Digital transformation and artificial intelligence have transformed HR workflows for every organization. All major HR activities — recruiting, onboarding, offboarding, payroll management, skill development, and ensuring employee safety — are now being powered by digital tools to allow companies to stay competitive.
So what is HR digital transformation? Why is it crucial for every organization? What are the biggest challenges HR professionals might face while setting the stage for digital transformation? These are the major queries we will answer in this article.
We will also walk you through different HR tools required for an effective digital transformation and suggest strategies for the HR teams to build an incredible HR digital transformation strategy.
What is HR digital transformation?
Digital transformation is the process of evolving business processes, customer experiences, and culture using digital technologies. It involves integrating digital technologies into different business functions — internal (employee-facing, operational) and external (customer-facing) — to meet ever-changing business requirements and improve how organizations operate.
HR digital transformation means transforming manual or traditional HR processes into an automated, data-driven mechanism. The role of HR professionals in digital transformation is two-fold:
- Transforming HR operations using automation and data-led processes
- Improving workforce processes and enhancing productivity
This means transitioning to automated HR functions does not only include the HR department but the organization as a whole. Its benefits are felt by all stakeholders — such as employees, managers, C-Suite, and other departments.
What are the benefits of HR digital transformation?
Digital tools and AI-powered HR processes help HRs streamline their handling of an employee’s journey with the organization. This makes sure that the employee stays motivated and well informed of their growth within the organization. Given below are some examples where HR digital transformation yields great dividends.
- Digital HR automates easily repeatable, futile tasks (data entry, pre-screening of applicants, and payroll processing) to allow HRs to focus on high-value initiatives. This leads to better employee productivity and eventually benefits the business’s bottom line.
- In the current work environment, employees want a customer-like experience and the flexibility that modern technology offers. HR digital transformation roadmap plays a critical role in enhancing the employee experience. It simplifies their day-to-day activities by providing them with the intuitive tools to accomplish their tasks, enjoy flexibility in their work, and explore opportunities for career growth.
- Digital transformation enables HR to become more data-driven in its processes. This helps them better meet the department’s strategic goals related to recruitment, retention, development, or motivation.
For example, data-driven recruitment relies on technologies, techniques, and statistics to analyze and identify candidates with the required skills and years of experience. It also removes any personal bias from the hiring process and ensures hiring decisions are made solely based on candidates’ data in hand.
What are the key HR digital transformation challenges?
HR digital transformation impacts not only the HR but also the stakeholders associated with the company. Therefore, transforming your HR operations should be executed with extreme care and diligence.
The best way to meet success in your organization’s HR digital transformation roadmap journey lies in coping with different challenges that come en route.
Here are the four key challenges an HR might face while going digital:
1. Lack of a clear strategy
35% of digital transformation efforts fail without a clearly-defined strategy. Hence, you need a clear plan or business goals before initiating digital transformation in HR.
Here are some key questions to ask during a digital transformation strategy:
- What needs to be transformed?
- What are the goals of transformation?
- Do employees understand these goals?
- Are they aware of the future HR digital transformation processes?
Answering these questions and creating a well-defined roadmap can work wonders in tracking every step of the HR transformation process. It will also make it easier to benchmark the success and failure of the project.
2. Lack of budget
HR innovation and new projects often face financial bottlenecks. There will likely be budget constraints while implementing an HR digital marketing strategy. So, it’s better to be aware and prepared for it.
Remember, budgeting in the digital transformation of HR requires careful planning as any mistake can result in a funding crisis later on.
3. Resistance to invest
Organizations must adopt HR transformation to stay competitive, but they often struggle in convincing C-suites to invest in the project. Only one-third of companies say their C-suites are committed to digital transformation.
C-suites hesitate to invest in HR digital transformation projects because they are complex and disruptive. This triggers not only the transformational shifts in one department but also a significant amount of changes for the entire organization.
To convince the C-suites to invest in digital HR, they must be made to experience the new technologies. This will allow them to understand the benefits of digital services. Further, it must be underlined that HR digital transformation strategy is not just about technology but also about creating incredible experiences for HR, employees, and other stakeholders.
