and Retention in Digital Human Resource Management

Abstract

The rapid digital transformation in Human Resource Management (HRM) has accelerated the adoption of Artificial Intelligence (AI) to optimize workforce engagement, enhance retention strategies, and drive talent management innovations. This study examines the impact of AI-driven HR systems on key performance indicators such as employee satisfaction, voluntary turnover, and HR operational efficiency. Empirical data collected from over 15 multinational organizations, encompassing 12,000 employee records across diverse industries, indicate that AI-powered HR solutions improve workforce engagement by 42%, reduce voluntary turnover rates by 27%, and increase HR process efficiency by 35%. AI-driven sentiment analysis enhances dissatisfaction detection by 33%, enabling proactive interventions. Additionally, AI-based predictive hiring models demonstrate 85% accuracy in forecasting employee attrition, compared to 72% for traditional HR models. The study employs a hybrid AI framework integrating logistic regression and Long Short-Term Memory (LSTM) networks to analyze employee engagement trends, job satisfaction fluctuations, and retention patterns over time. By leveraging AI-powered chatbots, predictive analytics, and intelligent automation tools, HR processes are optimized, reducing administrative workloads by 38% and improving response times from 20 hours to 1.5 hours. Comparative analysis with conventional HR approaches highlights AI’s superior ability to personalize career development plans and detect high-risk attrition cases, ensuring timely interventions. Despite these advantages, AI adoption in HRM presents challenges such as bias in decision-making, lack of transparency in AI-driven recommendations, and employee concerns regarding data privacy. This study addresses these challenges by proposing a scalable, explainable AI (XAI) framework that ensures fairness, transparency, and ethical compliance in AI-driven HRM systems. The research findings provide valuable insights for organizations aiming to integrate AI into HR strategies while fostering trust, employee engagement, and long-term workforce sustainability. By bridging the gap between academic research and real-world HR applications, this study offers actionable recommendations for optimizing AI-driven talent management in the modern digital era.