By Ray Birch
HARRISBURG, Pa.—For credit unions, the rise of artificial intelligence in human resources presents both an enticing opportunity and a potential minefield.
The promise of efficiency in recruitment, performance management, and employee development is real. But so, too, are the risks—ranging from legal exposure to the possibility of overlooking qualified candidates.
Sandra Holzgen, chief human resources officer at $9-billion PSECU, said her credit union has deliberately held back on switching on the AI features embedded in its Workday recruiting platform. The reason: HR decisions are too important, and too personal, to simply hand over to a machine.
“We’ve chosen not to activate AI in our recruiting,” Holzgen explained. “Instead, we have a centralized model where recruiters work directly with leaders to ensure every hiring decision is reviewed, justified, and aligned with our culture. We want to be careful, because in HR, you always need to put the human in human resources.”
Holzgen acknowledged that AI could one day streamline processes that, in larger organizations, often overwhelm HR staff. Sorting through hundreds of resumes, for example, could be dramatically simplified if an algorithm could quickly identify the ten most qualified candidates based on a job description. For a credit union with a small recruiting team—PSECU has only two recruiters for 900 employees—that kind of assistance could save significant time.
Beyond recruiting, Holzgen sees possibilities in talent development. In the future, she hopes to leverage AI to suggest career paths to employees, matching their skills and training against open positions and helping identify internal opportunities. Used responsibly, she said, AI could support succession planning, reduce turnover, and strengthen employee engagement.
AI is also showing value in compliance and risk management. Holzgen noted that some managers at PSECU use Microsoft’s Copilot to refine performance-review comments, ensuring they are free of language that could create legal risk.
“It’s about protecting both employees and the organization by making sure documentation is clear and fair,” she said.
Caution And Risk
Still, Holzgen stressed that credit unions should be cautious before leaning too heavily on AI. She has seen job seekers—some highly qualified—struggle to even land an interview because their resumes weren’t structured to pass through AI filters used by prospective employers. That not only harms candidates, she argued, but also creates the risk that credit unions themselves could miss out on strong talent.
Accuracy is another issue.
“Sometimes the information AI produces is flat-out wrong,” she said. “That’s why we double and triple check anything we use. The risk is real: if you get it wrong, you could make a poor decision that impacts your people, your culture and your reputation.”
Holzgen believes disclosure will become more important.
“If you’re using AI in your recruitment platform, should that be communicated to candidates?” she asked. “That way they know how best to present themselves. We need more guidance, more framework, around how AI is used in HR.”
What The Data Show
The caution is warranted. A recent survey by ResumeBuilder.com found that the use of AI in HR decisions is more widespread—and more troubling—than many may realize.
According to the survey of 1,342 U.S. managers with direct reports:
- Six in 10 managers use AI to make decisions about their employees
- 78% use it to determine raises, 77% for promotions, 66% for layoffs, and 64% for terminations
- More than one in five managers say they often allow AI to make final decisions without human input
- Despite the high stakes, two-thirds of these managers have received no formal training on AI’s ethical use in people management
The survey also revealed that nearly half of managers using AI have been asked to evaluate whether the technology could replace a direct report. Of those, 43% actually replaced a position with AI.
“This underscores the danger of relying too heavily on a tool that lacks empathy, context, and judgment,” said Stacie Haller, chief career advisor at ResumeBuilder, in releasing the report.
The Road Ahead
For Holzgen and PSECU, the watchwords are prudence and patience.
“Credit unions are about people helping people,” she said. “That means we need to make sure AI enhances—not replaces—the human element of HR.”
As credit unions across the country weigh whether to adopt AI in HR, Holzgen’s perspective captures the moment: The tools are powerful, the potential benefits real, but the risks—legal, ethical, and cultural—are too significant to ignore, she said.