The Ultimate Guide to HR Digital Transformation (Part #1) — Definition, Goals & the Why Behind the Digital Transformation in Human Resources

December 03, 2020
by Damian Keane

We’re in the final stretches of 2020, and HR digital transformation is still proving to be challenging for a lot of organisations.

Challenging… but not impossible.

You’ll agree that’s an important distinction.

A few years back, HR professionals were still weighing the whys and the why nots of digital transformation. Is it just a buzzword and a fad? Or is it the way for HR departments to move forward?

Today, we know that successful HR digital transformation is crucially important for business success. It’s how we take recruitment, talent development, and performance evaluation to the next level. And it’s how we turn HR departments into true value-creating centres.

In this 5-part series on Complete Digital Transformation in Human Resources, we’ll shed some light on the whys of HR digital transformation. But, more importantly, we’ll show you the step-by-step process of how to successfully implement it in your organisation

… Why simply moving from manual to digital processes is not enough?... 

… How to get the management on your side and build interdepartmental teams?... 

… What does success even look like when it comes to HR digital transformation?...

In this post, I’ll tackle the basics of digital transformation in human resource management:

  • What is the difference between digitisation, digitalisation & HR digital transformation;
  • What is digital transformation in HR and what are its goals & benefits;
  • When should a company commit to pursuing HR digital transformation;
  • Conclusion — part #2 sneak peek: The Role of AI in HR Digital transformation.

Let’s dive into it.

What’s the Difference Between HR Digitisation, HR Digitalisation & HR Digital Transformation?

Yes, there is a difference between these three terms, despite the fact that everyone is using them interchangeably.

That difference is subtle, but crucial for you to understand before you start fiddling with your HR processes. 

HR digitisation, HR digitalisation, and HR digital transformation are different stages of the transformational HR process. Where you are in that process will determine the actions you need to take to move forward to complete HR digital transformation.

Definition & Goals of DT in HR-01

  • HR Digitisation — today, digitisation in HR is commonplace. It means moving away from manual and paper-driven record-keeping and embracing digital solutions. A digital record of employee performance going back 10 years is an example of HR digitisation.
  • HR Digitalisation — with HR digitalisation, you’re going a step further. You’re now using technology to add value and to improve HR processes. For example, various collaboration tools allow HR professionals (recruiters, compliance officers, and talent experts) to create a perfect onboarding experience that is tailored to a particular role.

[Recommended reading: 5 Onboarding Tips That Boost Employee Engagement & Retention]

  • HR Digital Transformation this right here the Holy Grail for HR professionals. HR digital transformation is enabled by digitisation and digitalisation. But, it also includes a healthy dose of artificial intelligence and process automation. A perfect example of HR digital transformation is a fully automated recruitment process, where software makes accurate hiring predictions and guides you towards the perfect fit for your company.

A lot of companies are just out of the digitisation stage, making those first crucial steps towards HR digitalisation. The road to complete HR digital transformation is still long, but now that you know where you are, it’s easier to plot the course (and to avoid the usual pitfalls).

What is Digital Transformation in Human Resources (& Why Is It Critically Important to Get It Right)?

There is no one overarching definition of HR digital transformation. The one I prescribe to is from Deloitte’s 2017 Human Capital Trends report:

“[HR digital transformation]... is about HR teams using technology and data to take up the dual challenge of transforming how HR operations are executed on one side, and transforming the workforce and the way work is done on the other.”

This definition marries everything necessary for a successful HR digital transformation project. It puts technology and data front and centre and focuses on both processes and the organisational culture.

And that’s the ultimate goal of DT in HR —  to overhaul HR on an organisational level by using technologies similar to those used by marketing and sales teams.

The outcome of well-executed HR digital transformation is always three-fold:

  1. Automation of time-consuming processes;
  2. Maximisation of employee experience, and;
  3. Time freed up for high-level HR strategising.

Definition & Goals of DT in HR-02

Once this is accomplished, you can finally make a dent in the myriad of problems that HR departments are facing. 

I’m talking about things like:

  • low engagement levels that cost you a pretty penny [and cost the global economy up to USD 550 billion every year (Gallup, 2018)];
  • absenteeism that sinks your productivity levels [and costs the US economy alone USD 225 billion per year (Center for Disease Control, 2015)];
  • presentism losses sneakily accrue every day [and set the global economy back a whopping USD 1.5 trillion every year (GCC Insights, 2016)].

[Recommended reading: The Ultimate Guide to Employee Engagement]

Will turning HR 100% digital completely eliminate these expenses?

No, it won’t. 

But it could reduce them. 

Let’s assume your company is now bleeding USD 5 million per year due to low engagement and poor performance. How much would a 15% decrease in that be worth to you? Or a 30% decrease? Calculate it — it’s an actual (and significant) dollar amount that you’ll be saving.

However, it’s important to note that this isn’t the case for every organisation. Before you start the complex process of HR digital transformation, make sure your company ticks the following five boxes that signal that you’re, in fact, ready for this undertaking.

5 Boxes Your Company Needs to Tick Before Starting Digital Transformation in Human Resources

Definition & Goals of DT in HR-03

Not every company needs to start working on HR digital transformation right this minute. 

Before you rush into it, pause and figure out if these five prerequisites are in place because they’re crucial to successfully transitioning to truly digital HR.

  • More than 50 employees — for most companies, transforming how HR is done doesn’t make sense until they hit 50 employees. There are several reasons for this, economies of scale and return on investment being the two most important ones.
  • A formal IT department — your main partner in an HR transformation project is your IT department. You’ll need at least one qualified person to help you with integrations, data security, and logistics, and tackling all of that with an IT temp is not possible.
  • Employee data literacy — HR digital transformation is about letting data guide your decisions. Make sure you and your colleagues are comfortable working with large datasets. Or, hire a data expert who will help you translate those numbers into workable policies and strategies.
  • A robust HRIS in place — human resources information system is a software that’s at the core of every successful HR digital transformation. It collects thousands of data points that you’re going to need for future software and solution implementations.
  • Clear internal goals — HR digital transformation is not about modernisation. And it’s not about doing what your competition is doing. It’s about accomplishing clear internal goals that will ultimately lead to a fatter bottom line. Before starting on this project, think about what you want to do — reduce time-to-hire by 20 days, reduce onboarding mistakes by 25%, and similar.

Data & Automation — Two Keys That Unlock the Power of Human Resources

Let’s be honest here - HR departments are not really known for their readiness to embrace pioneering technologies.

But the complexity of HR digital transformation is pushing the industry into new and exciting experimentation. One of the most promising solutions to the problem of disparate and disjointed HR ecosystems is none other than artificial intelligence.

In our next post, we’ll explore:

  • what is AI (machine learning & deep learning) in the context of HR
  • why is using artificial intelligence in HR a smart business decision
  • how is AI already impacting 5 major areas of human resources

 

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