A few weeks ago, a small business owner I know, we’ll call him Mark, sent me a message that sounded equally proud and relieved.
“Paul, I finally did it. I asked ChatGPT to rewrite my entire employee handbook. Saved myself so much time!”
I winced, not because he used AI, something I use every day, but because I’ve seen this exact scenario play out multiple times in the last year.
About an hour later, he forwarded the handbook to me “just for a quick glance.” And at first glance? It looked great. Clean layout, clear language, nicely structured, like something a corporate HR department might produce.
But once I looked deeper, the cracks appeared: wrong state laws, unusable policies, borrowed standards from unrelated industries, and liabilities he never intended to create.
AI can give you beautiful words. But HR is about what those words mean.
The Confident Voice of AI (Even When It’s Wrong)
AI writes confidently, even when it’s wrong. It can produce polished content that feels authoritative while missing nuance or accuracy.
AI doesn’t automatically understand your state laws, your headcount, your industry, or how your business actually works. Small business owners often don’t know what details matter most, which leads to gaps AI can’t fill on its own.
The Hidden Problem: You Need HR Knowledge to Prompt AI Correctly
To get AI to produce accurate HR content, you need enough HR experience to know what to ask it. Without that foundation, AI fills in the blanks with assumptions.
If you don’t specify you’re in Missouri, it might default to California law. If you don’t mention you have fewer than 50 employees, it might assume FMLA applies. That’s how compliance errors are born.
Where HR Still Needs to Be Human
Even the most advanced AI cannot read your culture, navigate emotions, or coach your managers through sensitive moments.
It can draft a policy, but it cannot determine whether using it will escalate or resolve a situation.
A Real Story of Structure Without Understanding
Another owner used AI to generate a disciplinary system, which resulted in a rigid, corporate-style four-step model. His business had twenty employees.
An employee exploited the policy, productivity suffered, and the owner lost time he couldn’t afford, all because the structure didn’t fit the business.
Where AI Shines—and Where It Doesn’t
AI is great for generating drafts, ideas, and templates, but it cannot interpret laws, assess risk, understand behavior, or make judgment calls.
HR expertise is what turns a draft into something safe, practical, and aligned with your team.
Back to Mark—and the Line That Says It All
After rewriting his AI-generated handbook together, he said something that stuck with me:
“AI got me maybe 40% of the way there. You helped me fix the rest and kept me out of trouble.”
That’s the real partnership: AI accelerates the work, but experience ensures it’s right.
The Real Lesson for Small Business Owners
AI isn’t the enemy, it’s a powerful tool. But it’s not a replacement for HR judgment.
Using AI for HR without human interpretation is like following a GPS without noticing the road is closed ahead.
So use AI. Leverage it. Benefit from it. Just don’t skip the human part.
And if you’ve used AI to create handbooks, job descriptions, or policies, I’m always here to review them. That’s what I do every day at YourHR.
