Achieving Alignment On AI

As generative AI spreads across corporate America, workplace policies are a foundational step to mitigating related risks— but they won’t be effective without C-suite alignment on how and where such tools are being used in the first place.

According to Littler’s 2024 AI C-Suite Survey, only 44 percent of the more than 330 U.S.-based C-Suite executives responding say their organizations have policies in place for employee use of generative AI. The survey also reveals significant misalignment among top executives, making it harder to successfully implement such policies.

As chief executives look to balance innovation and risk management—and ultimately arrive at an approach that helps their organizations seize the opportunities created by generative AI without exposing new vulnerabilities—here’s what they need to know.

Risks of AI Use Intensify

AI-related lawsuits are expected to rise—spanning issues from privacy to employment law to copyright and trademark violations—alongside increased regulatory risks. The EU’s AI Act, for instance, could apply to U.S. employers even if they are not based in the EU and includes hefty penalties for non-compliance. Meanwhile, a complex patchwork of local and state laws is emerging in the U.S.

C-Suite executives are taking note. In the context of predictive or generative AI use in human resources functions, 84 percent of survey respondents tell us they are concerned with facing litigation and 73 percent say their organizations are decreasing the use of these tools for such purposes as a result of regulatory uncertainty.

Policies and Executive Misalignment

With these risks in mind, it may be surprising that fewer than half of organizations responding to our survey have established workplace generative AI policies. Yet this is a notable jump from Littler’s 2023 Annual Employer Survey, when just 10 percent had some sort of generative AI policy in place.

The progress here is encouraging and the hurdles are understandable given the ubiquitous and fast-evolving nature of the technology. Securing executive alignment and internal buy-in is challenging as views about generative AI’s risk level and opportunities tend to vary widely among stakeholders.

These disjunctions are present throughout our report, which illustrates a divide with chief executive officers (CEOs) and chief human resources officers (CHROs) generally on one side and legal executives—chief legal officers (CLOs) and general counsel (GCs)—on the other. For example:

· Legal executives report lower levels of activity when it comes tracking and enforcing generative AI policies than CEOs/CHROs, including utilizing access controls (38 percent vs. 65 percent), audits and reviews (27 percent vs. 56 percent) and automated monitoring systems (20 percent vs. 46 percent).

· 52 percent of CLOs/GCs say their organizations are not using predictive or generative AI tools in HR, compared with 31 percent of CEOs and 18 percent of CHROs.

· 42 percent of CEOs and CHROs say that AI has the potential to enhance HR processes to a large extent, compared with 18 percent of legal executives.

Now is the Time to Get on the Same Page

The swift adoption of generative AI—along with the ease with which employees can deploy these tools at work—presents significant challenges in keeping up with related policies and procedures. As C-suite executives work together to develop effective generative AI policies, key considerations include:

· What is the organization’s ultimate objective when it comes to AI—and how can we get there?

· Will employees be required to adhere to the policy? As a positive sign for risk mitigation, 74 percent of our survey respondents’ generative AI policies require adherence, rather than merely offering guidelines.

· Do we have a solid understanding of how AI is being used across the organization and how this varies by employee role?

· How will we track employee compliance with our policy? Our survey reveals that executives are still grappling with this issue, with 67 percent saying that their organizations focus on setting clear expectations for use and relying on employees to meet those expectations.

· How will we approach generative AI training and education to address both mitigating risk and improving employee skillsets?

Littler’s AI survey examines how businesses are addressing each of these issues and more.