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How HR Digital Transformation Defines Company’s Success

Every successful business relies on its talent on the road to great achievements. That is why attracting the right people to the team and creating a favorable environment is always a pressing issue.

A few years ago, human resources departments had piles of paperwork and relied on manual file processing. That was an unbearably slow state of affairs.

Luckily, HR digital transformation has changed all this. It has replaced the Sisyphean tasks HR managers had to deal with through a more modernized workflow. Based on Digital Transformation Through Human Development research carried out by Headspring Executive Development, 73% of respondents regard their organization as digitally advanced.

Despite these self-reports, 89% of companies plan to invest more in maintaining or enhancing their HR digital tools. This decision is explained by the Gartner 2021 HR Leaders Agenda Poll survey that showed that 48% of CHROs are not fully satisfied with their current digital HR strategy.

So, regardless of the recent spike in the digitization of HR workflows, there are still many challenges to overcome. That is why we have compiled this guide to clarify things and help you layout the best HR digital transformation strategy for your organization.

What Is HR Digitization?

First things first, “What is HR digital transformation?”.

Human resources digital transformation is a broad array of activities that involve using digital technology to augment the HR department’s capabilities by streamlining workflows and applying new HR models and culture.

This process enables innovation to shape how the HR departments hire, manage, and support the company’s staff. Digital transformation in recruitment frees HR managers from excessive administrative burdens and mundane tasks, allowing them to focus on value-added activities requiring direct personal involvement.

HR transformation examples include using the app for finding new talent on job search platforms, dealing with onboarding paperwork, or keeping digital records about every worker, thus allowing more educated and automated decisions about skill development for every individual.

HR Digital Transformation Examples

To give you a better understanding of how HR workflows can be transformed, look through this brief HR digital transformation case study.

The AIHR Academy states that the Anchor Group, a non-profit organization in the UK, decided to use a chatbot for recruiting purposes. They drove traffic to the bot using targeted ads on social media. The initial goal of the campaign was to increase the reach of the candidates by 82%, which they accomplished Moreover, the company also cut the cost per applicant by 65%.

As a company focused on constant improvement, Walmart embraced automation to better its employee experience. The company reduced the number of cashiers by creating self-service stations and trained its employees for a more exciting job position, like a personal shopper. Walmart also took things further and leveraged virtual reality to model various scenarios during staff training. Thus, workers felt more engaged and loyal.

Inspired by these digital HR examples? Then jump to the next section and discover more reasons for empowering your HR department with cutting-edge technology.

Reasons for HR Transformation

According to the recent survey of 500 HR leaders across all major industries carried out by Gartner, companies face the following challenges:

Gartner Top priorities for HR leaders

Building critical skills and competencies will become the core mission of HR leaders for 2022. But many firms find it challenging to carry organizational design and change management effectively without causing burnout in employees. Other issues include advancing the right mid-level talents and implementing DEI strategies.

Another research initiated by PwC’s Human Resources Technology suggests several main factors that drive the digital transformation of HR:

PwC’s Human Resources Technology

As we see from this survey carried out among HR and HR IT leaders, more than half of organizations believe that finding and retaining talent is the biggest dilemma. Gartner’s research supports this fact and insists that 48% of HR leaders are concerned about the rising turnover and tight competition for talent. Other complications include skills development, employee experience, collaborative environment creation, workforce demand planning, and DEI strategy implementation.

So, let’s recap the findings of both independent surveys and figure out the benefits of digital HR in light of the challenges HR departments face.

Facilitated Talent Acquisition and Recruitment

Thanks to AI-driven tools, HR managers have substantial assistance when sourcing, identifying and engaging talent. There are various software capabilities, but nevertheless, digitalization in human resource management allows HR departments to leverage algorithms to spot the matching candidates on job-posting platforms, chatbots to carry communication or assess the candidates’ qualification for the job position.

The HR department also gets access to thorough analytics that highlight the most effective sources for hiring, predicting future trends, time to fill, candidates’ skills, and calculating average vacancy costs.

