Featured Research: Where Are You on The Path Toward HR Digitization?

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Today, more and more HR departments are turning to technology to positively impact everything from recruiting practices and performance management to learning and employee engagement. Have you ever wondered whether this investment in HR solutions is having the desired impact on people and on business outcomes? 

With the recent research report, The Digital HR Function, Deltek and HR.Research Institute set out to discover what correlations exist between successful HR Digitization and its impact on other parts of the business and the employee experience. The findings, though not entirely surprising, are very enlightening. Perhaps the most interesting finding demonstrates the true value of HR digitization and the return on investment in HR technology.

Key Finding: Organizations that embrace greater levels of digital HR services and functions tend to outperform their more “analog” counterparts in certain key areas:
 

o    Employee experience 
o    HR performance 
o    Financial performance 
o    Future digital plans 
o    Efficiency and effectiveness 
o    Innovative and change-seeking culture

Each of these key areas of the HR professionals’ purview are positively affected by investment in HR technology. 

Less digitized HR departments struggle to provide the employee experience expected by the modern workforce. Systems and processes are predominantly manual and there are little to no opportunities for employees to self-service their needs. The study also found that not a single analog HR participant indicated that the employee experience in their company was “top notch.” Companies farther down the HR digitization path are able to provide a more automated experience that allows HR practitioners to move beyond transactional activities toward strategic improvement initiatives that have a positive effect on employee engagement.

Across the board, more digitized HR departments outperformed their analog counterparts. The farther down the digitization path HR professionals have travelled, the more they are able to focus on providing strategic leadership and guidance to other company leaders and decision-makers. While not directly tied to the findings in this research, the greater influence HR leaders have in their organization, the more able they are to drive performance in key areas such as the productivity and utilization of employees. This outcome moves far beyond impact on individual employees to overall organizational success. HR is integral to the successful achievement of strategic growth goals, and the extent to which an HR professional can dedicate themselves to this dictates the impact on the business as a whole.

The results of the study indicated that digital HR departments tended to operate in organizations who also reported better HR performance and financial results. Over 60% of the digital HR group reported that their financial performance was above average as compared to only 43% of the analog HR group. When it came to the performance of the HR department, the gap widened considerably. The digital HR group said that 44% realize above average HR performance compared to just 19% of the analog HR group. 

Less digitized HR departments tend to use homegrown, siloed solutions, or no solutions at all. Many of the processes are antiquated, but HR teams in these companies can sometimes struggle to convince leadership of the value of HR technology, which unfortunately places their organizations at a further disadvantage. At the other end of the HR digitization spectrum, technology dominates HR services and is valued by both employees and leadership. HR and IT tend to work closely in these organizations to continue to improve existing processes and applications. The return on investment is self-evident in these organizations and the ongoing support from leadership helps the HR department and company move forward more rapidly as new technology trends become pragmatic to adopt.

The survey found that the dominant role that the majority of HR practitioners fill is that of administrator (70%), with less than a third (30%) stating they serve as strategist. The organizations where the HR leaders are able to play the role of strategist tended to be more digitally advanced than their administrative analog counterparts. It follows logically that the most strategic HR leaders supported the companies with greater HR automation. The less time an HR department is required to spend on transactional activities, like changing an employee’s address, the more bandwidth they have to adopt the role of strategic advisor to the business; a role every HR leader should occupy at this stage.

When there is a lack of institutional technology literacy and a lack of buy-in at the executive level, it usually follows that a more analog HR department will be found. This translates to a workforce and an HR team that is largely unfamiliar with and lacks the skills to push an HR digitization plan forward. The farther down the HR digitization path an organization travels, the more likely they are to see a true learning-focused innovative culture. Continuous learning becomes a cornerstone of the company values, and innovation then follows. Employees who are encouraged to learn together through networking tools are then those to drive user adoption and propel teams toward greater levels of progress.

Not sure where to start? Start from the beginning and conduct an HR digital maturity audit. Leveraging the HR Digitization Maturity Model included in the report, assess key areas of your digitization journey to identify the starting point. Look at current technologies, objectively evaluate HR effectiveness, and employee engagement, and review companywide strategic initiatives to understand organizational alignment. There are never guaranteed results from largescale improvement initiatives. Success depends largely on execution and adoption. That said, there are enough indications that HR digitization has a positive impact on business performance to justify progress toward widespread HR digitization.