Digital HR: Human Resources In The Digital Transformation Era

Digital HR is the application of advanced technologies, analytics, digital traits, and behaviors to optimize HR and deliver sustainable organizational performance. It has become integral to every HR process and is key to creating a great employee experience.

Digital HR is essential for companies that want to optimize their internal processes and promote efficiency. Elements of digitalization exist at every stage of the employee life cycle – from recruitment and selection to onboarding, performance management, engagement, and offboarding. HR is now at the forefront of innovation, leveraging technology, data analytics, and understanding human behavior to shape workplaces.

What Is Digital HR?

Digital HR is the integration of digital technologies into human resources processes to make them more efficient and connected. It leads to a more agile and responsive organization.

Organizations undergo a digital transformation, transforming HR operations and its ways of working, which leads to a more employee-centric organization. Four phases characterize the digital HR journey of an organization:

1. HR efficiency: In this stage, companies invest in technology platforms that efficiently manage HR processes. The question is, “To what extent do we use technology to streamline administrative HR work?”
2. HR effectiveness: Companies use technologies to upgrade existing people practices, like performance management, talent acquisition, and training.
3. Information: People analytics are leveraged at this stage to create business impact. Here data is accessible and internal data is combined with external data.
4. Connection: Digital tools and software are utilized to create connections between people. Here technologies can foster a sense of belonging, leveraging technologies to build connections.

Digital HR integrates technologies and automated systems to improve people management. More than a simple modernization, it focuses on the revolution in processes, helping managers and teams focus on strategic innovations.

Traditional HR vs. digital HR

Digital HR differs from traditional HR because it digitizes manual tasks, such as record-keeping, data analysis, and answering employee questions. The differences between the two can be seen in this diagram.

Benefits Of Digital HR

Digital HR practices offer competitive advantages to organizations, along with other benefits. We’ve listed the important ones below.

Streamlining HR processes

Digitalizing HR processes helps streamline and structure them. In the case of recruitment, instead of manually tracking all the applicants, you can use an Application Tracking System (ATS).

An ATS system takes care of tasks like:

• Posting vacancies across multiple job boards
• Connecting with potential candidates
• Scheduling interviews and calls
• Refining the candidate pool via the recruitment funnel

Enhancing productivity

Automating HR tasks can free up HR personnel for high-priority work which requires critical thinking and problem-solving skills. This ultimately enhances the productivity of HR professionals who handle employees and take care of their needs.

Boosting employee experience

Employee experience consists of three key components: the physical experience, the digital experience, and the cultural experience. The massive surge in remote and hybrid work has made the digital component more important. This is where digital HR can improve the employee experience, especially in the case of employee self-service.

Here, employees can:

• View and download pay stubs, tax forms, and other documents
• Manage benefit plans like health insurance, retirement plans, and other perks
• Update contact details and other personal information directly in the HR system
• Log work hours and track attendance records.

These self-service features help employees meet their HR-related needs efficiently, reducing the administrative burden on HR departments and making the employee’s digital experience smoother and more user-friendly.

Better data management

Digitalization reduces the risk of data loss. Using software solutions such as the Human Resource Information System (HRIS) or ATS allows for better data management than manual methods. Most HR software today also comes with analytics and reporting features, making it much easier for HR personnel to analyze internal data and make data-driven decisions.

Strategic recruitment

Recruitment is a crucial HR function in any organization. Digital HR simplifies recruitment, helping you scale your selection process and evaluate candidates better. This results in candidates more aligned with your organizational culture and objectives.

Improving talent management

Talent management is one area where digitization has been abundantly seen. Candidate screening, interview scheduling, and onboarding can be largely automated.

The Process Of HR Digital Transformation

Leveraging digital in HR is no simple feat, it requires careful consideration and a lot of time, effort, and resources. So how do we approach a project of this magnitude?

Stages of HR digital transformation

Every organization that engages in digital transformation goes through six stages.

• Business as usual: HR acts on the belief that current solutions will remain relevant.
• Present and active: In this stage, through different experimentations and trials digital literacy and creativity are created throughout the company.
• Formalized: Experimentation becomes more intentional and there’s support from leadership.
• Strategic: Multidisciplinary teams execute most digital HR initiatives. Collaboration increases, leading to strategic HR digital transformation road maps.
• Converged: A dedicated digital transformation team guides digital support of HR strategy.
• Innovative and adaptive: By now digital transformation has become the organization's 'business as usual' and is a continuous process.