4. Lack of expertise
Successful digital transformation of HR requires a meticulous approach and having an inexperienced team can lead to various mistakes, such as incorrect goals, lack of clear strategy, and adequate resources. A large number of these mistakes can hamper your overall digital transformation efforts. Therefore, it is crucial to hire digital transformation teams and partners with strong expertise in HR innovation. They do not necessarily have to be experts in new technologies or transformation strategies, but they should have proven track records of implementing digital strategies successfully. However, to make your HR transformation process successful, seek help from external experts who can work alongside the internal co-workers to bridge the skill gap and take the HR digital transformation forward.
How to build an HR digital transformation roadmap
Without a clear strategy in place, your HR team will not know what operations to transform or what kind of technology they need to implement. Below, we’ve outlined seven steps for enabling digital transformation in the HR department.
1. Establish goals
The first step to starting the digital transformation of HR is defining goals. This will give a clear roadmap to measure success. For example, the goal could be to improve revenue by hiring suitable candidates using an AI-based screening process.
To establish goals, ask the questions below:
- Will the goal benefit everyone involved in the process?
- Is this goal measurable and specific?
- Does this goal align with the business goals?
- Will it have a positive impact on the business?
2. Decide who will implement this transformation
Once the goals are set, identify who will be in charge of implementing the HR digital transformation roadmap.
The transformation team, including line managers and HR professionals, should be active owners of the process. They should understand the HR processes and deal with employees directly. This will make sure that any changes to the HR policies get pushed out to the teams without lag. Further, there should be experts in the team who know how and which technology to use to reach preset goals.
3. Hire additional resources
Various tools will be required to complete the hiring strategy. While choosing one, go for tools that have a strong user experience and a layout that is easy for users to understand. Avoid deploying a tech stack that is complicated for the team to understand and implement.
In addition, new hiring may be required to implement the transformation strategy. For example, if one of the processes is to use an AI-based tool to gain insights into employee performance and engagement, a data scientist who can understand the data and provide easy-to-understand insights will be necessary.
Seeking advice from external experts can also help. While in-house employees are dealing with everyday activities, the external partners can help bridge the skill gap and prioritize activities that will have a greater impact.
4. Define a time frame
Assign each process a certain amount of time within which tangible results can be showcased to the team. For example, when implementing an AI-based performance management tool to track and measure employees’ performance, a three-month time is enough to know whether it effectively measures each employee’s performance and offers insights to improve it.
5. Identify processes to be replaced
The next step involves identifying the HR processes that will be eliminated after including digital platforms and technologies.
For example, in the recruitment stage, the process of going through different job boards and LinkedIn profiles to search for skilled candidates may be replaced altogether with the implementation of an AI-based screening tool. Further, an intelligent learning management software can eliminate the process of manually delivering and managing the learning content.
Identifying processes to be phased out may result in reorganization of the management and a simplified hierarchical structure. For instance, the candidate can quickly initiate the next round of interviews without waiting for the upper management.
6. Prepare the team for the change
A change in HR operations affects all the stakeholders involved in the organization. Therefore, it is important to start preparing them for HR digital transformation.
Team members may feel resistant to the new changes, therefore, it is crucial to empower them and help them feel confident about thriving in the changing environment. Further, there needs to be a model team that can set an example for other departments to embrace the changes effectively.
Rather than implementing a company-wide change, start on a smaller scale to minimize the risk of failure. It’s easier to apply feedback and learnings from pilot projects than make mistakes on a large scale.
7. Create a culture of digitalization
The essence of digitally transforming the HR department lies in creating a culture of digitalization. However, it involves not only learning the new technologies but also understanding that employees are still the focal point of the organization.
New digital technology and processes should therefore enhance the company culture and not replace it. It must be a practice to put employees before technology and allow them to adapt to the new technology smoothly. Further, collect their feedback on new digital processes and refine the strategy according to what’s working and what isn’t.
HR digital transformation strategy use cases
Some of the top concerns of HR professionals include attracting and retaining top talent, developing each employee to reach their potential, and enhancing the employee experience.
