Six ways to get on top of digital HR transformation
If you think it’s all talk and no action when it comes to digitising HR, then think again. Research from Bain anticipates a sharp shift from manual to digital processes in the next two years with no facet of HR remaining untouched
HR has found its appetite for digital. HR is rapidly adopting technologies such as micro-learning, recruitment management platforms and workforce analytics and 78% of HR leaders expect to use machine learning in at least one HR process within the next two years.
Robotic process automation (RPA – software that can be easily programmed to do basic tasks that humans do) is now being used or piloted in HR in roughly half of companies, with adoption expected to reach 74% within two years, according to research by Bain & Company.
Cloud computing is mainstream, with 84% of large companies already using at least one software-as-a-service (SaaS) application in at least one HR process, while blockchain pilots are underway in short-term recruiting, employment screening, payroll and other areas.
According to the survey of 500 HR executives and managers in the US, UK and Germany, the 23% of HR departments primarily using manual processes in recruiting will fall to just 4% by 2020 and the 31% using manual processes in career management will decline to just 7% in that time.
However, while 87% of respondents in the survey believe digital will fundamentally change HR, three-quarters acknowledge their IT systems and technology have not yet achieved optimal performance or the business outcomes they desire.
Nevertheless, 57% of respondents plan to increase their IT budgets by 1% to 10% over the next two years, and 25% plan to increase budgets by more than 10%.
“Many new technologies appear to have reached an inflection point for broad adoption over the next two years,” says Michael Heric, partner with Bain & Company’s performance improvement practice.
However, he warns: “The appetite of HR leaders for more digital tools may outpace their ability to absorb the tools. HR executives may be overconfident in how quickly they can make the shift, given how rocky the road has been so far in most HR departments.”
Challenges mentioned by respondents are too many digital tools, interfaces that users find difficult to understand, and tools that are missing critical functions. So how can HR leaders get on top of digital transformation rather than be overwhelmed by it? Heric points to six approaches evidenced in leading firms:
- Measure success based on business outcomes
Historically, HR used technology to improve the productivity of HR processes. Today, companies turn to technology for reasons far beyond cost savings. In fact, for areas other than payroll and recruiting, reducing process-level costs is a much lower priority than broader business outcomes such as speed, accuracy and quality
- Bring rich, consumer-grade experiences to the workplace
HR’s customers – including candidate, new joiner, retiring employee, manager and contractor—increasingly expect an experience as easy, convenient and personalised as they encounter with the best retailers or service providers. Leading companies use digital technologies to meet these expectations. In 2016, Ford launched the HRRev programme to streamline its people processes with technology. A seven-person People Lab gathered input from employees and devised experiments to improve processes. Multiple digital initiatives flowed from the experiments, including development of user-friendly HR tools, multichannel interaction models with HR, and real-time feedback tools
- Raise the game on analytics
Analytics is proving to be a critical means of informing HR decisions. A dedicated people analytics function has helped Google on numerous HR issues, such as how to contain the number of required candidate interviews; what the best size and shape of a given department should be; how to reduce defections after maternity leave; and how to spot hidden gold in the millions of engineer candidate applications
- Test and learn
Companies can get a lot of mileage out of technologies even at the experimental stage. Take chatbots, for instance. Online retailer Overstock relies on a bot named Mila to field notifications from call-centre employees who are too sick to come to work. Mila passes on the information to managers and adjusts schedules automatically. This system replaced an outdated call-in hotline, saving Overstock time and money on lengthy phone conversations. While limited in functionality today, chatbots could become a viable way to communicate in many situations
- Build ecosystems, not islands
As employees increasingly expect access to best-of-breed content, services and networks, HR departments can no longer staff all activities themselves. Instead, they are turning to partners outside the organisation. Mastercard partnered with Degreed to create a learning platform for employees to discover, curate, share and track internal and external resources on thousands of topics in a variety of formats
- Fix and simplify processes, data and systems
RPA and machine learning have a broad range of valuable applications. Often, though, it would be better if companies could simplify and standardise underlying business processes, data and systems. Take offer letter administration. RPA can conveniently draft offer letters for new employees that are tailored, accurate and compliant, by automating manual checking of data across diverse databases and regulations. However, some companies write offer letters in such a way as to create more questions than they answer, and there may be too many versions of the letter. Redesigning the offer letter template and moving to fewer versions, or to a single one, would reduce the manual work in need of automation through RPA in the first place.
The appetite of HR leaders for more digital tools may outpace their ability to absorb the tools. HR executives may be overconfident in how quickly they can make the shift, given how rocky the road has been so far in most HR departments