Tenable Skills Mapping

In a rapidly changing tech-advanced world, many companies suffer from a shortage of skills. Gartner has revealed a striking pattern about the speed of skills obsolescence—nearly one in three skills required for a position in 2018 will be unnecessary in 2022—while technological achievements inspire the emergence of new skills that are critical for business success.

In view of this data, the need for effective skills development of employees is critical. The implementation of digital human resources instruments helps HR managers find flexible skills mapping solutions. With access to the centralized database of employee profiles that contain information about every worker, HR managers can develop effective skills development strategies

Enhanced Employee Experience

Effectory revealed that the Global Employee Engagement Index in 2021 is estimated to be 35%. This means that 35% of employees are in a positive, work-related, and fulfilling frame of mind at their workplace. Effectory argues that the engagement metric should be maintained at high levels as engaged employees are more committed to the organization’s goals, show better performance, and are more likely to promote your organization.

That is why improving the employee experience is essential for a company’s growth. Thanks to workflow optimization that involves process automation, custom cloud-based apps, big data, and chatbots, HR leaders can create a more employee-friendly workplace that aligns with the company’s ongoing needs.

Better Performing Organization

All in all, streamlined workflows within the HR department bring tremendous benefits for the whole company. Along with better utilizing the value of human capital by reducing mundane yet time-consuming tasks, the organization achieves great cost savings. Thanks to a well-shaped HR strategic approach, companies are able to attract top talent and keep track of the workforce metrics. This means that HR managers can cover workforce gaps before they even emerge.

On top of that, employees become more loyal when the company focuses on their personal and professional development. In view of that, your organization is less likely to be affected by the global talent shortage.

How Will Digital Transformation Affect HR?

Let us show the impact of HR transformation in the digital age through a simple example everyone can relate to.

Just think back to when you got your first smartphone. You were thrilled. You were amazed. And why wouldn’t you be? It had a sleek look, advanced hardware that enabled quick operations, huge memory storage, and had a built-in camera. Without a doubt, it was a world-changing consumer technology.

But time flies, and now we are witnessing the advent of smartphones like the iPhone 13 with three professional-level cameras, the most secure face ID system, NFC ( pay the cashier with your phone), and 1TB of memory.

And now imagine using your old smartphone these days. Will seem as amazing as it did10 years ago? Will it enable you to tackle all your daily challenges? Will you be as enthusiastic about the fingerprint security system knowing that you can unlock your phone with a mere glance?

A business that doesn’t leverage HR digital transformation like someone who is still using an iPhone 5. You cut off access to the instruments that allow the team to maximize their performance and bring positive innovation to the whole company.

Thus, when talking about digital transformation and HR, you should realize that by empowering HR with brand new technologically-advanced tools, you enable the human resources team to adopt an innovative mindset that can alter the culture and workflow within the organization.

But that’s not all. Digital transformation has an impact on talent acquisition. Organizations with innovative and digitally enhanced hiring practices attract more candidates as they appear like a  more robust and successful company in contrast to less digitized rivals. In other words, innovative HR processes can be a  competitive advantage in the race for top talent.

HR’s Role in Digital Transformation

You may have already reviewed HR’s role in digital transformation to determine the department’s views on adopting new technology. That said, we would like to add our insights on the matter.

We are convinced that digital transformation is not solely centered around a more tech-advanced strategy. Its core target is the people who, on the condition of a successful implementation process, get tools for better decision-making and faster action. They can spend more time on value-added tasks that actually advance the company.

Robust digital transformation relies on deep knowledge of current workflows and a vision of how they should be streamlined. It also involves covering the skills gaps by training employees on how to carry their duties in a more efficient manner.

It’s hard to imagine how the company can bring so many tech advances to numerous departments without a centralized team guiding the whole process. HR specialists are the best candidates for this role as they are well-aware of the current workflows in various departments, and they can ensure all employees are receiving proper training for a smoother and more rapid transition to a new working environment.

