HR leaders grapple with AI ethics & performance reviews

Lattice has published its 2027 State of People Strategy Report on AI in HR and performance management, based on a survey of more than 1,300 HR professionals across the UK, Europe and North America.

The findings suggest many organisations are already using AI for routine management tasks, especially performance reviews, while still grappling with ethics, implementation and whether the tools deliver on expectations.

Almost three quarters of HR leaders said they believe managers are already using AI to write performance reviews. Among respondents, 76% said AI speeds up completion, while 64% said it improves review quality and the same share said it increases completion rates.

This points to a shift in how companies handle performance management. It remains the top priority for HR leaders globally, with 45% of organisations now conducting reviews monthly or quarterly rather than on a less frequent cycle.

Pressure points

The report found growing pressure on HR teams from senior leadership to make greater use of AI. Just over half of HR leaders, 51%, said they were under pressure from the C-suite to increase AI use, even as 60% said they still had ethical concerns about deployment.

Those concerns are reaching senior management directly. Some 71% said they had spoken with leadership about ethical issues linked to AI, suggesting the debate has moved beyond adoption to governance and accountability.

Regional differences were also evident. European organisations were more likely than US counterparts to use specialised AI-powered tools, 59% to 41%, and were also more likely to raise ethical concerns directly with leadership.

US HR leaders were more likely to say AI overpromises on productivity gains. That view was held by 77% in the US, compared with 64% in Europe.

Beyond AI adoption, the survey pointed to strain within the HR profession itself. More than half of HR leaders, 55%, said they had considered leaving the profession in the past year, citing feeling undervalued, operating in crisis mode and burnout.

Fears about being replaced by AI were less prominent than day-to-day workload pressures, with 21% identifying that as a concern. At the same time, 52% said they expected HR headcount to increase and 54% anticipated larger budgets in the next six to 12 months.

Buying tools

The report highlighted dissatisfaction with some recent HR technology purchases. Nearly half of HR teams, 47%, said at least one solution bought in the past two years had failed to meet expectations.

The main reasons were limited functionality, cited by 50%, followed by integration problems and poor usability, both at 34%. This underlines a broader problem for employers investing in workplace software as they seek efficiency gains from AI and other digital tools.

High-performing HR teams were more than twice as likely to blame failed rollouts on internal process gaps rather than the software itself. That suggests implementation and operational discipline may matter as much as product choice.

Culture and management

The survey argued that organisational culture remains central to whether companies can turn AI use into measurable workplace improvements. According to the data, companies that consistently demonstrate their core values have 89% of employees highly engaged, compared with 53% at those that do not.

Employees at those companies were also twice as likely to be able to articulate company goals, at 44% versus 22%. The report linked that stronger alignment to better support for HR leaders and less pressure to justify programmes focused on engagement, wellbeing and inclusion.

Sarah Franklin, Chief Executive Officer at Lattice, said the spread of AI is changing HR's role inside companies.

"As AI rewrites how companies operate, HR becomes central to business transformation," Franklin said.

"This is no longer about running better people programs with bolted-on AI. It's about redefining how work happens, how performance is defined, and how organisations build the capability to win in an AI-native world," Franklin said.

Sophie Hurcombe, Chief People & Operations Officer at Lattice, said the growing use of AI in reviews should not weaken managerial responsibility.

"Performance management needs to shift from a backward-looking exercise to a continuous rhythm of feedback, coaching, and development," Hurcombe said.

"AI reduces the administrative burden and gives managers more time for meaningful developmental conversations, but it should support human judgment and not replace it. Managers must remain accountable for their feedback and decisions. For HR leaders, the opportunity is to make performance management less about compliance and more about driving growth," Hurcombe added.

The report concludes that the main barrier to productivity gains from AI may not be access to the technology itself, but whether organisations redesign jobs, management practices and performance systems around it.

For employers weighing fresh spending on HR technology, the combination of rising executive pressure, ethical unease and patchy software satisfaction suggests the challenge now lies less in buying AI tools than in making them work inside the organisation.