April 27, 2022
By Jerome Forde
This is the fourth in a series of five articles on Digital transformation and explores the changing nature of the workforce and how HR can play an important part in supporting businesses through the changes that are inevitable.
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. The third in the series looks at the many benefits of digital transformation in HR and give some useful pointers as to how best to leverage the gains available.
Why do SMEs need a digital transformation strategy?
There are many reasons why small and medium-sized businesses in all industries need a digital transformation strategy. Those reasons include remaining competitive and relevant in the eyes of customers, as well as being able to take advantage of the opportunities that digital transformation offers.
There is also another reality currently facing SMEs that highlights the crucial importance of having a HR digital transformation strategy. That reality is the evolving nature of the workforce.
We have seen significant changes in the workforce in a range of industries over recent years. Some more so than others, of course, but things like the makeup of the workforce, the recruitment landscape, and employee priorities are different today than they were 10 or 20 years ago. Plus, the changes are ongoing as the workforce continues to evolve.
All companies, including SMEs, need to adapt to this evolving workforce. HR digital transformation should be a core component of that adaptation.
How the Workforce is Evolving
Before looking at how digital transformation can help the HR function in your business deal with the realities of the modern workforce, it is important to understand how that workforce is evolving.
One of the main areas is the shortage of skills in many industries. This results in companies finding it difficult to recruit the people they need. There are many reasons for this, including the fact that employees are remaining with their employers longer than they used to.
Regardless of the reason, the result is a switch of focus in many organisations from recruitment to retention, as it is no longer always the case that employees can be easily replaced.
You also have to consider the changing nature of skills required by businesses. The skills that are needed by companies in all industries change over time, but the trend we are currently witnessing involves a rapid reduction in the half-life of skills. This is one of the reasons why businesses in all industries need to continuously upskill their workforces, either through training or recruitment. If you don’t continuously upskill, you risk being left behind.
The employee experience is also becoming increasingly important, as more and more employees prioritise work-life balance over maximising their climb up the career ladder.
HR Digital Transformation Can Help SMEs Adapt to this Workforce Evolution
The traditional approach to HR is largely reactive, where you deal with situations after they occur or when they are already in-play. For example, businesses typically make decisions on upskilling their teams whenever they identify a skills gap. The identification of these skills gaps involves assessing current requirements as well as taking what are usually educated guesses as to what the future holds.
Previously, this was sufficient for businesses to compete, achieve growth, and maximise profits. What about today and as we look to the future?
HR functions in SMEs need to become proactive in order to ensure continued growth and competitiveness. Unless HR functions completely change through digital transformation, though, they will remain largely reactive.
Moving from a reactive HR function to one that is proactive is one of the main advantages of digital transformation. By becoming proactive, you can take advantage of technologies like predictive analytics, dynamic resource reallocation, data modelling, and more.
Changing it Up a Gear in HR
There are other technologies and elements of digital transformation that will help your business deal with the evolving nature of the workforce. This includes technologies and process that can improve the employee onboarding process, make communication with employees more effective, and generally improve all interactions to enhance the employee experience.
However, the technologies like those listed above do more than improve administrative processes and enhance efficiencies. They also enable SMEs to anticipate HR requirements for the future, making it possible to quickly adapt before those requirements become a challenge.
To illustrate this, we can look at the upskilling example above again. With a digitally transformed HR function in your business, you will have access to more and better data, in addition to predictive models. This will allow you to anticipate future skills requirements before they are needed, enabling more effective planning.
The Path to HR Digital Transformation
While achieving this level of HR efficiency and productivity is down the road for many SMEs, the technologies that make it possible exist today in platforms like HR Duo. This makes it even more important to have a HR digital transformation strategy to ensure your business continues to evolve along with your workforce.
This is part 4 of a 5-part series. Check back in a week or so or subscribe to make sure you receive part five –
“As Ways of Working and Doing Business Continue to Evolve, Traditional HR Models Are Falling Further Behind”