Why is digitization the future of HR?

According to a recent study by Gartner, two-thirds of executives believe that unless their company becomes more digital by 2020, it will no longer be competitive[1]. That's why we're taking up the question of why digitization is so important in human resources and how companies can prepare for further changes in the future.

What is HR digitization?

First and foremost, HR digitization is the process of using technology to streamline HR, making it more efficient and connected. For example, consolidating workforce data to manage employee performance or using technology to streamline the hiring process. This also coined the term e-HR, which first appeared in the 1990s. HR digitization has since become an important topic in the HR world. To put it simply, HR digitization can involve replacing forms and templates or Excel lists and manual calculations with a uniform database with corresponding report functions, or using software that enables faster and more efficient processing of HR processes, such as recruiting, master data management or payroll accounting.

Technology and engineering concept

What are the advantages of HR digitization?

  1. Improved Employee Experience (EX)

With increasing job turnover being the latest career trend of the 21st century, improving and optimizing the employee experience has never been more important. The digitization of HR can support this process by giving managers and HR a quick overview of all employee data. This includes an overview of job-related training and educational background to see if this correlates appropriately with the job profile and current pay. This is where people analytics can be particularly useful. With People Analytics, personnel movements can be analyzed and forecast for the future. This makes it possible to visualize demographic characteristics of employees and trends in terminations and to create a data model that makes a forecast for the future. Hotspots are identified and retention measures can be initiated at an early stage. This is all the more important if employees with critical skills are at risk of leaving and succession planning plays an important role. Not only can this help identify and prevent churn trends, but it can also provide the basis for demographic company reports.

  1. Improved security

Digitization makes it possible to store documents online and sign them electronically. There is also the option of encrypting the files, protecting them with a password or storing them in an audit-proof (ie unchangeable) format in an audit-proof digital personnel file. An electronic personnel file is a GDPR-compliant, modern and more secure alternative to paper files and the risk of document loss and errors is minimized. This not only makes HR work in the company safer, but also saves time. The digitization study by Haufe speaks of an average time saving of 60% through the digitization of HR processes. In addition, the transparent data processing of personal data is professionalized by role-based access authorizations and possible logging of access to this data in the system. Digital management and copying of the data protects against the risk of paper files being destroyed or manipulable.

  1. Improved efficiency

Gone are the days when employee data had to be entered twice or three times in a variety of Excel spreadsheets, forms or tools! The digitization of HR work makes it possible to bundle all this data in a single process. This means that updating employee data, e.g. a change of address, no longer has to take minutes but only seconds. The consequence? An increase in employee productivity as they are no longer frustrated when paper documents are lost and smaller operations take much less time[2]. All in all: more time for business and strategy!

  1. Improved hiring process

Hiring a new employee can be a daunting task. The thought of digging through piles of resumes to find the ideal candidate, and then conducting stage one, stage two, and even stage interviews can be very time consuming and exhausting. Digitizing this process makes it much more manageable and creates transparency for everyone involved. For example, by automating the process of receiving applications, managing documents, scheduling interviews, and communicating with relevant executives, a human resources department can interview many more people in less time, massively reducing the time-to-hire[3]. Not only that, but it streamlines the process for an applicant considerably. Some software allows potential employees to view live updates on their application process. Additionally, the use of artificial intelligence (AI) in the hiring process has increased significantly in recent years, and it's no wonder why companies that use AI in recruiting can achieve further cost reduction. For example, AI can help to sort application documents and thus do the preparatory work for the HR department.

Innovative ideas in businessman hands

How can companies start HR digitization?

  1. Identify the company-specific goals

As with any major change in life, it is crucial to plan and set goals correctly when it comes to digitizing HR work. Depending on the scope of the transformation, it is advisable to start with pragmatic goals that can be built upon in order not to overcomplicate the process. As soon as the goals for digitization have been determined, they should be prioritized. Listing and prioritizing the goals helps to assess the extent of the transformation and provides guidelines on where to start. Clear goals that fit the company's overall strategy also help to assess how exactly the process of HR digitization will contribute to the company's success.

  1. Choosing the right technology for your business

Every company has its own peculiarities, preferences and working style. For this reason, selecting the optimal technology to support the digitization of HR processes is crucial for your company. HR Tech Consulting GmbH can help here: Your needs will be discussed in an individual consultation and we will create an optimal process model for you. We are happy to make suggestions for suitable HR software providers and support the provider selection. In addition to prioritizing the use cases (e.g. recruiting, master data management, talent management, skill management) with the specific, required functions, the preference for suites versus best-of-bread approaches also plays a role in the selection. Furthermore, of course, points such as costs, implementation time, future viability and support offers. It all depends on the individual priorities and needs of the company.

  1. Appropriate training

Appropriate training and the timely familiarization of all affected employees is essential. It is helpful to start with key users, who can then train other colleagues and support them. There should also be open communication with the HR team that digitization will not replace the team, but will support it! The use of digital tools is always a human transformation. Previously learned work routines change and some need more, others less guidance and mindset shift. Implementing new HR software is a significant and impactful step into the future of HR work. We at HR Tech Consulting are happy to support you. No matter whether you want to introduce HR software in the company for the first time or whether you are thinking about a change or you might want to digitize other processes that have not been there before. Do not hesitate to develop the digitization potential that has not yet been developed within your HR work. Worth it!

[1] HR's Role in Leading Digitalization | Gardener

[2] Digitalising HR: The future of the workplace (bmmagazine.co.uk)

[3] Digital transformation of recruitment: How can you benefit? - Workable