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Digitization in HR

How to successfully digitize an HR department.

Digitization in HR

Successful digitisation means one thing above all: Giving HR time for value-adding activities while making routine work take a back seat. But what levers do you have to pull to successfully digitise HR?

From philippe dutkiewicz / Netzwoche

The role of an HR manager is very broad. The more time you spend on salary administration or expenses, the less time you have for topics such as employer branding or talent management. You can set your company apart from the rest of the market with good employer branding, but not just by paying wages on time. The aim of digitisation should be to put the HR staff at the centre as the pacemaker and to simplify or eliminate routine work. The Harvard Business Review has looked at this relationship in the following study1 and found: Pioneers in digitisation are also typically pioneers in their industry. So if you want to be competitive and be a market leader in your industry, you need to keep your HR tools up to date. We will show you the three tools that will help you accomplish this.

Accept the new reality

Many companies take an old RFP (request for proposal) or existing process documentation and seek out one or more tools based on this. But the requirements are often from back in the days when the Nokia 8210 was still the latest craze. An SMS was limited to 160 characters; emojis didn’t exist, and each key had three letters. A kind of SMS language developed on the basis of the technological circumstances at the time. But: Who still remembers that Nokia phone today? No one would currently come up with the idea of looking for a device who’s biggest feature is good pressure points in the keys. But this kind of thing happens all too often in HR.

For example: A major industrial group bought a savings tool and tried to use it with the existing country organisations and guidelines. But the guidelines, the payment strategy and travel organisation were completely outdated. Five years on, most employees still submit their expenses through an Excel sheet, and HR still has no idea whether the guidelines are being followed or not.

One global chemical manufacturer did things differently: The global guidelines and the payment methods were harmonised thanks to comprehensive reporting options and the summary of all expense expenses in a single tool. All employees in 29 countries today use the same expense process, the same expense types, and the same audit mechanisms. Only the legal aspects were localised. The cost for the expense process has shrunk massively, and the total costs have been reduced.

So, before investing heavily in digitisation, it is important to understand what kind of goal you are pursuing and how to achieve it with today's technology. Look at your processes and guidelines at the same time. And bring them up to date. You should not place a lot of weight on the way you have been doing things for the past 20 years.

Put employees at the centre

Digitisation today is often based on the requirements made by HR. But that is the wrong approach. HR should focus on its “customers”, i.e. its employees. Here is also a nice example of this approach.

HR at a Swiss packaging company is relatively satisfied with its processes. They pay wages on time and working hours are recorded correctly. In recent years, a lot of money and time has been invested in an on-premise solution. They want to protect these investments now and are holding innovation back. The only problem: A lot of employees in the company are highly dissatisfied. They are in the last third in terms of ratings in Kununu. HR is certainly not solely responsible for the situation, but it is not making a positive contribution to the current processes. There are also risks for the company because, for example, the application processes are not compliant with data protection requirements. Applicant dossiers are sent by e-mail and may not be deleted within the required time frame.

A private equity firm, on the other hand, consistently puts its employees at the centre and offers almost all services via a cloud platform. The company is extremely successful and attracts the best talent in the sector. Again, HR is not solely responsible for this, but smooth administrative processes allow HR to focus heavily on employee-related issues such as employer branding, well-being, and talent management.

Develop an HR vision and strategy, putting your customer, the employee, at the centre. Think about the added value you want HR to offer your customers. Use simple, common tools, such as Kim & Mauborgne’s Business Model Canvas or Value Curves, to leverage this value. Identify the topics where you can offer the greatest added value and start with digitisation there. Don’t be afraid to question ongoing and rigid processes, especially if they prevent you from modernising.

Digitise end-to-end

HR is a collection of dozens of interlocking processes. There are countless tools for every small and large process. There are over 300 solutions for performance management alone2. But as good as some of these tools are, they do not do a lot of good if they are not part of a digitisation strategy.

BMW today produces the i3 with a relatively short range of 200 km and does not provide a charging infrastructure. Owners have to drive to a workshop to have the software updated, just as they did 20 years ago. In 2013, the company was one of the first manufacturers to launch series production of electric cars. BMW’s head of development, Klaus Fröhlich, has concluded that people today still are not really interested in electric cars.

Tesla, in turn, is following a different model. The company offers a network of more than 1,300 charging stations and sells vehicles with ranges between 300-600 km. The vehicles are regularly updated over-the-air. The current Model 3 is the best-selling vehicle in its class in several countries. While Tesla thought through the topic end-to-end, BMW focused on the technical solution. The result is that today you can easily travel from Sweden to Sicily with a Tesla. With an i3, this endeavour becomes quite a trial of patience because of the different connectors, charging standards, long charging times, poor aerodynamics and so on. Another consequence is that BMW is massively losing market share to Tesla today. In the US today, more Tesla Model 3s are sold than cars in the same class as BMW, Audi and Mercedes. Without advertising and without discounts.

Address HR digitisation as a whole. Although digitisation can typically be an iterative process, it is important to have a strategy for it. This is the only way to minimise media disruptions, reduce costs and guarantee an optimal employee experience. Once you have chosen the solutions, you can combine and optimise them further, using different types of integrations. One example for user integration here would be a chatbot which can be used for various services. The employees are not interested in the tool in the background here.  Process integration for example, allows you to automate cross-tool process steps in onboarding processes using RPA Robotic Process Automation. This can, for example, simplify the automatic dispatch of policies as well as course introductions. And data synchronisation between different solutions is ensured with classic system registration, i.e. interfaces and APIs.

There is no recipe for successful digitisation in HR. The starting points are too different for that. But many stumbling blocks can be prevented with the following steps:

  1. Create resources to tackle the topic.
  2. Get your racehorses into position. Build a team that is open and able to drive digital transformation. This does not have to be a pure HR team. Bring your team up to date. Listen to pragmatists.
  3. Develop an HR strategy that puts your employees at the centre.
  4. Derive an end-to-end digitisation strategy. Think through processes from the end user’s perspective.
  5. Start with topics that deliver the most value, and sell your strategy internally with a business case.

Sources

1 https://c1.sfdcstatic.com/content/dam/web/en_us/www/assets/pdf/misc/hbr-report-salesforce.pdf

2https://www.g2.com/categories/performance-management

Published: 2. September 2019

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