Leveraging neuroleadership and adopting AI to improve human capital development in IT&C business organisations

Stăneiu, Roxana-Maria; Stratone, Mădălina-Elena; Dabija, Dan Cristian; Mititean, Pompei Article Leveraging neuroleadership and adopting AI to improve human capital development in IT&C business organisations Amfiteatru Economic Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Stăneiu, Roxana-Maria; Stratone, Mădălina-Elena; Dabija, Dan Cristian; Mititean, Pompei (2024) : Leveraging neuroleadership and adopting AI to improve human capital development in IT&C business organisations, Amfiteatru Economic, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 26, Iss. 67, pp. 721-740, https://doi.org/10.24818/EA/2024/67/721 This Version is available at: https://hdl.handle.net/10419/306180 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Artificial Intelligence in Enterprises: How Staff Competencies Requirements of Business Organisations are Evolving through the Integration of Artificial Intelligence AE Vol. 26 • No. 67 • August 2024 721 LEVERAGING NEUROLEADERSHIP AND ADOPTING AI TO IMPROVE HUMAN CAPITAL DEVELOPMENT IN IT&C BUSINESS ORGANISATIONS Roxana-Maria Stăneiu1, Mădălina-Elena Stratone2, Dan-Cristian Dabija3 and Pompei Mititean4 1)2)4) National School of Political and Administrative Studies, Bucharest, Romania, 3) Babeș-Bolyai University, Cluj-Napoca, Romania Please cite this article as: Stanciu, R.M., Stratone, M.E., Dabija, D.C. and Mititean, P. 2024. Leveraging Neuroleadership and Adopting AI to Improve Human Capital Development in IT&C Business Organisations. Amfiteatru Economic, 26(67), pp. 721-740. DOI: https://doi.org/10.24818/EA/2024/67/721 Article History Received: 30 March 2024 Revised: 25 May 2024 Accepted: 29 June 2024 Abstract This paper aims to explore how business organisations in the Romanian IT&C sector strategically implement neuro-leadership principles to accelerate the adoption and implementation of artificial intelligence (AI) technologies, thus enhancing human capital development and promoting sustainable competitive advantages. Applying the focus group method, dynamic discussions were held with 10 representatives of Romanian IT&C companies to highlight how these business organisations strategically implement neuroleadership principles and adopt AI technologies in human capital management. The results of the research, divided into four main themes, reveal the importance of neuroleadership in improving employee competencies as well as overcoming the challenges associated with implementing AI in organisations. Research provides new and relevant insights for leaders in business organisations to effectively adapt to the complexity of technological change caused by AI adoption in human resource management. At the same time, the results reveal the importance of fostering a culture of continuous learning and development to harness the potential benefits of AI, while mitigating the risks associated with this approach. The originality of the paper is derived from the merging of the fields of leadership, neuroscience, and AI, thus providing a comprehensive understanding of the dynamics shaping organisational responses to technological innovation. The research addresses a notable gap in  Corresponding author, Dan-Cristian Dabija – e-mail: [email protected] This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2024 The Author(s). AE Leveraging Neuroleadership and Adopting AI to Improve Human Capital Development in IT&C Business Organisations 722 Amfiteatru Economic the literature by exploring concrete strategies to accelerate AI adoption through neuroleadership principles, enriching the literature on this multidimensional relationship. Keywords: neuro-leadership, neuro-leaders, human capital, artificial intelligence (AI), artificial intelligence technologies, employees, and business organisations JEL Classification: O32, J24, D83, D84. Introduction In a society undergoing constant transformation and change, driven by the rapid evolution of technology, AI is emerging as an essential element in the digitisation process, reshaping traditional practices (Allioui and Mourdi, 2023). AI has become an important source of innovation in organisational performance and adaptation of business models, bringing human capital development to the forefront to support such transformation in technically orientated organisations operating in the IT&C sector. AI will fundamentally change the way organisations work and their expectations of employee skills, often compared to the fourth Industrial Revolution (McKinsey, 2022). Management and leadership practice are seen as important factors in the implementation of AI in business organisations: the confidence that management shows in AI, in conjunction with how they translate it into the company, is fundamental to the adoption of these technologies (Barton et al., 2022). Organisations therefore need neuroleaders who can be agents of change, who can provide clarity to employees in the face of AI-generated uncertainty, who consider human behaviour and the natural reaction of employees to technological developments that fundamentally transform the organisation. The integration of neuroscience concepts into traditional leadership practices, known as neuroleadership, combines knowledge from psychology and elements of