The Ultimate Guide to HR Digital Transformation (Part #3) — The 6 Stages of HR Digital Transformation

January 13, 2021
by Damian Keane

As I’ve mentioned in part #1 of this series on HR digital transformation, companies still struggle with slightly more complex digital implementations in human resources departments.

The reason for that is simple.

HR digital transformation is not a switch that you flip. It’s not something that you do, and then you’re done with.

Instead, it’s a continuous process of chipping away at legacy HR solutions and replacing them with new systems and ways of doing things.

These legacy processes have been around for decades. Replacing them — and the way of thinking that’s propping them up — won’t be achieved overnight.

However, there’s a method to dragging HR into a digitally-forward future. And that method is rooted in the six stages of HR digital transformation.

The 6 Stages of HR Digital Transformation

When they talk about it, most HR experts borrow from Brian Solis’ work that focuses on digital transformation in customer experience. He notes that every DT initiative (HR or otherwise) can be divided into 6 distinct stages:

(Lots to say, not enough pixels in the world - click on the image & and it will double in size)

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Right now, most companies are in the second, present and active stage. Some have moved into the formalised stage. And a rare few are inching towards strategic HR digital transformation. 

In all my research, I didn’t come across a company that’s moved definitively beyond stage #4 (while some did start stage #5 experimentation).

In this post, I’ll dig a little deeper into each of the stages. I’ll also show you what needs to happen across several dimensions — leadership, HR processes and technology, and data and analytics. Each of these needs to be tackled successfully to move through each stage of HR digital transformation.

Ready to find out what’s next for your organisation? Let’s dig in.

Stage #1 of HR Digital Transformation — Business As Usual

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Also known as the ‘but-we’ve-always-done-it-this-way’ stage.

If your organisation is in this stage, HR processes, tech, and people are still clinging to decades-old solutions. The leadership is not interested in change because they see no value in change. 

Before you can even discuss your HR transformation roadmap, you need to break through these barriers — and the entrenched preconceptions of HR veterans who are propping them up.

How to successfully navigate through (& beyond) this stage:

Strategy & leadership — your main job is to build awareness of the benefits of HR digital transformation. Invite a guest speaker, distribute case studies about DT in HR (preferably those featuring your direct competitors), and try to find allies in upper management.

Technology & processes — make a list of all HR processes currently in use. Have specialists walk you through the steps of each and every process and assess how streamlined and standardised they are. On the tech side of things, conduct a fit-gap analysis to find out a) what type of tech stack you need to cover current HR needs, and b) what you need to scale as you move through the stages of HR digital transformation.

People — put some feelers out to identify people in the organisation who could help you implement changes. Focus on those with digital know-how and an appetite for experimentation. At the same time, work on educating HR employees on the benefits of HR digital transformation.

Data & analytics — determine the quality of the HR data you’re currently collecting (low-medium-high). Identify those metrics that have the highest business impact. Discuss how to improve reporting and quality with (HR)IT experts and data analysts.

Stage #2 of HR Digital Transformation — Present & Active

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Welcome to the ‘let’s-tinker-with-this-and-see-what-happens’ stage of the HR digital transformation.

The top brass is finally realising the benefits of HR digital transformation (usually prompted by outside competitive forces). Also, there are pockets of innovation emerging. HR employees are connecting to launch small-scale test projects and successfully implementing technology and process changes.

How to successfully navigate through (& beyond) this stage:

Strategy & leadershipidentify an urgent business need (drop in engagement, poor performance scores, low productivity). Partner with a willing exec (preferably with the CFO, CHRO, or the COO) to brainstorm a solution rooted in digital HR that could fix/prevent this issue in the future. Create a strong business case that will intrigue a few more people from the leadership team enough for them to throw their weight behind the project.

Technology & processes — create a roadmap of future technology implementations. Discuss the details with HR, IT, and business ops stakeholders. Decide which current tech solutions stay; which ones need to be expanded, and which ones are getting sunsetted.

For processes, create the same roadmap but keep the focus on those processes that a) have the biggest business impact, and b) deliver the best employee experience. Favour incremental improvements you can test before deploying globally.

Peopleform several multidisciplinary teams that will use impact-effort matrices, and take a stab at getting big results through small changes.

Data & analyticspartner with business and analytics experts to create reports with actionable people-centric insights. These reports need to demonstrate business value. Organise interdepartmental brainstorming sessions to identify which crucial data points are currently missing.

Stage #3 of HR Digital Transformation — Formalized

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In this stage, the HR digital transformation is well underway.

Projects grow in scope. You’re now experimenting more purposefully, looking to solve particular business problems. 

That said, there’s some pushback from the top brass because you’re now spending more money. Producing results becomes imperative, especially as you’ll need even more cooperation (and a bigger budget) to successfully transition to the next stage of the HR digital transformation.

How to successfully navigate through (& beyond) this stage:

Strategy & leadership — continue building your case for ploughing ahead with HR digital transformation. Leverage executives who have bought into your initiatives to be bolder in your asks — more manpower and more money. Create a timeline for projects, regularly update the leadership team, and keep the focus on your results.

Technology & processes — invest heavily in replacing legacy tech systems. Buy or build an all-in-one solution that unifies collaboration, employee experience, dashboarding, and reporting.

On the process side of things, start cutting out things that don’t work in a digitally-driven HR landscape. Automate time-consuming steps wherever possible (onboarding, surveys, performance assessments), and free up time for strategizing.

People — start rolling out training programs to cover any potential digital skills gaps in the HR department. A good understanding of concepts such as design thinking and horizontal integration is a must for all employees.

