Digital HR

What is digital HR?

Put simply, digital HR is the integration of digital technologies into Human Resources processes to make these more efficient, effective, and connected. It’s the strategic combination of the HR department and technology that leads to streamlined operations, improved decision-making, enhanced employee experience, and a more agile and responsive organization.

According to Dave Ulrich, the digital HR journey of a company is characterized by four phases:

• HR efficiency: In this stage, organizations invest in technology platforms that efficiently manage HR processes. The key question to ask yourself in this phase is: To what extent do we use technology to streamline administrative HR work? 
• HR effectiveness: At this phase, companies use HR technology to upgrade existing people practices such as performance management, talent acquisition, and training. The critical question is, ‘To what extent do we use technology to innovate our HR practices?’
• Information: Organizations start leveraging people analytics to create business impact. Their data is accessible, and internal data is combined with external data. The most important question to ask in this stage is, ‘To what extent do we use technology to access information?’
• Connection/experience: In this stage, companies use digital HR software and tools to foster a connection between people. Experiences between people are created, social networks are leveraged, and technology enables a feeling of belonging. The question to ask yourself during this phase is, ‘To what extent do we use technology to create connections?’

At the end of their digital HR journey, organizations will have undergone an HR digital transformation, transforming HR operations on the one hand and the workforce and the way work is done on the other. 

How is digital HR different from traditional HR?

Digital HR differs from traditional HR in that it digitalizes manual tasks such as record-keeping, data analysis, and answering employee questions.

The difference between digital and traditional HR is best illustrated with an example. 

Benefits of digital HR 

Digital HR not only gives organizations a competitive advantage, but it also has multiple other benefits. 

Saving time and improving productivity for HR

As we’ve seen in the LASD example mentioned above, digitalizing HR processes can be a huge time saver. This, in turn, will also improve the department’s overall productivity, making it one of the biggest benefits of digital HR.

Streamlining HR processes

Digitalizing HR processes helps to streamline and structure them. Think about recruitment, for example. Rather than manually trying to keep track of your applicants and their process stage, you can use an Applicant Tracking System (ATS) instead.

Depending on the ATS, the system can take care of tasks such as:

• Posting vacancies across multiple job boards
• Connecting with candidates
• Scheduling interviews with potential candidates
• Nurturing candidates through the recruitment funnel
• And much more.

Boosting (digital) employee experience 

The employee experience consists of three key components: 

1. The physical experience 
2. The digital experience 
3. The cultural experience.

The massive surge in hybrid and remote work since 2020 and the continuous digitalization of work, in general, have made the digital employee experience more and more important. 

Digital HR can significantly improve the employee experience, for example, by enabling employee self-service. Workers can easily:

• View and download their pay stubs, tax forms (e.g., W-2s), and other related documents
• Enroll in, change, or manage their benefits plans, including health insurance, retirement plans, and other perks
• Update their contact details, address, emergency contacts, and other personal information directly in the HR system
• Clock in and out, log work hours, and track their attendance records.

These self-service features empower employees to manage their HR-related needs efficiently and independently, reducing the administrative burden on HR departments and making their digital employee experience smooth and user-friendly. This enhanced autonomy fosters greater employee satisfaction and engagement.

Better data management

Digitalizing HR processes reduces the risk of data loss. Provided that people know where the data is stored and how to access it, using a software solution such as a Human Resource Information System (HRIS) or an ATS will allow for better data management than using a manual alternative.  

Enhancing talent acquisition 

If there is one area within the HR field that is abundant in terms of digital HR solutions, apps, and software, it is talent acquisition. 

Many aspects of the candidate journey can be digitalized and (largely) automated, from candidate sourcing and job posting to candidate pre-selection, interview scheduling, and onboarding. 

Enabling data-driven decision making 

Most, if not all, of the digital HR software today comes with analytics and reporting features, making it much easier for HR to analyze internal data and make data-driven decisions.

Lower administrative costs 

The use of HR technology can significantly reduce the time HR professionals spend on administrative tasks such as payroll processing, employee data management, and benefits administration. As such, digitalizing HR processes will lower administrative costs.

Digital HR examples

Let’s explore some examples of digital HR in practice, looking at how technology is integrated within HR processes and practices. 