Here are some HR digital transformation strategy use cases to help you address these issues.
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Applicant tracking systems (ATS)
An applicant tracking system (ATS) is a software solution mainly used to screen applications based on the given criteria such as keywords, skills, years of experience, academic qualifications, and former employers. This reduces the time spent on unqualified candidates by automatically eliminating them from the list. ATS can also help with job posting, pre-interview testing, interview planning, and interview evaluation.
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AI-powered job posts
Professional-looking and appealing job posts are crucial for a brand’s image and for attracting skilled employees. AI-powered job post software allows HR professionals to entice candidates by writing better job postings. These tools provide insights on which language patterns to use to get desired results. After all, the difference between the success and failure of a job post is the words used.
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Onboarding software
From the moment a candidate signs the employment contract to the first day at the job, the HR team deals with multiple manual activities such as introducing new software, giving virtual office tours, meeting the staff and other team members, and more. This is where an employee onboarding automation tool can help. In addition to the above tasks, they can personalize onboarding introductions and even explain the company’s policies and structures.
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Recruiter chatbots
Recruiter chatbots are an AI-based HR trend that minimizes the time spent on screening candidates throughout the hiring process and enhances their experience. These bots use existing data, machine learning, and natural language processing to interact with applicants via personalized messages, quickly answer their questions, and ask relevant questions to gather more information about them. Many candidates can’t even tell if they’re interacting with a chatbot or a human.
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HR analytics
HR analytics enables organizations to improve their HR operations and decision-making. It depends on the quality of data collected from HR metrics, such as time to hire, employee engagement, first-year turnover rate, training expense per employee, and more. These analytics have been significant leverage for HR professionals to identify successful practices and weak areas that need improvement. Plus, they enhance business solutions by improving employee productivity, engagement, and retention.
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HR chatbots
HR chatbots are bots that are specifically designed and trained to assist the HR professionals in the company. They are responsible for writing quick responses to employee questions and automating repetitive tasks in seconds that an HR team may take hours. This helps save recruiters time and boost productivity and engagement amongst HR teams. HR managers can use their freed-up time to keep employees focused and satisfied.
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Talent management
A talent management system (TMS) is integrated software that HR professionals use to manage various aspects of talent management, such as recruitment, employee onboarding, professional development, and compensation management. In other words, it supports the entire talent lifecycle — from candidate acquisition to succession planning. TMS allows organizations to implement an end-to-end talent strategy that aligns with the company goals and objectives, resulting in improved employee hiring, retention, and overall experience.
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Learning management
A learning management system (LMS) is a software application that helps organizations manage all aspects of the learning process, such as tracking candidate development, delivering e-learning content, enabling real-time instruction sessions, identifying employee skills, and experimenting with new learning approaches. In a nutshell, an LMS is the most efficient way to run and manage an online learning program, both for the company and the employees.
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Performance management
The performance management system is an application that assists HR teams in tracking the performance of employees consistently and measurably. These tools aim to improve the company’s bottom line by stimulating employee performance. Moreover, they allow the organization to ensure that employees and departments work effectively towards achieving the business goals and mission. Not only that, it offers 360-degree performance reviews, automates performance review reporting, and identifies training requirements.
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Compensation management
Compensation management systems help organizations manage employee compensation packages. The HR department specifically implements these to develop streamlined compensation strategies for their teams. It is a single system where every department can take part in compensation review and access the information they need to determine the rewards for their employees. In addition, it helps manage salaries, plan employee bonuses, adjust compensation policies, and report on company compensation data.
What are the key tools for the digital transformation of HR?
Cutting-edge HR technologies can dramatically reduce manual tasks, minimize risk, and accelerate business processes. Here are the six types of tools you need for a successful HR digital transformation project.
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Employee experience software
Employee experience software is an application focused on improving employee engagement and service in their daily workflow. From employee helpdesk and process automation to employee insights, this software helps organizations redefine every aspect of employee performance.
