Executive Summary

As global productivity growth slows, Fortune 500 companies face increasing pressure to innovate. For CHROs, the opportunity to lead this transformation lies in leveraging Retrieval Augmented Generation (RAG). By combining the language capabilities of AI with secure access to internal data, RAG provides actionable, personalized insights that empower workforce strategies.

Key benefits include:

• Improved decision making through specific and contextual knowledge.
• Increased efficiency by automating low-value tasks.
• Improved employee engagement with customized development plans.
• Innovation and collaboration at the enterprise level.

CHROs that adopt RAG can redefine workforce management, foster a culture of innovation and secure a competitive advantage for their organizations.

Introduction

The Opportunity for CHROs in the Age of AI

Global productivity growth has halved in the last decade, challenging companies to do more with fewer resources. Traditional tools and processes are no longer sufficient to address this growing gap. Meanwhile, generative artificial intelligence tools such as Large Language Models (LLMs) have revolutionized information processing, but are ill-suited to organizational challenges due to their lack of access to internal data and enterprise-specific context.

This is where Retrieval Augmented Generation (RAG) comes in. RAG integrates AI with secure access to proprietary knowledge, providing actionable and contextual insights. However, RAG’s transformative potential extends beyond HR, requiring cross-functional collaboration with COOs, profit and loss managers, and CFOs to ensure that its implementation generates measurable impact across the enterprise.

For CHROs, this represents a transformative opportunity to drive productivity improvements, increase employee engagement and align workforce strategies with broader organizational goals.

Why LLMs Are Not Enough

Although LLMs have demonstrated extraordinary potential, they face critical limitations:

1. Limited Access to Proprietary Data: LLMs cannot retrieve information from internal systems, such as HR databases or compliance records.
2. Outdated Information: Your training on historical and public data sets means that your results may not reflect current organizational realities.
3. Generic Results: Without company-specific knowledge, responses may not align with strategic objectives.

These gaps can lead to inefficiencies, misaligned decisions and missed opportunities. RAG closes these limitations by integrating AI with secure access to internal knowledge, ensuring that insights are both relevant and actionable.

How RAG Transforms Productivity

RAG enables CHROs to optimize workforce performance by:

Provide Contextual Knowledge

RAG connects seamlessly with HR systems, operational databases and policy repositories to provide data-driven recommendations tailored to organizational needs. For example:

• Workforce Planning: Optimize staffing by analyzing turnover rates and skills gaps.
• Employee Engagement: Identifies satisfaction factors through real-time feedback analysis.
• Compliance Management: Ensures that decisions are aligned with current corporate regulations and standards.

Improve Decision Making

By providing access to real-time data, RAG empowers leaders to act decisively. For example, one multinational retailer used RAG to reduce seasonal staffing shortages by 20%, improving both customer satisfaction and employee morale.

Research from Harvard Business School showed that consultants using generative AI tools at Boston Consulting Group (BCG) experienced a 25% reduction in task completion time, with a simultaneous improvement of more than 40% in work quality. RAG leverages these advantages by tailoring insights specifically to an organization’s proprietary data, enabling similar or even greater productivity gains in decision-making and operational processes across multiple industries.

Fostering a Culture of Innovation

RAG fosters cross-departmental collaboration by making knowledge accessible to all teams, eliminating silos and stimulating creative problem solving.

Implementation Strategy

To maximize the potential of RAG, CHROs should follow these steps:

1. Identify High Impact Use Cases

Focus on areas with the greatest potential for measurable gains, such as reducing turnover or accelerating onboarding processes.

2. Collaborate Across Functions

Work with IT and legal teams to ensure secure integration with existing systems and compliance with data protection regulations.

3. Launch a Targeted Pilot Program

Start with a controlled implementation in one department or use case to refine the approach before scaling.

4. Driving Adoption with Change Management

Clearly communicate the value of RAG to stakeholders and empower employees to adopt new tools effectively.

5. Measure, Iterate and Scale

Establish clear KPIs, such as productivity gains, cost savings or employee satisfaction, to track success, refine strategies and expand implementation.

To ensure that these strategies have maximum impact, CHROs must engage key stakeholders in operations, finance and divisional leadership, making RAG a collaborative, enterprise-wide solution.

Engaging Cross-Functional Leaders for Real Business Impact

Maximizing the potential of RAG requires CHROs to collaborate closely with COOs, P&L managers, and CFOs. These partnerships align RAG implementation with operational, financial and strategic priorities, transforming it into a driver of large-scale business success.

Operational Alignment with COOs

COOs, charged with optimizing efficiency and productivity, are natural allies in deploying RAG. By using RAG to analyze staff allocation or address scheduling inefficiencies, CHROs and COOs can achieve tangible improvements, such as reducing overtime costs or improving task completion rates. Shared metrics such as operational uptime or workforce productivity ensure alignment between HR and operations objectives.

Strategic Collaboration with Profit and Loss Managers

Divisional and Regional Presidents bring a revenue-focused perspective to RAG deployment. Piloting RAG in regions with labor challenges-such as high turnover or demand fluctuations-can directly improve customer satisfaction and revenue results. For example, addressing staffing shortages in high-growth areas positions RAG as a solution to critical revenue issues, generating momentum for broader adoption.

Financial Supervision with CFOs

CFOs ensure that RAG investments align with fiscal objectives. Collaborating with CFOs to quantify ROI-through metrics such as cost savings from automation or reduced turnover-reinforces the financial case for scaling RAG. By presenting a compelling business case, CHROs can secure support while aligning RAG implementation with broader financial strategies.

Creating Shared Responsibility

Cross-functional success depends on a unified approach:

• Establish Common Objectives: Collaboratively set objectives that link RAG results to business priorities, such as profitability and efficiency.
• Integrate Metrics: Develop KPIs that track results in HR, operations and finance, creating a shared framework for success.
• Maintain Engagement: Establish regular points of contact with COOs, P&L managers, and CFOs to review progress and refine strategies.

By positioning RAG as a shared initiative, CHROs ensure that its implementation generates significant business impact and reinforces HR’s strategic role in organizational success.

Conclusion

Leading the Productivity Revolution with RAG

With cross-functional alignment as the basis, RAG allows

CHROs transform workforce productivity while advancing business goals. By seamlessly integrating AI with internal data, RAG empowers organizations to:

• Make data-driven decisions aligned with strategic organizational objectives.
• Empower employees through customized development and engagement strategies.
• Encourage collaboration and innovation between departments.

The role of the CHRO in this transformation is crucial. By adopting RAG, you can redefine how your organization approaches productivity, ensuring sustainable growth, fostering innovation and lasting competitive advantage.

Your Next Steps:

1. Identify areas where RAG can have the greatest impact.
2. Collaborate with IT and operations leaders to ensure seamless integration.
3. Launch a pilot, measure success and scale to achieve enterprise-wide transformation.

Take the initiative today. Lead with RAG and redefine the future of workforce productivity.

Article provided by Movo

References

1. Brynjolfsson, E., Li, D., & Raymond, L. (2023). Generative AI at Work. MIT Sloan School of Management.
2. Brynjolfsson, E., Li, D., Raymond, L., & Saunders, A. (2023). Experimental Evidence on the Productivity Effects of Generative Artificial Intelligence. Harvard Business School.
3. Noy, S., & Zhang, W. (2023). Navigating the Jagged Technological Frontier: Field Experimental Evidence of the Effects of AI on Knowledge Worker Productivity and Quality. Harvard University.
4. McKinsey & Company (2024). What is Retrieval-Augmented Generation (RAG)? McKinsey Explainers.