Digital HR Transformation: Stages, Components, and Getting Started

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Digital HR Transformation: Stages, Components, and Getting Started

One of the key themes for many organizations in the next 10 years will be digital transformation. Digital adoption and transformation is a key development for most organizations in their strategic goals. This finding will only be accelerated during and after the COVID-19 pandemic.

In line with this trend, HR departments are undergoing an impact from digitalization. In this article, we’ll take a look at digital HR transformation, its various stages, components, and what elements are needed to develop a digital HR transformation plan. Here goes!

What is digital HR transformation?
Stages of digital HR transformation
Components of digital HR transformation
What is needed to develop?
In conclusion

What is digital HR transformation?

Digital HR transformation is the process of incorporating digital technology to improve how the HR department (and in consequence, the organization as a whole) functions. This digital technology includes cloud-based HRIS, digital recruitment solutions, internal communication platforms, workforce engagement software, people analytics tools, and much more.

When integrating these digital technologies, HR professionals need to consider how new apps, tools, and programs will transform the workforce and how work is performed and completed.

HR teams that are able to look beyond just their own departments and operations will have a leg up on their competition. The key, therefore, is to look at digital HR support with a bird-eye view and make decisions that impact the quality of HR in the short-term, but also reflect an integrated and holistic long-term vision on HR for the future.

A digital HR strategy should, therefore, not be viewed as a rigid plan that is set in stone but should be regarded as a set of principles on key digital drivers. Examples of key digital (HR) drivers for an organization could be:

  • Improve operational flexibility
  • Employee experience optimization
  • Improve knowledge sharing
  • Experimental innovation

In this way, it is described what the organization is trying to achieve with the digital HR strategy. These digital drivers that feed the digital HR strategy could come directly from the overall digital strategy of the organization but could also be specifically relevant for HR.

In order to advance the digital HR strategic agenda, it is necessary to build initiatives around these drivers and these may change on a regular basis, based on business needs.

Stages of digital HR transformation

When it comes to digital HR transformation, an organization might find itself in any one of the stages listed below (click on the image to enlarge it). In my experience, most organizations are in either stage 2 or stage 3 and some organizations have entered stage 4.

I have not seen many examples of organizations that have shaped an integral and converged approach to digital HR transformation described in stage 5. In addition, I haven’t seen any examples of organizations in stage 6, where digital HR is no longer a transformation but is a continuous and ingrained component of all the processes HR is involved in.

Stages of digital HR transformation
The 6 stages of digital HR transformation

In order to progress to the next stage of digital HR, it is important to first have a shared ambition on the topic with at least one senior business stakeholder. Once you start a discussion on the topic with senior stakeholders, it is important to think about and mention all the business benefits digital HR might deliver. You might mention:

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  • Digital HR enhances the employee experience of our learning processes and they will learn new skills better and faster
  • Spending less time on HR related processes means our employees have more time to spend on customers and product development
  • Improving the overall experience of our employees at work boosts employee engagement and this might have a profound effect on customer satisfaction

Once there is buy-in, the next step is to determine how to progress. For this, it is useful to use a transformation framework and determine actions on specific components of digital transformation.

Components of digital HR transformation

In the table below (click on the image to enlarge it) you will find the major components which are crucial to a successful transformation. All components are of course heavily intertwined and dependent on each other. For example, investing in new HR technology will usually lead to improved HR processes (although this is definitely no guarantee!). It is a useful framework to use when you want to create a transformation plan with specific actions. 

Components of digital hr transformation
The various components that are crucial for a successful digital HR transformation

What is needed to develop?

First, you’ll need to determine where you stand as an organization and set an ambition for the next stage. Luckily, together with AIHR, we have developed a Digital HR quick scan where you can get an assessment within 30 minutes. You will also receive a report with some practical tips which you can use to fill the matrix below (click on the image to enlarge it). With this information, you might provide content for your organization’s digital HR transformation plan for 2021. 

Matrix digital HR quickscan

In conclusion

I’m increasingly convinced that complex transformations such as these can only succeed with small incremental changes and not with big bang transformations in the shape of a huge transformation program. The difference digital HR can make will only be noticeable in the various teams of an organization and in the way they are enabled to service their customers.

This requires changes in behavior by the people and the best way to change human behavior is through small steps into the desired direction. HR needs to facilitate these incremental changes as best they can.

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