Digital transformation and digitalization are hot commodities in today’s technology space. Companies from around the world are gradually embracing digital ecosystems by integrating new technologies into their operations. Today, human resource (HR) is at the brink of a complete digital makeover, and for a good reason.
Over the past few years, HR has consistently evolved – so much that it is becoming increasingly difficult to stay abreast of all new trends that are coming to the fore. However, it is hard to miss one major trend and that is HR digital transformation.
The human resource management market is projected to reach a market value of around $38.17 billion by 2027, growing at an impressive CAGR of 11.7% from 2020 to 2027 . This indicates that companies are willing to revamp their HR processes by investing in robust human resource management (HRM) solutions.
Shifting Tide – From Manual to Digital
There is little doubt in our mind’s that organizations are focusing on formulating robust digital HR strategies. HR teams that primarily rely on manual processes are likely to be replaced by an HR department that is data-driven and automated.
If you think your HR department is lagging, do not panic! HR digital transformation is not an overnight process.
Before you go all in and initiate digital transformation for your HR department, you need to have a solid roadmap. First things first, you need to understand what HR digital transformation is.
What is HR Digital Transformation?
HR digital transformation can be defined as a process in which technology is used to streamline and improve the overall capabilities of the HR department.
The objective of digital transformation for human resources is simple to understand. One, to boost productivity and save money, and two, to collect data and make data-driven decisions.
Different Forms of Digital Transformation
Digital transformation of human resources can take many forms:
- Reading every resume that comes your way can be time-consuming. However, with a full-proof digital HR strategy in place, an applicant tracking system (ATS) can do that for you. Besides, it will also filter out candidates who are not fit for the role based on data and keywords given by your top employees.
- Instead of taking new hires through the onboarding documentation manually, let an onboarding software do that for you. It automates the entire process and allows you to focus on other important tasks.
- Succession planning systems offer critical information on employee performance, personal goals, and skill gaps. Using this information, you can promote the most deserving candidates.
The above scenarios are just a few handpicked tasks that HR software can accomplish. From payroll management, compliance, onboarding, and relieving, HR tools can transform all the major HR processes.
In principle, digitizing HR operations may seem like an easy task. In reality, it is much more complicated than you might think. Every step in this process presents its own challenges.
These challenges could be anything from defining a goal, getting the leadership on board with your idea, researching, completing the setup, training employees, etc.
You might also have to put some thought into how the success of each of the above processes can create your HR ecosystem. Keep in mind that without a well-thought-out digital HR strategy, even a single wrong move could derail your entire ecosystem.
There’s no beating around the bush. HR digital transformation requires considerable planning and strategy. Although many companies want to get onto the digital bandwagon at the earliest, they might not be ready to change things up.
Let’s take a look at some boxes organizations should tick before choosing the digital path for their HR processes.
Prerequisites Before Digital Transformation
Due to stiff competition, companies from around the world are seeking innovative ways to stand out. A lot of companies are turning to digital solutions to automate mundane and repetitive tasks.
For many companies, the clock is ticking on the implementation of a sound digital HR strategy. However, it should be methodically carried out.
Here are some of the prerequisites before executing a digital strategy.
Human Resource Information System (HRIS)
A solid foundation paves the way for a sturdy and disaster-proof building. Similarly, an HRIS is a foundation on which you should build your HR digital infrastructure.
An HRIS is one of the most important software used to save and maintain an employee database. Besides other recruiting systems, every step in the digital transformation process will depend on employee data stored in your HRIS.
If you do not use an HRIS, it is never too late to get one.
At least 50 employees
Every business is different. While that is true, it is also important to realize that you are not likely to get a good return on investment and economies of scale with digital transformation unless you have a workforce of at least 50 employees.
Besides, employee benefits requirements come into the picture when companies have at least 50 employees. This means they are presented with more administrative obstacles.
There is no running away from this one! As mentioned before, a major digital overhaul of all your HR processes is complex. It puts forward an array of predictable as well as unforeseen logistical hurdles.
Data security precautions, integration requirements, and other technical aspects can be easily taken care of by an IT department. Besides, the IT department will also guide you through the entire digital transformation.
Data literacy skills
Around 82% of respondents in a survey said that they want to improve their data literacy skills .
Gathering huge volumes of employee data will prove to be counterproductive if you cannot decipher what it is saying. Hence, it only makes sense to go ahead with digital HR transformation initiatives if you have employees with strong data literacy skills.
Define your goal before modernizing your HR processes. If your decision is based on what everyone around you is doing, it is a wrong move. Every process should have an internal goal with a measurable outcome. Only then, you can evaluate if your transformation was successful or not.
Notable HR Technology Trends in 2021
Rising Adoption of Artificial Intelligence (AI)
AI has spanned its wings across a wide range of industries. More recently, AI has successfully made its presence felt across the HR space. The increasing awareness about the benefits of AI is one of the reasons why AI is strongly advocated by many.
Cloud-based Human Capital Management (HCM)
Cloud computing is booming and businesses are moving towards the cloud at an impressive rate. Another software solution that is gradually heading towards the cloud is HCM.
Cloud-based HCM is becoming increasingly popular as they can be accessed from any device from any location.
Chatbots have evolved and how! After solely being used for customer service for several years, chatbots are finding applications in other areas as well.
Chatbots are set to revolutionize employee experience in the upcoming years. Besides, very simple issues can be resolved with chatbots. More so, new hire information, data submission, and other data can be collected with the help of chatbots.
Due to the COVID-19 pandemic, remote work attained new levels that were never anticipated before. In 2021, the narrative remains the same in many parts of the world.
A lot of companies are likely to continue with a hybrid approach i.e. working from home as well as the office even after the pandemic. This is why the demand for virtual technologies to hire, connect, and communicate is increasing.
Cutting-edge technologies such as artificial intelligence and virtual reality (VR) are likely to provide immense benefits to most HR professionals. Technology will continue to evolve at a rapid pace in the upcoming years. This means that if you are already lagging in the digital race, you are likely to drop even further.
We think there are plenty of reasons why you should build a solid foundation. If you still rely on spreadsheets and paper files for a major chunk of your HR requirements, you need to make a decision soon.
You can check out our tool reviews of some of the most affordable human resource management systems (HRMS). You can also compare different tools to make sure you choose the right solution for your business.
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 (2020) “Human Resource Management Market Worth $38.17 Billion By 2027” Grand View Research [online] Available from: https://www.grandviewresearch.com/press-release/global-human-resource-management-hrm-market [accessed May 2021]
 (2021) “Qlik Reveals Data Literacy Skills Shortage in the U.S.” Business Wire [online] Available from: https://www.businesswire.com/news/home/20180129005256/en/Qlik-Reveals-Data-Literacy-Skills-Shortage-U.S [accessed May 2021]