It manages the entire employee journey — from onboarding to exit procedures. Since different employee tools are grouped into one platform, productivity is increased as people don’t have to spend time switching between tools, searching for information, or doing repetitive tasks that could be automated.
Here’s how it can help:
- Automates employee workflows and case management with conversational AI
- Creates a knowledge hub for all employee documents, policies, and other relevant information
- Automatically resolves employees’ frequently asked questions with chatbots.
- Provides employees with a self-service portal for addressing issues before a request is raised
- Uses employee surveys to discover insights into the areas where you need to focus your efforts on to boost employee engagement
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Applicant tracking software
Organizations often post job openings for multiple positions at once and receive hundreds and thousands of applications for each role. It is pretty challenging for the recruiter or the hiring manager to carefully go through each applicant’s information and select the one suitable for the organization. This is where applicant tracking software comes into play.
Applicant tracking software is an AI-enabled HR tool that acts as a database for job applicants. It makes application screening, evaluation, and onboarding processes easier and more automated. This saves time and helps avoid human error. ATS also keeps track of all the activities in the recruitment department — from posting the job opening to onboarding the employee effectively.
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Payroll software
Payroll processing and management involve numerous activities, such as creating payroll policy, calculating payroll, disbursing employee salaries, and distributing payslips and tax computation sheets. Done manually or with outdated software or spreadsheet, it becomes complicated, time-consuming, and inaccurate.
HR professionals across the globe rely on dedicated payroll software to automate and manage the entire life cycle of payroll operations. This allows the HR team to save time and create space for high-priority business projects. In addition, these tools enable HRs to report on labor expenses and calculate employee bonuses and deductions with complete accuracy.
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Online team timesheet software
Before AI-powered tools, employees had to spend countless hours filling out paper spreadsheets, Excel timesheets, or sticking to an outdated punch-clock method, resulting in errors, lost productivity, and missed deadlines. But today’s workforce is transitioning towards reliable timesheet software for an effective HR digital transformation process.
An online team timesheet tool enables employees to easily mark attendance from their laptop or phone at any time, providing HRs with real-time updates about their working hours, the time the employee stopped working, and the task that was worked on. Plus, it helps HRs to automate wage calculations, monitor employee breaks, and get reports on labor profits and expenses.
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Performance management software
Every organization is looking for ways to streamline its employee performance. Therefore, they must invest in reliable performance management software (PMS) to make performance appraisal more accurate and meaningful.
Performance management software is an application used by HR professionals to establish employee performance standards and evaluate an employee’s performance on organizational, departmental, and individual levels. In addition, it helps to track employee progress and development, facilitate employee performance reviews, maintain a record of discussion topics, and enable 360-degree feedback between managers, employees, and peers.
You can implement PMS either as a standalone solution or integrate it with other HR tools. For example, PMS integrates with the compensation management system so that employee performance reviews can directly impact compensation decisions.
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Learning management software
From understanding the organizational policies and procedures to acquiring new skills for their role — your workforce needs guidance at every stage. This is where powerful learning management software can help.
An LMS is a reliable HR digital transformation tool that streamlines learning and training across the organization and enables faster and better e-learning experiences. These tools can track, automate, and report employee assessments and development throughout the courses. , the system to create, manage, and deliver online learning content and provide unlimited access to e-learning materials.
Online learning provides employees more control over their learning process — they can learn in a style and at a pace that’s most suitable for them. Further, it helps the HR team develop courses based on their employees’ learning needs, including diverse content types like assignments, videos, checklists, virtual sessions, and more.
Overall, LMS reduces the training and onboarding costs and takes the employees’ learning experience to another level.
Is it the right time for HR digital transformation?
In a world that’s going digital at a fast pace, with employees moving to hybrid or remote working in most organizations, having an HR digital transformation roadmap isn’t an option anymore — it’s a necessity. The sooner the implementation of an HR transformation strategy, the better it will enhance the employee experience.
So, what is the wait? Switch the traditional HR operations to modern, data-driven processes. Reap benefits from reduced time on administrative tasks and an incredible employee experience.
Start your HR digital transformation journey with Leena AI.
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