HR Technology Strategy for HR Digital Transformation
Updated: Feb 22
HR Digital Transformation is Lagging
The rate of technological advancement has had a significant impact on how business is conducted. The way we manage people changes along with the business world. The function of Human Resource (HR) is now bigger, more crucial, and more difficult than ever. In a world that is changing quickly, HR departments are battling digitalization and curating the employee experience. In their adoption of innovative digitalization for HR activities, firms throughout the world are suffering "significant lags," according to the HR Trends Report 2023 by HR consultant McLean & Company.
McLean found that 58% of survey participants said their HR departments have not undergone a digitization transformation and 55% are experiencing "major challenges or obstacles" to HR digital transformation in a survey of 1,075 business executives from organizations in the U.S., Canada, and parts of Europe and Asia. When given the option to select several obstacles to HR digitalization, survey respondents gave a variety of explanations for why they had failed. Working with legacy systems was indicated as the greatest obstacle by an estimated 41% of respondents, followed by inadequate funding from 39% of respondents and a lack of a digital HR strategy from 33% of respondents.
In this article we will dive more on the HR technology strategy for HR digital transformation.
HR Technology for HR Digital Transformation
The development of HR technology is a topic of interest on a worldwide scale, with current data indicating that the market for human capital management (HCM) applications will exceed $22 billion this year. These solutions enable firms to digitally alter historical operations in quest of higher efficiency and effectiveness. They include everything from recruiting, onboarding, compensation, and payroll to training and performance monitoring. Businesses demand solutions that can easily access and manage employee data straight from HCM systems already in place. We need a strategy for integrating such systems into HR so that the time and money spent are more effectively used.
HR Technology Strategy for HR Digital Transformation
The growth of workplace digitization has made HR technology the primary enabler of employee satisfaction and productivity. HR technology investments are frequently costly and long-term. HR directors must make sure that the technology used can adapt to meet changing business and employee needs to get the most out of this significant investment. HR leaders can apply a dynamic trigger-based review approach, integrate solutions with employees' personal and professional goals, and develop a governance system to assess HR technology investments as a portfolio, not silos projects, to develop an adaptive HR technology strategy.
Make dynamic plans for HR technology, not static plans
It is difficult to modify or replace technology solutions in response to a change in demands since technology investments often include significant costs and high levels of effort in their selection and implementation. As a result, HR directors must carefully consider how to adapt their IT strategy and support in response to shifting business or employee demands, all the while avoiding overall disruption to their roadmap. To do this, HR executives should actively decide when to reassess their strategy and collaborate with team members from all parts of the company (such as IT, HR, and the business) to look for changes in external trends or changes in business/employee demands. Three critical aspects set dynamic HR technology planning apart from static HR technology planning:
Planning assumptions: Plan technology investments with the expectation that change will occur rather than planning HR technology initiatives and investments based on a single, most likely scenario.
Review frequency — Iterative reviews or reviews based on the identification of certain triggers should be used in place of an annual review of the HR technology strategy or action plans.
Partnerships – Work together with business, IT, and HR partners to develop and assess the HR technology strategy rather than doing so in a silo.
Enhance not just user experience, but also whole employee experience
Although most HR executives concur that they want to use technology to improve the employee experience, half of CHROs believe that HR technology detracts rather than enhances the employee experience at their firms. This is due to the fact that HR directors frequently adopt a technology-user-centric perspective when describing employee experience in the context of technology. They emphasize the technology's usability and how simple it is to locate, access, and troubleshoot the solution. This strategy has the drawback of ignoring how HR technology helps workers achieve their goals and carry out their work. Helping people achieve their personal and professional goals should come first, not usability. If a technological solution enables them to do their task more quickly and precisely, then it is the feature that matters the most to them, according to 73% of employees.
HR technology teams must broaden their focus from enhancing the user experience to enhancing the human interaction with technology as the influence of HR technology on employee experience changes. This entails improving how employee-facing technology affects their social, professional, and personal life. In the hybrid workplace, when the lines between work and personal life are blurred, this is even more crucial.
There are three fundamental differences between enhancing the whole employee experience and only the user experience:
Starting point – Starting from understanding the value of the technology for the employee, before addressing the usability of the technology interface
Improvement approach – rather than focusing solely on increasing productivity, consider how you can use technology to provide employees with a sense of empowerment and engagement.
Success criteria – Evaluate how HR technology affects equality, employee wellbeing, and productivity rather than just usage and satisfaction measures.
Organize your technology portfolio, not your projects
Even though most firms want to combine their HR IT solutions into a small number of suites, in practice they cannot meet all of the organization's requirements. This means that HR technology leaders will invest in point solutions to close gaps left by suite deployment, address a pressing business requirement, or take advantage of market innovation (such as talent acquisition space). According to the strategic hypotheses made by Gartner, 60% of all midmarket and large businesses worldwide will have deployed a cloud deployed human capital management (HCM) suite for administrative HR and talent management by the year 2025. However, given the functional limitations, companies will still need to obtain 20%–30% of their HCM requirements from other solutions.
With numerous HR technology solutions at varying stages of selection, development, and deployment, this results in a complex ecosystem that must be managed. Organizations typically see these solutions as standalone initiatives. Different parts of the technological stack are handled separately from other investments in technology. Urgent, immediate, and short-term obligations, such as adopting new technology, maintaining it, and managing upgrades, overwhelm HR professionals. As a result, maintaining current systems and planning their life cycles receives little attention, with time spent on change management dwarfed by more technical design and setup.
This project-focused, short-term strategy has a low ROI and a long-term financial loss. HR executives should establish a governance framework that oversees the ecosystem of technological solutions as a portfolio of interconnected technological solutions if they are serious about increasing the return on their technological investments. They should consider where various technologies are in their life cycles while making judgments. Only a prioritized set of improvement efforts that have been determined to be feasible and of business criticality should be included in the action plan.
In three crucial aspects, managing technology solutions as a portfolio differs from managing them as projects:
Plan for the complete life cycle of the solution (five years and beyond), taking into account factors like planned updates and anticipated replacement dates, rather than just the implementation period (of one or two years).
Technology performance metrics – Track business measures such as ROI, adoption, and a decrease in process complexity rather than just delivery metrics like time, cost, and user happiness.
Partnership between business and IT – Rather than creating a tactical relationship that is just focused on project implementation, build a strategic partnership that is concentrated on achieving business goals, generating ROI, and maximizing the portfolio.
The pace at which company and employee demands are changing requires HR technology to keep up. HR directors must make sure they manage the technology strategy and implementation to satisfy present and future business objectives as firms increase their investment in HR technology. HR executives must have an adaptable strategy and management approach for technology to achieve this. To drive a total employee experience, they should collaborate with business and IT to define how HR technology can adapt when triggers are activated, be aware of changes in employees' personal and professional needs and assess their entire technology portfolio when developing an action plan.
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