1. Human Resource Information System (HRIS)

The HRIS is one of the most well-known examples of digital HR. It’s a system that stores, collects, processes, and manages employee data. HR teams use it to work more efficiently and make more data-driven decisions.

HRIS features typically include: 

• Benefits administration 
• Employee data management 
• Employee self-service 
• Payroll processing 
• Reporting and analytics 
• Time & attendance. 

Using an HRIS is particularly interesting for organizations of a certain size, starting with companies that have between 30 to 50 employees. 

Some of the biggest benefits of working with this kind of software include: 

• Improved efficiency: The fact that all employee data is stored in one place saves time and increases accuracy. 
• Better record-keeping: At its core, an HRIS is a record-keeping system. As such, it tracks all changes related to the organization’s employees and is considered the single source of truth for staff data.  
• A better employee experience: The HRIS can offer self-service tools to managers and employees. This means that they are in charge of things like requesting leave or updating their information, which, in turn, positively affects the employee experience.   

You can think of the HRIS as the backbone of digital HR.

2. Collecting employee feedback 

Employee feedback has become vital for evaluating the success of nearly every single HR process: recruitment and selection, onboarding, performance management, L&D, and so on. 

There are different ways to gather feedback from people, each with its benefits and limitations. Depending on your strategy, what you want to achieve, the target audience, and the timing of the feedback, the decision about which approach—and platform—to use will differ.

Examples of the digital methods that companies use to collect employee feedback include:

• Employee pulse surveys 
• Point-in-time surveys (i.e., the traditional annual survey)
• Topic-driven surveys
• Exit surveys.

3. HR case management 

HR case management refers to the process that a company’s HR department has in place to resolve the questions and inquiries that employees send to them. 

There are many different issues or queries that employees may run into. Some of these may be related to: 

• Benefits
• Onboarding 
• Payroll and taxes
• Performance
• Policies and procedures

A dedicated HR case management software is indispensable, particularly in medium—and large-sized organizations, to ensure reliable HR case management and handle the volume and complexity of the various inquiries well.   

Benefits of working with this kind of software include: 

• Immediate access: The software gives employees immediate access to HR, so they no longer have to wait for a meeting to ask their questions.
• Quick escalation: The HR case management software collects all the relevant information for each query, making it easy to pass the case directly to the right person or team. 
• Status tracking: The software’s ticketing system allows both employees and HR to follow the status of each case. 
• Workflow automation: Common questions are answered in FAQs and in an HR knowledge base that people can easily access. This saves the HR team a lot of time that they can use on more complex queries. 
• Improved employee experience: All of the elements mentioned above contribute to a better employee experience as they improve transparency, access to HR, and overall problem resolution.

4. AI-based coaching

AI-based coaching involves using artificial intelligence to enhance, support, or take over the coaching relationship.

The coach can use AI to get insights into their coachees’ needs and to provide recommendations. In other cases, employees interact only with AI, for example, through a chatbot.

5. Succession planning software 

An effective succession planning process enables organizations to identify, select, and develop the right people for critical roles to ensure business continuity when an individual holding that role leaves.

In the era of digital HR, there exists an array of succession planning tools that companies can use to streamline their succession planning process. 

The exact features differ per tool and provider, but here are a few examples of what is possible: 

• Proactively identifying critical roles 
• Visualizing your bench strength 
• Creating dedicated talent pools
• Focusing on leadership vulnerabilities 
• Creating a short, medium, and long-term succession plan for each key role.

The process of HR digital transformation 

Leveraging digital in HR is not as simple as implementing a few software solutions here and there. It is a complicated process that requires time, effort, and resources.

So, how do we approach a project of this magnitude?

Stages of HR digital transformation

Every organization engaging in digital transformation will go through six stages. Here’s what they translate to in HR:

1. Business as usual: HR acts on the belief that current solutions will remain relevant.
2. Present and active: In this stage, different experiments throughout the company create digital literacy and creativity.  
3. Formalized: Experimentation becomes intentional, and there is more support from leadership.
4. Strategic: In this phase, multidisciplinary project teams execute most digital HR initiatives. Collaboration increases, leading to the development of strategic HR digital transformation roadmaps.
5. Converged: A dedicated digital transformation team guides digital support of HR strategy and operations.
6. Innovative and adaptive: By now, digital transformation has become the organization’s new ‘business as usual’ and a continuous process.

