Constant changes in the workplace can make human resource (HR) management an overwhelming responsibility. This is especially true for midsize businesses that often lack the HR Systems, HR policies and structure that larger companies maintain. It is for this reason that 47% of medium size organizations increased their HR digital technology spending in 2018, a 20% increase over 2017. In terms of dollars, according to a new report published by MarketsandMarkets, the core HR software market size is expected to grow from $6.47 billion in 2017 to $9.89 billion by 2022, resulting in a compound annual growth rate of 8.8% during the forecast period.
It’s no wonder why this growing market is compelling more and more midsize companies to integrate HR digital transformation. It can provide professionals with the tools to manage everything from an employee’s time and attendance, to integration with payroll, to better workforce management and more. Indeed, digital technology has the potential to transform HR in a midsize business to a model employed by much larger companies. But while it’s one thing to talk about digital HR transformation, it’s an entirely different thing to implement it. In this article we’ll take a closer look at HR digital transformation in midsize companies. We’ll define what it is, why it’s necessary, and how companies go about integrating it.
What is HR Digital Transformation?
HR digital transformation is the process of changing manually-managed HR processes to become automated and data-driven. Essentially, HR’s prior responsibilities remain the same. The difference lies with the new tools digital HR offers midsize businesses to manage the rules of workforce management. This includes redesigning talent practices, recruiting, leadership, and performance management; implementation of digital applications; and building a meaningful and compulsory employee experience.
Why Is It Necessary?
Up until recently, most HR technologies available in the market were not focused on the employee, but rather organization-centric. And there lies the root problem: While it is HR’s responsibility to purchase workforce management technology, it has traditionally overlooked the fact that the end users of this technology are the employees, not the company. This means not only do midsize companies face new challenges in the way they approach employee recruitment, retention and engagement, they also need better means to control things like employee time and attendance tracking, integration with payroll, and employee duties.
Also, with the growing influence of millennials in the workforce and the increasing transparency of the digital age, today’s younger employees have come to expect a more engaging and enjoyable work experience. Business leaders and HR departments have responded by employing a digital HR solution that integrates three core dimensions: engagement, culture and performance management.
How Companies are Integrating Digital Transformation
Taking that first step towards an HR digital transformation can seem like a formidable challenge to midsize companies. But the process is quite manageable if the company focuses on the following key objectives:
Clearly defined goals
— Before a company launches a big transformation to digital HR management, it must first establish clearly defined goals that make sense from a business perspective. In almost all cases these goals will center upon issues employees encounter.
That’s why in a process of HR transformation the focus should always be on the employee as an end-user. It’s also why it is good practice for the company to let employees first test any new technology—geo tagging or location tracking, for example—before implementing it. Another thing that warrants consideration is the desire of a lot of 21st-century employees: the opportunity to work remotely at least part of the time. In fact, it’s one of the benefits employees value most when choosing a company to work for. Having the means to institute a remote digital clock in / clock out option increases employee satisfaction, which in turn is good for employee morale.
Secure agreement from both management and employees
— A major transformation to digital HR management requires that all stakeholders, from employees to the C-level executives and everyone in-between be in agreement with the changes being instituted. This is where a lot of midsize companies fail in their efforts to shift to digital HR because they don’t consult the employees before implementing the changes. When it comes to a digital HR transformation—something that will affect the entire organization—you need everyone on board and all the support you can get in order for it to become a success.
Keep the transformation simple
— The most effective means of moving ahead with a digital HR transformation is to start simple and take small steps. Remember, not everything has to be implemented at the same time. Make a list of HR processes that would benefit from a digital makeover. These areas might include time clock software, digital time tracking and web punching, integration with payroll, a move to go paperless, or means to prevent buddy punching, among others. Discuss each area with employees, managers, clerical staff and C-level executives. Ask for everyone’s input on what they think should be a priority and then decide what would be the most prudent first step to take.
— Take the ideas discussed in step #3 and prioritize them based on how their implementation would impact the business. Consider the time and money it would take to actually integrate the ideas digitally. Start with the ideas that return a high impact at a low effort. They will provide the quickest way to build the business case for digital HR and get you going quickly.
Means of assessing performance
— Implementing digital technologies makes sense on many levels but doesn’t make much business sense if you can’t measure results. Therefore, you need the means to critically assess what works and what doesn’t. This includes compliance and regulatory requirements, leveraging analytics to move beyond employee engagement and retention analysis, and gaining deeper insights into management and operational issues that can help improve organizational performance. Performance analytics also help HR identify the high performers and at-risk employees, which helps drive higher retention and engagement rates. Predictive performance analytics can also help organizations hire better quality talent during recruitment.
Be mindful of the work environment and culture
— Digital technology by itself does not transform a HR department, let alone a digital transformation of an entire organization. It takes keeping close watch on the work environment and the mindset of everyone involved. Environment and mindset are primarily what makes up a company’s culture. For a successful transformation to digital HR, a digital mindset must be integrated. This includes not only new hires and the current workforce, but also mid- and upper-level management and C-level executives.
Like it or not, for today’s businesses to thrive and grow, a transformation to digital HR management is no longer optional. From compliance and legal issues, to recruiting, to policies, to benefits, to business goals, companies need to keep up with a world that’s digitalizing at a fast pace. If midsize companies don’t emulate their bigger brothers and sisters and move to HR digital transformation, they will inevitably pay the price in lost revenue and a disgruntled and unmotivated workforce.
Don’t make digital HR transformation an afterthought. Also, don’t make the mistake of not assigning an HR professional that understands digital transformation early on. It’s one of the most valuable positions to be filled in today’s growing company. Bottom line—it doesn’t really matter what the size of the company is because every company needs similar HR functions. And the first businesses that move to implement them will be the first ones to reap their enormous benefits.