human brain anatomy to enable neuroleaders to develop effective strategies and approaches to managing AI within organisations (Pittman, 2020). Even though leadership theory and AI adoption are widely debated and researched topics, there is an absence of research investigating the integration of neuro-leadership principles in the implementation of AI in business organisations to develop and strengthen human capital. Recent literature addresses the importance of management and leadership practices in AI implementation in business organisations (Nguyen et al., 2022), but does not address concrete ways in which neuro-leadership principles can be strategically leveraged to accelerate the adoption and implementation of AI in business organisations, supporting human capital development. Therefore, this paper aims to explore how business organisations strategically implement neuroleadership principles to accelerate the adoption and implementation of AI technologies in human resource management, promoting innovation and generating competitive advantage. The research problem is translated into practice using a qualitative methodology, which is based on the focus group method. It was carried out among different representatives from the Romanian IT&C sector. The paper adds value to the literature by proposing a new perspective on how neuroleadership can be integrated into the business strategies of organisations implementing AI Artificial Intelligence in Enterprises: How Staff Competencies Requirements of Business Organisations are Evolving through the Integration of Artificial Intelligence AE Vol. 26 • No. 67 • August 2024 723 in the management of their human capital. Focusing on the technical elements of AI adoption, the research extends studies focused on intellectual capital theory, pointing to the essential role of neuro-leadership and managerial skills in managing the organisational change process (Andronie et al., 2021; Dijmărescu et al., 2022) and the relevance of AI acceptance by employees. By investigating the connection between neuro-leadership and AI adoption, the paper makes a significant contribution to our understanding of how human factors influence the successful implementation of this technology and support an organisational culture oriented towards continuous learning and development of employee competencies. In terms of structure, the paper begins with a section devoted to reviewing the current state of the literature on key concepts, followed by a section detailing the research methodology. The results section then brings to the fore a critical analysis of the focus group discussions, divided into four thematic categories. The discussions interweave the approach and connect the results of the paper with other previous findings and conclusions in the literature. The paper concludes with a conclusion section, outlining theoretical contributions and managerial implications, along with limitations and future research directions. 1. Review of the scientific literature 1.1 Human capital theory Investing in human capital is essential for increasing the competitiveness of business organisations, but also for improving the living standards of citizens (Cabrilo and Kianto, 2023). Intellectual capital encompasses the beliefs, attitudes, and actions of the employees of a business organisation, as well as those in leadership positions, which together synergistically contribute to achieving the greatest potential for intellectual development (Quintero-Quintero et al., 2021). Of course, intellectual capital is closely related to human capital, which refers to the traits, skills, and knowledge of individuals that can be developed over time and that together contribute to supporting the growth of the business organisation (Amayew et al., 2019). Closely related to intellectual capital is the training, evaluation, development, recruitment, and motivation of employees. These processes need to be carried out in such a way that they ensure added value for the business organisation (Vătămănescu et al., 2023). Employees of business organisations must possess the ability to learn, innovate, think creatively, and contribute to organisational change; thus, they become a vital source of innovation and renewal of the company's strategy (Quintero-Quintero et al., 2021), which is essential in achieving sustainable market success and generating competitive advantage (Cawthorpe, 2023). The direction followed by the development of human capital theory goes beyond traditional workforce management and moves toward new strategies to strengthen and develop the potential of everyone within the business ecosystem (Todericiu, 2021). The performance and productivity of an organisation is improved through the effective management of intellectual capital, which includes the skills, experiences, relationships, processes, inventions, and ideas of the employees of the business organisation and the impact of these vectors on the community (Ausat et al., 2022). Careful management of human (intellectual) capital at different organisational levels has produced a richer understanding of the complex dynamics of the business organisation by facilitating and accelerating learning dynamics, AE Leveraging Neuroleadership and Adopting AI to Improve Human Capital Development in IT&C Business Organisations 724 Amfiteatru