Understanding these stages is crucial for several reasons. Firstly, it helps organizations assess their current position in the digital transformation journey and identify the next steps to progress further.

Secondly, it ensures that efforts are aligned with the broader business strategy, maximizing the impact of digital initiatives. 

Lastly, it facilitates a structured approach to change. That way, organizations can adapt to new technologies and practices systematically and ultimately achieve the goals they’ve set.

Best practices for digital transformation in HR 

Starting with such a complex process as digital HR transformation can seem overwhelming. The following best practices are the core of your HR digital transformation and will be the key drivers for success.

Assess your current HR processes

Start with an audit of the current situation. Here are some questions to ask yourself and steps to take:

• What kind of HR software or tools are you currently using to run various HR processes? Do you already use an HRIS and an ATS, for example? 
• If nothing is in place yet, then what are the areas where digital HR will have the most impact? Try to see if you can align here with the company’s business goals.
• If digital tools are in place, create an overview of all the current HR solutions your organization is using and whether these systems can communicate with each other. If they can, how?
• How is each solution and tool maintained? Does HR take care of this? Does this happen automatically?

Based on your audit, you can decide what the priorities are right now and where to start.

Develop digital HR skills within your team 

HR practitioners need the right digital HR skills to drive the company’s digital transformation, starting with digital agility. This refers to the ability to rapidly adapt to and leverage digital technologies and tools to enhance HR processes, improve efficiency, and drive innovation.

Here are a few ways to develop digital agility: 

• Familiarize yourself with different types of technology
• Collaborate with other departments on innovation
• Work on your change management skills
• Dare to experiment
• Get certified in Digital HR.

Define clear objectives and success metrics for the transformation 

As with any new project, you should define clear objectives and success metrics before embarking on your digital transformation journey.

The objectives and metrics will differ per organization. Let’s say that your goal is to improve operational efficiency, allowing HR to complete work at a lower cost, in less time, and with fewer people involved.

You could use the following metrics to measure whether you achieved this objective:

• HR cost per employee: This metric calculates the total HR expenditure divided by the number of employees. A reduction in HR cost per employee would indicate that the digital transformation has made HR processes more cost-effective.
• HR service delivery time: This tracks the average time taken to complete various HR services, such as processing leave requests or resolving employee inquiries. A reduction in service delivery time reflects enhanced operational efficiency and faster response times due to digital tools and processes.
• Employee self-service utilization rate: This metric tracks the percentage of HR-related transactions (such as leave requests, benefits enrollment, and personal information updates) completed by employees using self-service portals or applications. A high utilization rate signifies that employees are effectively using digital HR tools to manage their needs independently, which reduces the administrative workload on HR staff and enhances overall productivity by minimizing time spent on routine tasks.

Adopt a phased approach 

A phased approach to digital HR transformation allows you to correct course where needed. Before digitalizing a particular HR process, start with a pilot project. This will enable you to test and refine your HR digital transformation strategy.

Let’s say your company wants to automate its payroll process. Before making the switch for all the employees in the organization, test the new solution first with just one or two teams, starting with your own HR team, for example.

HR tip

Develop your HR digital transformation roadmap. An HR digital transformation roadmap serves as a guide when implementing digital HR technologies at your organization. This document outlines key milestones, timelines, and responsible parties, facilitating a structured approach to adopting and integrating new technologies within the HR function.

Implement scalable solutions

Whether you implement digital HR software or digital HR tools, you want them to be scalable. The process of selecting, buying, implementing, and launching digital tools is too costly, in terms of time and money, to repeat countless times. So, if the organization grows, you want the software you use to grow with it.

Create cross-functional teams 

It is unlikely that you, as an HR team, will be able to achieve a successful digital transformation on your own. Get the right people on board from the start – think of IT, Legal, and other stakeholders – and build a cross-functional transformation team. 

This collaborative approach not only improves the implementation and adoption of digital solutions but also ensures compliance, security, and alignment with broader organizational strategies.

Prepare a change management plan 

Digital HR transformation impacts many people in the organization. HR should consider creating a digital change management plan to prepare people for upcoming changes. 

