What is the role of HR in digital transformation?

Published on 30 Apr 2021

In 2020 people in unprecedented numbers started working from home due to the Covid-19 pandemic. In fact, 85% of managers believe that teams with remote workers will become the norm [1]. This sparked an acceleration and increased interest in digital transformation among businesses. Being able to deliver services, collaborate on data and maintain work continuity with a remote workforce became a necessity. Human Resources was not exempt from this transformation. Processes like payroll, compensation, performance measurement etc are being digitalized across organizations by implementing a digital HR strategy. In this article, we look at the role of HR in the digital transformation of an organization overall.

Understanding digital transformation

Digital transformation means transforming all areas of an organization and businesses by integrating digital technology into processes and tools. The goal of digital transformation is to increase efficiency, productivity, and output; reduce cost and resource requirements; and deliver higher value to customers. Digital transformation changes the fundamental way in which a business operates. For this type of transformation to be successful, there needs to be a cultural shift in the organization. Employees and managers need to challenge the status quo, try new ways of doing things, and accept that things may not work perfectly right off the bat. Often organizations have to abandon long-standing processes that helped a business achieve success in favor of new processes that are still being developed and defined. Hence when it comes to digital transformation, HR plays a key role as the department has a significant impact on the culture of an organization.

Key areas of digital transformation

Technology for transformation

One of the key areas of digital transformation is technology. Over the past decade, technology has developed exponentially. Technologies that are leading to transformation in business include but are not limited to:

  1. Blockchain
  2. Artificial intelligence
  3. Cloud computing
  4. Big data processing, etc

The potential for these technologies is immense and is the driving force behind digital transformation. The potential benefits in terms of cost savings, productivity, and output are so significant that businesses can no longer ignore these technologies. That being said, businesses face some serious challenges when it comes to adopting these technologies. These technologies are complex and if a business does not have the in-house expertise and knowledge to understand them, adoption can become very difficult. Most businesses also have to contend with their existing technical debt, legacy technologies that have already been put into place through significant investment. Can these legacy systems be upgraded and integrated with the new technologies? What would be the cost of such changes? What security concerns would this create? These are questions that need to be carefully considered.

Data and technology

Another area of digital transformation that businesses sometimes do not think about is data. Data plays a key role in driving many new technologies. For artificial intelligence to be effective quality data needs to be given to its machine learning models. However, most businesses do not maintain basic hygiene when it comes to data. Effective transformation requires accurate data and analytics in order for the right changes to be made. If the right data is collected and the right time and in the right format, many processes can be automated, this reduces the cost and resources required to complete a task.

Let's take an example from digital transformation in human resources in terms of payroll. Today, businesses can easily get software that will automatically calculate how much employees need to be paid, what tax needs to be deducted, etc. However, for this software to work effectively, they also need to collect accurate data on a continuous basis like attendance information, any overtime owed, bonuses that need to be paid out, etc. Hence effective digital transformation requires businesses to understand what data is required, how it needs to be collected, stored, and presented so that automation can be effective.

Implementing processes

Processes are required to execute digital transformations. It requires businesses to think end-to-end. This is why they are key areas of transformation. Not having the right processes in place can lead to the failure of digitalization even if the right technology and data are being used. Organizations need to think outside of the traditional hierarchical thinking and focus more on what the right workflow is. By keeping in mind that any and all processes can be overhauled, eliminated, or improved, businesses can achieve true transformation instead of incremental improvements.

Role of HR in successful digital transformation

Technology, data, and processes are the key areas of digital transformation. However, organizations are made up of people, and ignoring the human aspect in a transformation will lead to failures. Successful digital transformations take into account the people involved, how they currently behave and how the changes will impact them. This is why it is crucial to have a digital transformation HR strategy. 

Ask for an HR perspective

When businesses are putting together a team to lead their digital transformation, the HR and Operations departments must have a prominent seat at the table. These departments will speak for the people, identify what training is required, and can help ensure that resource recruitment and development is aligned with the changes taking place at the organization. This will help ensure the long-term success of the transformation. The goal of digitalization is to increase efficiency and productivity and reducing cost by utilizing technology to automate processes and eliminate the need for resources to invest time in non-value-adding tasks. When businesses do not think about the people that will be impacted by a technology it can lead to frustration among employees and to unsuccessful initiatives.

Shaping company culture

Your HR and operations team will be able to understand and communicate the concerns employees have regarding a technological transformation. This will allow you to address the concerns in a timely manner. The right leaders can help employees at the business understand the need for change and inform them how the changes will impact their work and lives. A true digital transformation is a fundamental change in a company's culture.

Supporting transition and training

The HR department understands an organization's workforce, its current skillset, and strengths. Hence, they will be able to identify what areas employees need training in and design a program that will be able to fulfill those needs. It is the HR department's responsibility to create a training program that will prepare employees for any new requirements from the role. For example, if new software or tool is going to be used, employees may need training on the interface or in some cases employees may need more comprehensive training on technology and even get necessary certifications. Human Resources can help ensure proper compliance is maintained. They can support the business's transition from one technology to another and improve the chances of a successful transformation.

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1. Apr 2021, J. Steward, "The Ultimate List Of Remote Work Statistics for 2021", Findstack [available online] available from: https://findstack.com/remote-work-statistics/ [accessed Apr 2021]

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