Economic identifying performance-generating practices, and disseminating them within the organisation (Quintero-Quintero et al., 2021). At the same time, business organisations are aided to achieve higher performance through continuous monitoring of human resource development and their intellectual growth strategies. This involves identifying factors that contribute to organisational change and promoting innovation, particularly within economic entities (Hashim et al., 2015; Iwata and Hoskins, 2020), but also in other fields such as art and sports (Byrnes, 2022; Ciocan and Milon, 2017; Byrnes, 2022). Other authors (Dokthaisong, 2021; Rzepka and Witkowski, 2023) warn that as AI becomes increasingly prevalent within organisations, there will be a need to redefine effective leadership by integrating emotional intelligence in order to complement AI-based decisions, and thus ensure effective human capital management. 1.2. Application of neuro-leadership principles in the context of human capital development in business organisations In addressing organisational dynamics and effectiveness, the interdependence between human capital and leadership plays a key role (Ismail et al., 2023). This relationship is based on an understanding of the complex interaction between acquired skills, know-how, and competencies of the workforce, that is, the leadership techniques that direct and coordinate human resources (Gheerawo et al., 2021; Trifan et al., 2022). From a neuroscientific perspective, researchers are exploring ways to influence human brain responses so that company employees can better contribute to the achievement of organisational goals, be inspired or motivated to perform tasks, and be encouraged to take responsibility (Rodrigues et al., 2023). This delineates the concept of neuroleadership, which is a multidisciplinary field and combines neuroscience and leadership (Cleotemberg and Waslany, 2023). The literature (Tomlinson, 2021) also addresses the concept of neuroplasticity, which highlights the human brain's capacity to adapt to change. Neuroplasticity constitutes a key factor in leadership, representing the brain's ability to learn new things from the environment (Swingle, 2018). Leaders of business organisations that use neuroplasticity, that is, applying neuroleadership concepts in the management of their companies, can help their employees to become more effective in performing their tasks, to acquire the skills they need more deeply and even faster, that is, to adapt faster to challenges and/or responsibilities (Gheerawo et al., 2021). Leaders of such organisations contribute to the continuous improvement of their employees and promote a culture of change (Sivalingam et al., 2017). Neuroleadership relies to a great extent on the emotional intelligence of the subjects (RuizRodrguez et al., 2023). Influencing them and determining them to emphasise a certain behaviour depends to a great extent on the ability of leaders in a business organisation to understand the neurological mechanisms that generate emotional regulation and foster empathy by exploring neuroscientific findings. This understanding becomes crucial to developing the kind of interpersonal connections necessary to maintain productive leadership, i.e., to ensure positive dynamics among business organisation employees, especially in small and medium enterprises (Ruiz-Rodríguez et al., 2023). Understanding the neurological underpinnings of leadership facilitates the delineation of the neuroscience of social behaviour, as it helps to boost the participation, motivation, and Artificial Intelligence in Enterprises: How Staff Competencies Requirements of Business Organisations are Evolving through the Integration of Artificial Intelligence AE Vol. 26 • No. 67 • August 2024 725 performance of business organisation employees (Gkintoni et al., 2022). Leaders of business organisations who exhibit neuroleadership skills have the ability to get their staff to collaborate and communicate effectively, control their emotions, and find the motivation to contribute effectively to the achievement of organisational goals, i.e., in the rapid, rigorous, and efficient execution of their tasks. By understanding the fundamental processes of the human brain from the perspective of leadership implications and decision making (Nuez et al., 2023), business organisations can facilitate human capital development through the application of neuroleadership (Rodrigues et al., 2023). AI will become the backbone of organisations' competitive advantage through strategic and operational decision-making capabilities (Torre et al., 2019). 