Elements to think of in that regard include:

• Communicate with stakeholders to understand how the change will impact your company
• Use the decision-making Cynefin framework to navigate your change project with actionable steps
• Base your change communications on the competing values framework
• Use a stakeholder management template to help you manage your various stakeholders.

Focus on employee experience 

Most of the time, the company’s employees are the ones who will have to use the digital tools on a daily basis. Therefore, it is crucial that the software, apps, and other types of technology you roll out improve your employees’ work experience.

To ensure this is the case, involve them from the start, ask for their opinion, and, most importantly, listen to it.

Build an integrated HR tech stack  

There is a digital HR software solution for virtually every HR process. If we had to categorize the various technologies, we’d distinguish three main categories: 

• Core HR solutions: HRIS, payroll, compensation and benefits management software, etc.
• Recruiting: ATS, pre-selection tools, referral software, etc. 
• Employee experience: Onboarding, LMS, performance management software, rewards, etc.

Most companies use software and tools from each of these categories; this is what we call their HR tech stack. 

Make sure you build an integrated tech stack. This means that all your HR tech stack elements should work together. For example, your HR management system (HRMS) should integrate with your payroll software, allowing for smooth data flow and reducing the need for manual data entry.

A set of tools that can’t communicate with each other will be counterproductive. You also don’t want the inefficiency of separate destinations for every HR process.

HR digital transformation examples

Let’s take a look at some HR digital transformation case studies where organizations worldwide successfully used HR tech to tackle a specific business challenge. 

New Moms: Improving efficiency and transparency using an HRIS

New Moms is a non-profit organization based in the U.S. that supports young mothers who are struggling with homelessness and poverty. 

The organization spent hundreds of hours tracking down personnel information, funding stream data, and other essential documents. 

The non-profit then decided to implement a streamlined HRIS that enabled them to store and access all of their data on one platform. 

As a result, New Moms was able to:

• Find and present compelling data on their daily operations to key stakeholders
• Reduce turnover by 37%
• Secure additional funding for their projects
• Shift from a paper-based annual review to weekly coaching for its employees.

Global energy company: Using digital HR to improve EX 

A global energy firm noticed a considerable difference between its external and internal digitalization. For example, their Learning delivery and Compliance training was extremely outdated and ineffective. 

The company’s Interim HR Change and innovation Director decided to shake things up and use gamification to tackle the issue. 

This led to a new training app that allows employees to collect badges and obtain high scores that are visible to the entire employee base.

As a result, the energy company saw: 

• An almost 100% uptake on the tests
• Their compliance training was completed in 3 months rather than in the 9 months it used to take.

KPMG Belgium: Starting the employee journey right after the signature 

This HR digital transformation case study focuses on preboarding, an important yet often overlooked step towards happy and engaged employees.

KPMG Belgium didn’t have a preboarding process for new hires. For graduates, in particular, this could lead to relatively long periods between the moment they signed their contract and their first day on the job.

To solve this problem and to create a more structured process, the company decided to use an integrated and secure onboarding software solution.

Now, the organization’s onboarding—or preboarding, actually—starts as soon as the candidate signs the contract. The app sends new hires all the practical information they need to know before they start, including contact details of their new colleagues.

After two years of preboarding, KPMG saw:

• New hires rate their experience at 4.45 out of 5
• New hires rate their first week at a 4.12
• An app activation rate of 81%.

Digital HR skills

In order to implement digital HR and execute the organization’s digital HR transformation roadmap, HR practitioners need to master specific skills. Essential digital HR skills include: 

Digital agility

This is the ability to use technology to increase the impact of HR and prepare the organization for the adoption of digital practices.

There are three dimensions of digital agility: 

• Technology empowered: HR practitioners who master digital agility are able to integrate technology to build efficient, scalable, and impactful HR solutions.
• Digital aptitude: Digitally agile HR professionals are motivated to learn and experiment with digital ways of work. 
• Digital adoption: HR professionals who have developed digital agility (co) create an environment ready for digital adoption.

Digital agility is one of the five core HR competencies identified by the Academy to Innovate HR; the other four are Data Literacy, Business Acumen, People Advocacy, and Execution Excellence.

These core competencies form a solid foundation for every HR professional to build on and should, therefore, be part of HR’s skills starter kit. 