Understanding these stages is important for several reasons. It helps organizations understand their progress in the digital transformation journey and to identify the next steps. Secondly, it ensures that objectives are aligned with the boarder business strategies. Lastly, it facilitates a structured approach to change. This way, organizations can easily adapt to technological changes and achieve their goals.

Best Practices For Digital Transformation In Human Resources

Sometimes, starting with digital HR can be overwhelming. Following the best practices listed below will be key drivers for success.

Assess your current HR processes

Start with an audit of the current situation. You can sort your priorities based on the audit and decide where to start. These are some questions to ask yourself:

• What kind of HR tools are you currently using to run various HR processes?
• What areas do you need to identify that could have the maximum impact? See if you can align it with your business goals.
• How is each tool and solution maintained? Does it happen automatically?
• If digital tools are already in place, create an overview of the current HR solutions. Do these systems communicate with each other? If so, how?

Define clear objectives and success metrics

Objectives and metrics tend to differ per organization. Let's say our goal is to improve operational efficiency at a lower cost, time, and people. In this case, you could use the following metrics to measure this goal:

• HR cost per employee: Calculates the total HR expenditure with the total number of employees. A decrease in the HR cost per employee would mean that the digital transformation has made the HR process more cost-effective.
• HR service delivery time: This calculates the average time taken to complete HR delivery services. Reduction in service delivery time reflects enhanced operational efficiency and faster response times due to digital tools and processes.
• Employee service utilization rate: Tracks the percentage of HR-related transactions completed by employees using self-service portals or applications. A high utilization rate signifies that employees use HR digital tools to manage their needs. This reduces the administrative burden on the HR department, enhancing overall productivity and time spent on routine tasks.

Develop HR digital skills within your team

HR practitioners need the right skills to enforce digital transformation, starting with digital agility. Digital agility is the ability to rapidly adapt and leverage digital technologies to enhance HR processes, improve efficiency, and drive innovation.

You can develop digital agility by:

• Familiarizing yourself with different types of technologies
• Collaborating with other departments on innovation
• Working on change management skills

Adopt a phased approach

A phased approach to digital transformation helps you make amends when needed. It’s better to start with a pilot project, before digitalizing a particular HR process. This will help you test and refine your HR digitalization strategy. For example, if you want to automate your payroll process, rather than doing that with your entire organization, start with one or two teams and then upscale.

Create cross-functional teams

IT, legal, and other stakeholders are important in building cross-functional transformation teams. These teams improve implementation and ensure compliance and alignment with broader organizational strategies.

Implement scalable solutions

Whether you implement HR software or tools, you want them to be scalable. The process of selecting, buying, implementing, and launching digital tools is costly in terms of time and money to repeat countless times. So, as the organization grows, the tools and software should also be scalable.

Focus on employee experience

Mostly, the company’s employees will use these tools regularly. Hence, the software rolled out should improve the employee experience. To ensure this happens, involve employees and ask for their opinions.

Prepare a change management plan

A digital change management plan should be in place to prepare people for upcoming changes. Thus, it would be wise to conduct the following activities:

• Communicate with stakeholders to understand how the change will impact the company
• Use the Cynefin framework to process how the change will occur through actionable steps
• Base your change communications on the competing values framework
• Use a stakeholder management template to manage multiple stakeholders

Build an integrated HR tech stack

Digital HR software is used for every HR process. You can categorize them into three technologies:

• HR solutions: HRIS, payroll, compensation, and benefits management software.
• Recruiting: ATS, pre-selection tools, referral software, etc.
• Employee experience: Onboarding, LMS, performance management software, and rewards.

Most companies use tools and software from each category to build their HR stack. You should create an integrated HR stack wherein all elements work together. For instance, your HR Management System should integrate with your payroll software. A set of tools that cannot communicate with each other would be counterproductive, leading to different destinations for each HR process.

Digital HR Transformation Examples

What does digital transformation look like in practice? Here are some examples.

HCM Systems

Human Capital Management (HCM) systems integrate various HR functions, like payroll, performance management, benefits, and talent management into a single digital system. Implementing HCM systems helps streamline processes, improves data accuracy, and provides a centralized view of employee information. It also enables employees with self-service tools to request time off, manage their benefits, and update personal information.

By automating core HR functions, HCM systems reduce errors, improve efficiency, and allow HR teams to focus on strategic tasks.

