February 14, 2022
By Jerome Forde
This is the third in a series of five articles on Digital transformation and how it is impacting HR provision in small and medium sized businesses (SMEs). The first post considers how the introduction of HR software on its own is not digital transformation or Industry 4.0 and the second one considers automation in HR for SMEs and look at how it can be achieved.
In this post we consider the many benefits of digital transformation in HR and give some useful pointers as to how best to leverage the gains available.
Industry 4.0 is driving considerable change in companies in all industries and sectors. Those changes are commonly referred to as digital transformation, where everything from tasks and processes to departments and functions is digitalised. What does this mean for HR, especially HR in small and medium-sized businesses?
After all, large corporations can allocate significant resources to transforming how HR works. Most SMEs don’t have that luxury, either financially or in terms of in-house expertise.
However, the reality is that HR digital transformation is essential for all businesses, regardless of size. Ignoring this transformation of the HR function involves taking a considerable business risk.
Why HR Digital Transformation is Important
Before looking at HR digital transformation specifically, it’s important to understand why it is so important. One of the things you can look at is the benefits that HR digital transformation can bring to the HR function of your business. Those benefits are impressive, as they include improved efficiency, reduced costs, improved productivity, and better decision-making.
However, it is not enough to look only at the HR function in your business. It is also important to look at the wider digital transformation question and how it is changing your business, industry, and levels of competitiveness.
Digital Transformation is Here to Stay
Industry 4.0 and digital transformation involve new and innovative technologies, but the real catalysts for change are the opportunities that Industry 4.0 presents. One of those opportunities is the level of service offered to customers. When companies transform the way they operate, they can become highly customer-focused operations, allowing them to more effectively meet changing demands and expectations.
A good way to illustrate this is with manufacturing. For example, we are moving away from an era where product designers choose the colours available in their latest line of shoes. Instead, customers can choose their own designs with developments like mass customisation. You can see this in action when you go to the website of car brands like Mercedes or BMW. Instead of selecting from a pre-determined list of models and add-ons, you will be offered the opportunity to build your own.
Digital transformation and Industry 4.0 are also making businesses more streamlined, productive, and efficient, improving the bottom line and increasing agility. Companies are also becoming smarter with better decision-making, forecasting, and planning. This is primarily because of improved access to, and use of, data.
What This Means for HR
Whatever type of change is implemented in a business, the HR function must adapt. With digital transformation, however, the changes taking place are too, well, transformational for tinkering around the edges to be enough, regardless of the intent.
In a variety of different areas, the traditional way of doing HR is simply no longer effective. Therefore, for your business to take advantage of the opportunities offered by Industry 4.0, your HR function needs to digitally transform too.
Having a Clear Plan
One of the big positives about HR digital transformation compared to digitalising other aspects of your business is that much of the technology already exists. Furthermore, it can usually be integrated with your current systems and processes with minimal friction. We have experience helping customers with these integration projects ourselves here at HR Duo.
Plus, as the technologies are available off-the-shelf, costs are not a barrier either.
As with all change, however, it needs to be managed properly. Also, the transformation doesn’t have to take place overnight. Instead of speed, you need to have some essential components in place to ensure HR digital transformation success. Those components include buy-in from the top of the organisation, a clear strategy, and a partner who can help you navigate through the process.
With these components, you can set the HR function in your business on a path to digital transformation and the benefits that it will bring.
This is part 3 of a 5-part series. Part 1 and Part 2 are available. Check back in a week or so or subscribe to make sure you receive part four: “The Need for HR Digital Transformation in an Era of the Evolving Workforce”