On top of that, as we talk about HR and digital transformation, keep in mind that this process engenders a cultural shift as well. So, there should be a leader (or a group of leaders) to inspire new thinking in employees. HR departments are well-positioned to pave the way for new ideas and set higher standards for doing things.

The Stages of HR Digital Transformation

Now, we wish that there was a simple way to implement a new digital strategy for HR operations but that is not the case. The adoption of new ways of doing things doesn’t happen overnight. It’s a continuous process that requires a lot of effort and discipline.

Of course, those legacy processes have strong connections in employees’ minds, and they can’t easily be switched to a new model overnight. Understanding this, Brian Solis, an industry analyst, suggests six stages of digital transformation in his report called ‘The Race Against Digital Darwinism: The Six Stages of Digital Transformation.’ He explains how companies can leverage digital transformation by leading the HR department into a groundbreaking digitally-orientated future.

These HR digital transformation stages include:

  1. Business as usual
  2. Present and active
  3. Formalized
  4. Strategic
  5. Converged
  6. Innovative and adaptive

The author combines psychoanalysis and conventional business analysis to explain how companies respond to changes. The report is written based on the interviews of those who drive digital transformation in organizations. He contends that even though the process of adopting an innovative HR digital transformation roadmap is not as breezy as one might think, organizations can get through it by being equipped with the right information. Solis reveals specific patterns, processes, and components that make a solid foundation for these changes.

Even though the report is centered on customer experience, the stages have been successfully adopted to explain how HR teams undergo digital transformation. So let’s dig a little deeper and see what to expect at every step.

Business as Usual

This is the starting point for every business striving to achieve innovative and optimized HR operations. At this stage, the HR staff is still clinging to tried and tested models and patterns. Leaders see no point in upgrading the HR processes and don't encourage the change.

The problem lies in the rigid mindset of leaders and team members. Once a shift in thinking happens, and leaders see the need for finding new ways for getting things done, the digital transformation process can really begin.

The Steps to Get to a New Stage:

  • Collect data about the current state of the HR department’s performance.
  • Increase awareness of the HR digital transformation benefits through presentations, guest speakers, and case studies.
  • List the current HR processes and estimate how streamlined they are.
  • Find tech solutions that fill the gaps in poorly arranged HR operations.
  • Think of things that need updates to advance to the next stage.
  • Engage company leaders to help implement changes.
  • Develop a training program for the HR department to help them grasp new workflows faster.

Present and Active

When top management becomes aware of the perks of digitizing the HR department and starts experimenting with new strategies, the second stage can take shape.

This period involves conducting experiments that track which paths align with the company’s goals better and brings results faster. If the experiments are successful and deliver positive outcomes, they can be expanded on a broader scale. We recommend running small-scale tests (you can also conduct AB testing) to boost the effectiveness of the HR department and have obtained detailed metrics about the experiment effects.

Steps to Take to Get to a New Stage:

  • Spot one of the biggest challenges within the department (talent pool management, employee experience enhancement, skills mapping) and cooperate with one or several executives to brainstorm the solution.
  • Build a roadmap of further technology implementation and discuss it with all parties in the HR digital transformation process (CFO, HR, IT department).
  • Focus on the decisions that will have the most impact on the business and provide a better employee experience.
  • Create several teams to test the effectiveness of various solutions.
  • Partner with business analysts to create reports that track the business value of the tech decisions.

Formalized

As your organization advances to this stage, the HR transformation process is well underway. This is when you become more daring with experiments but conduct them more purposefully. It means you start making bolder decisions for transforming operations within the HR department and the whole business. These actions should lead to a higher success rate and measurable results.

By this stage, the support of executives is increasingly important. They will ensure access to all needed resources and technology. Of course, you might face some pushback from top managers as implementing a new strategy might require more money. So, get ready to persuade them that it’s worth the investment.

Steps to Take to Get to a New Stage:

  • Don’t be shy about asking executives for more resources (workforce and money) if needed to carry HR digital transformation projects.
  • Create a timeline for projects and stay focused on the results.
  • Cut out what doesn’t work for enhancing the new digital environment.
  • Roll out training programs to prevent any skills gaps that might emerge during the transitional period.
  • Keep track of reports and analytical data to make more educated decisions about the upcoming digital enhancement strategies.