1.3. Synergies between Neuro-leadership and AI in human capital management of the Business Organisation The attention paid in the literature to the implications and especially the applications of AI in business organisations has skyrocketed in recent years, and it is considered a new industrial revolution (Badghish and Soomro, 2024). The implementation of AI-based technologies in business organisations and their processes enables companies to improve their performance. Compared to other information technologies, AI-based technology includes systems capable of learning, adapting, and connecting very quickly to any change, providing significant benefits to business organisations, such as the ability to anticipate market turbulence in a timely manner, identify market opportunities, and extract the most relevant information from existing data (Wei and Pardo, 2022). AI is radically transforming the way business organisations hire, manage, and interact with staff. By adopting AI-based technologies, these business organisations can improve their hiring procedures, can more accurately assess employee performance, provide employees with real-time feedback on task performance, thus contributing to continuous improvement in employee performance (Cawthorpe, 2023), and increase staff work productivity (Chowdhury et al., 2023). AI combined with the organisation's employees forms a collective intelligence that facilitates teamwork, creativity, and the rapid making of the most appropriate decisions, leading to innovation and improvement in task performance and administrative activities (Malone, 2019). Due to the increased efficiency of tasks performed by machines compared to manual work, the integration of AI-based systems into the human resources framework of the business organisation allows for better and efficient human capital management (Lim et al., 2019), while they become more flexible and adaptable to changes (Chamorro-Premuzic et al., 2017). Neuroleadership has a major impact in business organisations, being able to improve decision-making, to streamline the emotional regulation of those involved, and to contribute to the identification of the most appropriate solutions to the challenges and problems encountered. At the same time, neuroleadership facilitates collaboration between management and employees and makes it easier for the business organisation to adapt quickly to change when necessary (Gkintoni, 2022). Neuro-leadership can interact excellently with AI, as its combination provides business organisations with new insights into human behaviour (Roman et al., 2022) and employee motivation and performance, respectively (Lim et al., 2019). Today, business organisations have the ability and AE Leveraging Neuroleadership and Adopting AI to Improve Human Capital Development in IT&C Business Organisations 726 Amfiteatru Economic opportunity to maximise their human capital development efforts by embracing and applying the principles of neuroleadership and incorporating AI into the conduct of work tasks and daily activities, respectively (Tiwari et al., 2021). Combining the fundamentals of neuroleadership with AI in the context of human capital development provides crucial insight and allows business organisations to reconsider their approach and perspectives on reporting to employees (Qin et al., 2023). The integration of AI with neuroleadership enables the enhancement of business organisation effectiveness, as employees can receive real-time feedback on the performance of tasks and work carried out based on preset indicators. Obtaining this feedback helps employees reach their full potential and significantly improve their skills (Khoruzhy et al., 2023). By adopting the principles of neuroleadership combined with the use of AI, business organisations can improve their ability to recognise, develop, and engage employees in the most effective way possible in their daily tasks and activities. Furthermore, it allows complex and difficult tasks to be assigned according to the competencies and skills, that is, prior knowledge and individual performance of employees (Johannessen, 2020), which implicitly contributes to streamlining processes within companies and increasing their performance. In fact, business organisations can thus significantly improve their productivity, being able to efficiently manage tasks and day-to-day operations by incorporating AI technology into intraorganisational procedures, i.e., human resource management (Roman et al., 2022; Khoruzhy et al., 2023; Qin et al., 2023). AI has a substantial impact on the HR department, which is vital for the success of the business organisation, as it can help through the adoption of AI-based technologies, the proper recruitment of the workforce, and the identification of the best talent (Kshetri, 2021) or can contribute to a more accurate and rapid evaluation of employee performance (Tian, 2020). AI-based technologies help neuroleaders minimise bureaucracy and recruiters to select the most suitable candidates according to job requirements or organisational needs, saving time and resources, i.e., increasing the productivity of the department and the whole organisation (Kiran, 2021). In fact, AI-based technologies not only simplify the recruitment process, but also make it more rigorous and objective, and less prone to errors or biases in candidate selection (Vrontis, 2022). It is the task of neuro-leaders to choose AI tools that allow them to support the development and/or continuous training of human capital, to define or modify objectives specific to the responsibilities, but also to the competences and skills of each employee, along with the individual and continuous monitoring of overall job performance and efficiency in performing tasks, and to generate feedback. 