If we focus more on specific digital HR skills and technical skills, then there are a few more that come to mind: 

HRIS knowledge

As we saw earlier, the HRIS forms the backbone of a company’s digital HR. In today’s digital world, HR professionals must be familiar with and knowledgeable about an HRIS solution.

Knowledge of relevant HR software

Depending on your role within HR, you will need to know how to use specific software.

As a talent acquisition specialist, for example, you want to know how to use an Applicant Tracking System (ATS) and how to use different social media platforms.

As someone overseeing the organization’s talent management strategy, you want to familiarize yourself with Talent Management Software (TMS).

Cloud technology

Almost every HR software solution out there is cloud-based. This means that as an HR practitioner, you need to know how to operate a cloud-based HRIS, ATS, TMS, or LMS.

Prompting

Prompting is becoming an essential digital HR skill due to the growing use of generative AI-driven tools in work processes.

These tools rely on clear prompts for tasks like generating candidate outreach messages, creating onboarding plans, and analyzing employee feedback. HR professionals need to master prompting to ensure accurate outputs.

As AI tools evolve, effective prompting enables HR professionals to leverage advanced capabilities fully and strategically.

Digital HR trends

What does the future of digital HR look like? These key emerging digital HR trends will shape how HR works. 

Generative AI in HR 

In the future, generative AI will enable true HR business partnering. 

Until now, HR automation technology has mainly focused on highly repetitive and not very complex work. The issue is that a lot of work in HR is neither simple nor repetitive, and that’s where GenAI comes in.

For example, GenAI can assist in crafting personalized employee development plans, analyzing complex workforce data to provide actionable insights, and generating tailored communication for diverse employee needs. This enables HR to become a more strategic partner within the organization.

Personalized employee experience 

Employees today expect to have access to what they need when they need it at the tap of a screen. They want a personalized experience tailored to their needs. In many organizations, this is not yet the case.  

This is why there will be an increased focus on employee experience design, and HR technology will play an essential role in facilitating this.

AI bias awareness 

As the use of AI in HR continues to increase, so will people’s awareness of bias. In hiring, there are some examples of how AI bias has affected decision-making due to biased training data, algorithmic design, or biased human involvement. 

HR will have to mitigate AI bias as much as possible. This can be done using fairness-aware algorithms and improving overall data collection and human oversight.

HR chatbots and virtual assistants 

HR chatbots offer two main advantages. On the one hand, they save HR teams from answering frequently asked questions and providing commonly requested information.

On the other hand, they can significantly improve the employee experience by responding 24/7 to employee queries about, for example, leave policies or benefits.  

Therefore, it is no surprise that the HR chatbot market is expected to grow significantly between 2023 and 2030.

Automating onboarding tasks

Recent employee onboarding statistics show that HR practitioners see technology as the missing piece in their onboarding toolkit, with 68% planning on using it in the near future.  

According to the statistics, organizations with a formal onboarding process have a 50% higher retention rate than those without. This percentage increases by another 16% when specific onboarding tasks are automated. 

Thus, further automation of the onboarding process is likely to occur in the near future.

Digital HR certification 

Completing a digital HR certificate program will help you develop the skills, expertise, and experience needed to lead the digital transformation of HR in your organization. 

If you want to learn about the impact of digital on how, when, and where we work and how HR can capitalize on this to remain relevant and effective, AIHR’s Digital HR 2.0 Certificate Program can help you with this.

The program will teach you how to create a digital HR strategy that delivers an excellent employee experience and efficient HR service delivery.

You will learn:

• How to design effective and memorable employee experiences by applying design thinking methodology
• How to effectively implement digital projects, minimize resistance to change, and drive digital adoption
• How to analyze, optimize, and automate HR processes to increase efficiency and reduce errors
• How to develop the expertise to become a digital innovator and drive digital HR initiatives. 

The benefits of this program are:

• It is self-paced – you can learn when and where it suits you best
• Access to a global HR practitioners community to connect with peers and HR professionals from all over the world
• Real-world projects and case studies to develop practical skills
• Competency assessments that help you track your learning progress and fill your skills gaps
• Resource library full of templates, toolkits, and checklists to help you apply what you’ve learned in your work 
• Accredited, globally recognized education
• Your own personal coach who will be your point of contact at AIHR throughout the program.

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