Strategic

As you advance to the strategic stage, you no longer need to convince the executives that HR digital transformation is crucial for business growth. You’ve already proved it during previous stages. Now the period of big thinking has come.

It is recommended you bring different departments together and go over the strategies for solving pressing problems. This usually results in a roadmap of a detailed plan of action several years ahead. It should involve  HR’s connection to different facets of the business and a streamlining of that process.

Steps to Take to Get to a New Stage:

  • Continue to implement the HR digital transformation plan.
  • Start measuring how HR digital transformation affects other business facets.

Converged

As you have built a plan for further HR tech-driven transformation, it’s time to create a team that will drive the new strategy to success. The team needs to stay focused on the global organization’s goals while managing operations.

During this period, a new company structure starts to emerge. New roles, processes, systems, and models take place to transform HR digitally.

Steps to Take to Get to a New Stage:

  • Build a strong team that will advance the new HR development strategy.
  • Arrange an analytical dashboard for insights into employee engagement and well-being in the course of changes and how it affects the company’s bottom line.

Innovative and Adaptive

By this stage, you’ve done enough to ensure HR digital transformation within the company. You can reap the first major benefits, and the C-suite can finally see the point of this is undertaking.

But you shouldn’t stop here. Now it’s time to explore new possibilities and adapt to rapidly changing trends for taking HR processes to a new level.

Steps to Take to Get to a New Stage:

  • Make tracking the HR processes and their efficiency a part of the corporate culture.
  • Gather feedback from team members to spot digital components that work and eliminate the ones that don’t.
  • Invest in long-term thinking, visionaries, and futurists with innovative solutions.

Most Popular HR Digital Transformation Trends in 2021

Whether you are just taking the first steps on the road to an HR digital transformation or have already achieved results, you still need to consider developments in the realm of digital technologies these days. So, here are the hottest HR transformation trends you have to be aware of.

Custom Cloud-Based HR Apps

It’s not a secret that HR departments use various tools to recruit new talent, retain, and manage employees, and carry out administrative tasks. This is especially the case with custom cloud-based digital solutions, which have become a hit this year.

The most significant advantage of cloud-based apps for HR departments is that you can get access to any device and from anywhere without compromising security and convenience. Custom software contains critical features for your HR team that cannot be found in any other apps. You can even build a product that combines the capabilities of several apps and unite them under one roof. It will significantly diminish demands on your HR managers and boost their productivity.

However, the process of creating a  custom cloud HR software requires collaboration with a team of experienced developers like Ergonized. We will help you bring your tech idea to life and enhance the performance of your HR department.

AI Is in Its Prime

HR departments use AI in many ways, especially during the recruitment process. Smart AI algorithms screen and score every candidate for the job, conduct interviews through video calls and chats and even estimate the progress of the hiring strategy. As a result, the recruiter finds talent much more easily and more quickly.

Chatbots for Enhanced Employee Experience

Chatbots can be used not for delivering customer support only. HR departments can use them to solve numerous problems within the organization. For example, to guide newcomers through the onboarding process or provide employees with new information. Chatbots can also be used to submit or collect data about the department or on individual employees. They can be of great help for remote workers as well.

Training Using Virtual Reality

In order to create a fully-immersive experience for employees, top companies have started leveraging VR for training purposes. This has proved to be an effective solution to help workers implement new knowledge in simulated situations.

Afterword

More and more businesses have switched from manual processes to tech-driven operations. This tendency has allowed HR departments to offer robust strategies for digitizing workflows.

If your organization struggles with implementing an HR business transformation strategy, we are here to help you. Arrange a call with our CTO to discuss the details of your project and learn how Ergonized can accelerate your HR initiatives.

Written by

Dmitriy Sorokin

Dmitriy is developing the company’s financial expertise and helps clients to automate their business process with the help of Financial Services Cloud.

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