What Does Digital Transformation Mean in HR?

As technologies evolve, so do people, processes, and priorities. Digital transformation occurs when organizations change traditional business practices into new digital methods to improve efficiency and better achieve internal (employee-facing) and external (customer-facing) objectives.

Global spending on the technologies and services that enable digital transformation is expected to reach $2.3 trillion in 2023, according to data from the International Data Corporation (IDC), growing steadily to reach a five-year compound annual growth rate of 17.1%.

Digital transformation isn’t just happening in large organizations. It is also reshaping operations and driving efficiency in small businesses. It is changing how diverse departments operate within smaller organizations, and it is already having a major impact on human resources.

What Is Digital Transformation in HR?

Successful digital transformation in HR is transparent, interactive, agile, and data-driven. It uses data to determine the direction of all aspects of HR, such as hiring, benefits, payroll, employee development, performance management, and recognition. Small businesses may be hesitant to tackle these changes, but modernizing manual processes and using technology to increase efficiency can be done gradually, without depleting financial and human resources.

Goals for digital transformation in HR might include:

• Improving recruiting and hiring practices to find qualified, committed, and engaged candidates
• Improving employee and manager experiences. Putting information at the employee’s and manager’s fingertips, enabling them to find information they need/want on their own timetable.
• Updating the skills of employees to improve the overall quality of work and to meet changing industry needs
• Automating processes to minimize employee time spent on repetitive tasks
• Using newly opened-up time for strategic and creative tasks
• Changing the workplace culture and mindset to improve processes, productivity, and the overall employee experience
• Keeping up with competition by adopting digital processes and a culture of embracing new technology
• Increasing profitability by building customer loyalty through improved customer experiences and engagement

The Digital Transformation Journey

The digital transformation journey can be broken into three steps:

1. Digitization: Shifting from manual to digital processes
2. Digitalization: Creating a culture of using technology to run an organization
3. Digital transformation: The outcome of combining digitization and digitalization, resulting in an agile and adaptable organization

In a recent Gartner survey, two-thirds of business leaders said if their company does not digitalize more by 2020, it won’t remain competitive. Yet the digital transformation journey within HR is complex and challenging, and many HR leaders feel overwhelmed by the scope of these changes. Gartner’s research found that 88% of chief HR officers reported needing to invest in three or more technologies over the next two years.

Steps for Success

If your organization is thinking about undertaking a digital transformation journey, start with these initial steps:

• Define your overarching goal: What are you trying to achieve? How will this goal benefit your intended audience? What outcome will mark success, and how will you measure it?
• Establish who is responsible for each piece of the puzzle: Who will manage and implement each of the processes and technologies you are changing? Are there any obstacles or gaps that might get in the way of achieving your goal?
• Hire or outsource if necessary: Can you reach your goal with your current team? Do you need more resources to facilitate the digital transformation process?
• Troubleshoot and adapt: As you get started, where are you seeing potential problem areas? Are the tools you’ve chosen meeting your needs, or do you need to explore other options? Are employees dealing with challenges that need to be addressed?

Digital transformation in HR won’t happen overnight, but if managed well, it will create lasting positive changes within your organization.

Learn more about MedHQ’s expert human resources services.