AI-powered HRM and ethical leadership: Balancing efficiency and human-centricity

This study explores the intersection of Artificial Intelligence (AI)-powered Human Resource Management (HRM) and ethical leadership within organizations in Jeddah, Saudi Arabia. It aims to investigate how ethical leadership can mediate and moderate the ethical challenges associated with AI integration in HR functions. A quantitative, cross-sectional research design was adopted, utilizing a structured questionnaire administered to 350 employees across various sectors that have implemented AI-driven HR systems. The study employed statistical techniques including cluster analysis, regression analysis, and Structural Equation Modeling (SEM) to assess relationships among AI usage, ethical concerns, and leadership factors. The results indicate that while AI adoption enhances HR efficiency in recruitment, performance management, and analytics, it also raises significant ethical concerns such as bias, lack of transparency, and reduced human oversight. Ethical leadership, characterized by fairness, openness, and integrity, was found to significantly reduce these concerns by fostering trust and transparency. It both mediated the relationship between leadership and AI governance and moderated the link between AI usage and perceived ethical challenges. Ethical leadership plays a pivotal role in mitigating the ethical risks posed by AI in HRM. Its presence helps align technological advancement with human-centric values, ensuring responsible and accepted use of AI tools in HR functions. The study underscores the need for organizations to invest in leadership development alongside technological upgrades. HR leaders must prioritize transparency and employee trust to successfully integrate AI while maintaining ethical standards. These insights are especially relevant for organizations operating in culturally complex environments like Saudi Arabia.