2. Research methodology 2.1 Research objectives and topics The purpose of this research is to explore how business organisations in the Romanian IT&C sector strategically implement neuroleadership principles to accelerate the adoption and implementation of AI technologies in human resource management, thus contributing to the development and strengthening of human capital. Through this strategic approach, the increase in organisational performance is considered, as well as the effective use of innovation in the generation of competitive advantages. In this regard, the research is based on the following objectives: Artificial Intelligence in Enterprises: How Staff Competencies Requirements of Business Organisations are Evolving through the Integration of Artificial Intelligence AE Vol. 26 • No. 67 • August 2024 727 1. Analysis of the concept of neuroleadership and its implications on the development of human capital within business organisations in the IT&C sector by exploring the leaders’ perceptions of these entities. This objective was transposed into topics 1 and 2 of the research, which facilitated the exploration of participants' perceptions of the evolving leadership role and the synergies between neuro-leadership and AI technologies used within the organisations under analysis. 2. Examining the processes and procedures required within business organisations in the IT&C sector in the effective adoption of AI in human resource management, objective transposed into research topic 3. 3. Assessing how the integration of AI technologies and tools influences human capital development within business organisations in the IT&C sector, objective transposed into research topic 4. Thus, the four research themes that facilitated the dynamic exchange of ideas, opinions, and perspectives from the participants are: Topic 1: Understanding the concept of neuro-leadership and human capital development in business organisations in the IT&C sector in Romania. This theme aims to highlight the importance of applying the principles of neuroleadership in the development of human capital in business organisations to better respond to current market challenges and to allow them to rapidly adapt to change, considering maintaining or increasing employee satisfaction (Ruiz-Rodrguez et al., 2023; Guarnier & Chimenti, 2024). In fact, business leaders must understand the implications of integrating these principles to properly manage and improve human capital development. Topic 2: The general attitude of the respondents towards the synergies assumed by the implementation of neuro-leadership principles in human resources management within business organisations in the IT&C sector in Romania by applying AI-driven technologies. This theme highlights the connection between the application of neuro-leadership practices and the adoption of AI in business organisations in the IT&C sector in Romania, focussing on how neuro-leaders can support, through their competencies, employees, and teams in performing their tasks and in adapting to change (Badenhorst, 2015; Grunwald, 2021). Certainly, the use of AI-driven technologies enables the development of various necessary competencies for employees to accomplish their tasks in organisations. Neuroleadership must contribute to reducing employee resistance to using AI-driven technologies, especially given the fact that these technologies can improve efficiency, thereby fostering competition to elevate the performance of the business organisation. Topic 3: Criteria to evaluate the degree of readiness of business organisations in the IT&C sector in Romania for the adoption of AI-driven technologies in human resources management. This topic focusses on assessing the vectors (processes, procedures, tasks, and activities) that a business organisation needs to consider in the successful integration and adoption of AI-based technologies, which are capable of enabling human capital to use them to improve organisational performance. Of course, this analysis implies examining organisational processes and procedures capable of determining whether the company is mature enough to embrace change and manage the risks associated with the adoption of AI. The smaller and more innovative business organisations are in adopting AI, the less resistant they are to change because they are more agile and able to make decisions quickly (Hradecky et al., 2022). AE Leveraging Neuroleadership and Adopting AI to Improve Human Capital Development in IT&C Business Organisations 728 Amfiteatru Economic Topic 4: The importance perceived by the participants regarding the impact of the use of AI-driven technologies in the development of human capital within business organisations in the IT&C sector in Romania. This theme aims to outline how respondents perceive the benefits and competitive advantages that AI-based technologies can generate for human capital development within business organisations (Krakowski et al., 2023), in order to improve employee learning processes. At the same time, the aim was to highlight the role of neuro-leadership in overcoming the obstacles, potential risks, and disadvantages associated with implementing AI within these organisations. Thus, this theme aims to showcase the negative aspects of AI adoption in business organisations, such as those caused by cyber security threats or ethical issues arising from insufficient legislative regulations (Bhatt and Muduli, 2022). 