Data & analytics — Focus on creating a bespoke reporting and analytics dashboard that delivers business-critical data. Collaborate with HR, IT, and other departments to regularly improve data collection and reporting.

Stage #4 of HR Digital Transformation — Strategic

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In this stage of the transformation, multidisciplinary teams driving the HR transformation get the seat at the top brass table.

You’re no longer busting your chops trying to make people see the benefits of digital transformation in human resources. That part of the heavy lifting is done.

What’s next is building an HR transformation roadmap that stretches several years into the future. This means coming up with a strategy that connects HR to every facet of the business.

How to successfully navigate through (& beyond) this stage:

Strategy & leadership — your team is now responsible for developing an HR transformation roadmap, proposing a budget and a timeline, and executing on objectives. Foster good working relationships with key stakeholders, especially IT executives, because you’ll be leaning on them to accomplish your goals.

Technology & processes — work with the IT department to connect existing business tech with the HR tech stack. Ensure HR access to other organisational programs, platforms, and knowledge bases. Start injecting AI-driven solutions into the ecosystem.

When it comes to processes, all fat should be trimmed at this point. Those processes that stay all add value and can ‘communicate’ with one another. For example, your performance reviews are linked directly to your L&D solution, allowing it to make accurate training predictions for specific employees.

People — proficiency in digital and data interpretation is a requirement for all new hires to the HR department. Employee enthusiasm about new initiatives might start dropping off at this point — keep engagement high by providing weekly updates on new projects, ask people to pitch in ideas and celebrate team successes.

Data & analytics — identify gaps in business-critical insights and work with the IT team to close them. All HR insights and data points should be available via self-service dashboards. Create training materials for all stakeholders who regularly request HR information.

Stage #5 of HR Digital Transformation — Converged

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At this stage of your HR transformation roadmap, your focus is on building a strong interdisciplinary team that will support the new HR strategy as that strategy supports business and customer-centric goals. 

You can also expect an emergence of new roles — a work-from-home facilitator, university for life coordinator, and algorithm bias auditor are just a few that you might see a need for.

Strategy & leadership — the name of the game is high-level strategising. Your HR transformation team is now an integral part of the leadership team. Your job is to keep other stakeholders involved and contributing by sharing problems and challenges and proposing solutions.

Technology & processes — implement a tech solution that feeds off a single data source. Ensure data validity and security, and allow HR tech stack to access any dataset necessary to make accurate predictions and suggestions. Continue work on smart algorithms (machine learning and deep learning), and begin work on automating processes that were human-dependent up until now.

Continue to optimise HR processes and workflows by deploying frequent pulse surveys to gather feedback. Train software to make more accurate predictions (for example, when it comes to L&D suggestions) by implementing a rating system to score said suggestions.

[Recommended reading: The Role of Artificial Intelligence in Human Resources Management]

People — Focus on bringing in data-savvy employees with a flair for HR. You’ll need them as you become more reliant on Big Data. Additionally, either train or hire people with a robust software dev skillset. Often, you’ll need to build solutions from scratch to cover the unique demands of your operation. Keep in mind that these profiles are in high demand so you’ll need to work on making your company more attractive to top talent.

[Recommended reading: The Ultimate Guide to Employer Branding]

Data & analytics — now is the time to connect HR-specific data with business (customer) data. Build integrated dashboards that will, in time, be able to calculate the impact additional training, employee engagement, and/or employee well-being have on the company’s bottom line.

Stage #6 of HR Digital Transformation — Innovative & Adaptive

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At this stage, the role of your digital transformation team is to innovate and explore possibilities. 

In cooperation with other departments, deploy pilot programs… even if the ideas sound outlandish. Your HR digital transformation is a key driver of business. Experimentation (and even failure) helps you keep the necessary momentum.

Strategy & leadership — develop a pulse-taking mindset where you continuously check in on existing processes. Use feedback to fine tune digital components that work, and to eliminate those that don’t. Secure budgets for experimental pilot programs that have an impact on all areas of your business.

Technology & processes — double down on the use of AI in tech. Work with IT teams to create a continuous feedback loop of data that allows your ML and DL algorithms to make even more accurate predictions and suggestions.

Hone your processes to such a level that you’re able to know what works best for each department. For example, the sales team responds best to mentor relationships to develop talent; marketing talent progresses fastest with access to high-ticket training programs.

People — invest in forward-thinkers, innovators, and futurists. At this point, you’ve opened up your headcount enough (by automating time-consuming processes) to hire people who’ll be a creative driving force behind your transformation. Review the HR talent gap to stay prepared for disruptive changes.

Data & analytics — work on pushing the envelope on real-time, smart insights (for example, highlight different insights in the dashboard depending on the requesters role). Challenge other departments to come up with specific data goals you can work on.

 

6 Stages of HR Digital Transformation — Where Are You?

Well, you’re not at stage #6, that’s for sure… 

But it’s also okay if you’re just treading into stage #2. You now know exactly what you need to work on to speed through that phase and formalise your HR digital transformation efforts.

It will be some time until we have the technology and the know-how to automate HR completely. When that happens, HR departments will turn into business-changing units.

Until then, it pays to take a look at what some companies are doing right now… even if they haven’t reached their 100% digital HR goal.

In my next post, I’ll serve you with a few HR inspirational stories, some of which include:

  • HR solutions that can accurately predict employee attrition
  • AI-based learning and development in human resources
  • HR chatbots driving transformation in employee onboarding

 

 

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