Digital Transformation of HR: How AI and Talent Management Practices Drive Organizational Innovation

This study investigates the critical role of digital transformation in Human Resource Management (HRM) through the integration of Artificial Intelligence (AI) and strategic talent management practices in driving organisational innovation. In an era of rapid technological advancement, organisations are increasingly leveraging AI-driven tools to transform traditional HR functions such as recruitment, performance management, employee engagement, and workforce planning. The study explores how AI adoption in HR practices, when combined with effective talent management strategies, significantly enhances operational efficiency, decision-making, and organisational innovation outcomes. Through quantitative research involving 120 respondents from organisations adopting digital HR practices, the study examines key variables including AI adoption, AI in HR, talent management, employee engagement, and organisational innovation. Statistical analyses including correlation, regression, ANOVA, and chi-square tests confirm strong positive relationships between digital HR practices and innovation. The findings highlight that employee engagement serves as a critical mediating factor in linking AI-driven HR practices to innovation. The study recommends that organisations invest in AI-driven training, strengthen talent management strategies, and build participatory digital platforms to sustain a culture of innovation and competitive advantage.