Purpose The purpose of this paper is to analyse the integration of artificial intelligence (AI) in human resource (HR) practices with a view to ethical challenges and opportunities, and their effects on organisational integration and employee engagement. Design/methodology/approach Based on an extensive literature review, this study uses the social exchange theory and stakeholder theory, in the backdrop of strategic human resource management to formulate a conceptual framework. The proposed framework reconciles AI-based efficiency with human-focused HR practices. It investigates AI ethics, transparency and perceptions of fairness in AI-based decision-making among employees. Findings AI implementation in HR has the potential to enhance efficiency, transparency and decision-making but is ethically challenging with regard to bias, data privacy and trust. Ethical adoption of AI in HR promotes organisational integration and employee participation when applied with fairness and human-oriented values. The research points out that AI-based HR practices, when coupled with ethical principles, improve employee motivation, organisational trust and fairness in HR processes. Research limitations/implications This study is conceptual and would benefit from empirical testing through case studies and real-world HR implementations. Further research can delve into industry-specific issues, regulation implications and cultural differences in the adoption of AI across HR. Practical implications Organisations must adopt AI-based HR solutions with a robust ethical base, promoting fairness, transparency and employee trust. AI must be used as an augmentation tool and not a substitute for human judgement. Initiatives such as Explainable AI (XAI), bias reduction and stakeholder engagement are essential for responsible AI implementation in HR. Originality/value This paper adds to the emerging conversation on ethical AI in HR through the development of a framework combining AI with employee-focused HR values. It underlines finding the balance between technology and ethical as well as employee-focused factors for developing an equitable and inclusive working environment.
S. et al. (Tue,) studied this question.