Application Tracking Systems (ATS)

ATS platforms manage recruitment, from job postings to tracking candidate applications and coordinating interviews. Implementing ATS platforms helps HR teams streamline workflows, assess candidates, and improve communications with applicants. It improves recruitment speed and quality, reduces the administrative burden of hiring, and enables HR to make data-driven decisions.

Onboarding automation

Onboarding automation uses digital tools to streamline and standardize new employee onboarding. This includes sending new hire emails, providing access to training materials, and completing documentation electronically. Automating onboarding reduces administrative work, improves the employee experience, and accelerates new hires' productivity by providing a structured onboarding process.

Employee self-service portals

Self-service portals allow employees to manage their HR-related tasks, such as updating personal information, requesting time off, and accessing benefits information. These portals are typically a part of a larger HCM system and are accessible from anywhere, providing employees with flexibility and convenience. Self-service portals enable employees to control their personal information, reducing the administrative workload for HR and improving the employee experience.

People analytics

People analytics uses analytics and data tools to understand workforce trends, evaluate employee performance, and make data-driven HR decisions. It covers turnover analysis, productivity tracking, and talent forecasting. Furthermore, it provides actionable insights that help HR leaders optimize talent management, improve retention, and make informed decisions on workforce strategies.

Digital adoption platforms (DAPs)

Digital Adoption Platforms (DAPs) represent a notable example of HR digital transformation. They facilitate integration, adoption, and effective use of organizational tools and technologies. A DAP guides employees through new software and processes by providing in-app guidance, tutorials, and real-time support. DAP helps users adapt to digital tools faster, minimizing disruption and improving efficiency with new technologies.

Digital HR Case Studies

Digital transformation can affect HR functions – from recruitment and onboarding to payroll and benefits. This transformation can vary in scale, from a few days to over a year. We have three digital HR transformation case studies of companies that tackled a specific business challenge.

ATOS

At Atos, an IT and consulting firm, there was a disconnect between the core HR system and its employee document management function. To bridge this gap, the organization wanted a tool that facilitates seamless end-to-end HR delivery services for employees, managers, and HR personnel. Atos chose a cloud-based solution that would be rolled out across 70 countries.

This software integrated the organization's Employee File Management system with the recruitment model of its HRIS, allowing streamlined operations and automation of the offer letter process. The managers could now access the HRIS directly and generate an offer letter with the push of a button, eliminating the need to contact HR personnel for approval of new hires.

Global energy company: Using digital HR to improve EX

A global energy firm noticed a considerable difference between external and internal digitalization. Their delivery and compliance training was outdated and ineffective. The company’s interim HR Change and Innovation Director used this to shake things up by introducing gamification to deal with the issue. A training app was developed that allowed employees to gain badges and obtain high scores visible to the entire employee base.

As a result, the company saw a 100% uptake in the tests, and their complaint training was completed in 3 months (down from the 9 months previously).

KPMG Belgium

The HR digital transformation case study focuses on preboarding, an often overlooked but important step towards happy and engaged employees. KPMG Belgium didn’t have a preboarding process – for graduates in particular this could lead to relatively longer periods from the moment they signed the contract to their first day on the job. So, they decided to use an integrated onboarding software to solve this problem.

The organization’s pre-boarding starts as soon as the candidate signs the contract. The app sends the candidates all the essential information they need, including their colleagues’ contact details. After two years of pre-boarding, KPMG saw:

• An app activation rate of 81%
• New hires rating experiences at 4.5 out of 5

How To Implement a Digital HR Strategy

Even though implementing a digital HR strategy sounds great in theory, it can be daunting. Here are some pointers on things to watch for while implementing it.

Identify key processes

Begin with high-impact HR processes like recruitment, onboarding, performance management, and learning and development to maximize the benefits of digitalization.

Set clear objectives

Define specific, measurable goals for your digital HR transformation, such as improved employee engagement, faster recruitment, or streamlined payroll.

Choose the right technology

Research and select HR technology solutions that align with your strategic goals, considering features like cloud-based access, integrations, and scalability.

Ensure data privacy

Ensure compliance with relevant data protection regulations by implementing robust security measures for employee data.

Evaluate performance

With the objectives and metrics established in your digital transformation strategy, critically evaluate what works and what doesn’t. You can also make timely adjustments by collecting feedback from employees.

Wrapping Up

HR digital transformation is a continuous journey rather than a one-time event. Once a new solution is implemented it is important to stay agile and responsive to changing business needs and technological innovations. This ongoing commitment to improvement fosters long-term success and creates a significant competitive advantage.