The adoption and integration of Artificial Intelligence (AI) tools in Human Resource Management (HRM) have significantly enhanced decision-making and optimized core processes such as recruitment and employee performance evaluation. Despite these advancements, ethical challenges including algorithmic bias and data privacy remain critical concerns. Numerous studies emphasize the need to maintain a balance between automation and human oversight to ensure responsible and effective implementation. This study presents a systematic literature review (SLR) of research conducted between 2020 and 2025, focusing on the integration of AI within HRM. The literature highlights how AI contributes to process automation and operational efficiency, while also shedding light on the ethical risks posed by these technologies. In particular, the review evaluates AI’s role in recruitment, performance management, and staff development, emphasizing the growing importance of ethical and innovative practices within organizations. Findings show that AI can significantly improve HR functions through automation and predictive analytics, particularly in enhancing employee engagement and streamlining administrative tasks. However, the deployment of such technologies must be approached with caution, as concerns regarding transparency, fairness, and the protection of employee data are increasingly prominent. Addressing these issues is essential for sustainable and trustworthy AI integration. This study underscores the need for organizations to adopt responsible strategies when implementing AI in HR. It offers practical insights to help leaders navigate both the opportunities and risks associated with emerging technologies. By proposing a balanced perspective, the study contributes to the ongoing discourse on ethical AI practices in HRM. Future research is encouraged to develop AI models capable of predicting employee behaviors while addressing ongoing ethical and privacy challenges.