2.2. Research design In transposing the research scope, a qualitative study was conducted through a focus group among representatives of business organisations in the IT&C sector in Romania that apply the principles of neuro-leadership. Resorting to focus group-based research is considered appropriate for analysing topics with a high degree of novelty, but also those based on social components (Nyumba et al., 2018). By involving participants in structured discussions, focus groups allow the exploration of different perspectives on the topic addressed in an interactive way, encouraging all participants to share their knowledge and their own beliefs about the proposed topic through dynamic and informative discussions (Smithson, 2007). The focus group consisting of representatives of business organisations in the IT&C sector in Romania that apply the principles of neuroleadership was organised in February 2024. It was attended by 10 representatives (see Table no. 1), a number considered adequate and relevant for such an approach (Cortini et al., 2019). The research participants come from different organisations in the IT&C (software development) industry. The organisations are at least 9 years old in the market and have an annual turnover of more than 10 million euros. Their focus is on providing software development and consulting services to a portfolio of more than 120 clients both in Romania and in EU countries. The companies have more than 100 employees. Table no. 1. Information about the focus group participants Name Role Experience in business organisations Age Gender A.P. Talent and Recruitment Director 7 35 Female E.F. People & Culture Director 5 25 Female S.G. People & Culture Specialist 2 23 Female O.A. HR Manager 10 40 Female R.S. Customers Director 8 27 Male A.I. HR Manager 4 32 Female L.P. HR Manager 4 30 Female A.B. Project manager 6 28 Female A.T. Project Manager 2 31 Male S.I. Project Manager 3 27 Male Artificial Intelligence in Enterprises: How Staff Competencies Requirements of Business Organisations are Evolving through the Integration of Artificial Intelligence AE Vol. 26 • No. 67 • August 2024 735 Recent literature (Gheerawo et al., 2021; Riva et al., 2021, Tomlinson, 2021) finds that relevant aspects influencing neuroleadership include employee agility, emotional and social intelligence, self-development mindset, as well as performance-orientated attitude, rapid learning and empathy. Business organisations can make the most of their efforts to create human capital by adopting neuroleadership practices and integrating AI into their daily activities (Tiwari et al., 2021). Conclusions Society is on the verge of a technological revolution that is set to fundamentally change the way international economic actors, jobs, and the individual-team-organisation triad look. Throughout the evolution of humankind the only constant has been change, individuals are once again forced to adapt in the face of dual innovation: on the one hand, AI represents a significant opportunity for automating repetitive aspects of work, enabling the efficient integration of human-technology interaction; on the other, AI is perceived as a threat to the status quo with potentially destabilising potential for those who are not prepared to adopt and adapt to it. From a theoretical perspective, the paper extends research focussing on intellectual capital theory, which is addressed in relation to neuroscience and the implementation of AI-based technologies in the workplace. The research results revealed both opportunities and challenges associated with the implementation of AI in the development of human capital in business organisations. While there is significant potential to increase operational efficiency and organisational performance through the use of AI in human resource management, there are associated risks and barriers, such as concerns about the privacy of employee data, resistance to the adoption of these technologies, or paradigm shifts in the workplace. Like any technological innovation, AI is not a zero-sum game, but a complex system that encompasses benefits, risks, and obstacles. From a managerial perspective, the paper addresses the crucial role played by neuroleaders in addressing the challenges induced by the use of AI-based technologies in human capital management within their own organisations. Neuro-leaders can act as agents of change, guiding employees, teams, and the whole organisation to embrace the changes proposed by AI, helping to combine emotions (the human factor) with rationality (the technological factor). Through conversational intelligence and emotional regulation, neuroleaders can facilitate an optimal transition to AI-driven practices and promote a growth mindset within organisations by cultivating the belief that learning is continuous. Among the limitations, the generalisability of the results to other industries or other countries to Romania and the IT&C sector can be pinpointed. The sampling and methodology used is another limitation of the research, the small size of the number of participants influencing the representativeness and generalisability of the results. In terms of future research directions, a deeper exploration of how AI can be integrated into human resource development programmes to enhance human capital development can be foreshadowed. Research could also focus on developing models and tools to assess organisational maturity in adopting AI. 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