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What is Digital HR? Understanding HR’s Digital Transformation

June 8, 2023
7 min read

Optimize Your HR Tech Stack Guide


The human resources department has been in the spotlight more than ever in the past few years, and there’s no sign it will fade into the background anytime soon. But with the increased attention comes an increased workload for HR departments. Luckily, companies are responding by investing in modern HR technology to drive efficiency.

As a result, HR is in the midst of a digital transformation. Companies are turning to digital tools to optimize and align HR processes, manage their people, cultivate company culture, and maximize employee talent. As a result, over the past few years, firms have invested more than $15 billion in the HR technology market, and more HR software solutions are available to companies than ever before.

#HRTech investments topped $15 billion over the past few years, a sure sign of HR’s ongoing #digital transformation:

And HR is reaping the benefits of going digital: teams are working more efficiently, automating processes for employees and their teams, and gaining increased visibility into their workforce thanks to HR analytics. Keep reading to learn more about how digitalization is transforming human resources departments across industries.

What is digital HR?

Digital HR refers to the process of optimizing HR services and functions using social, mobile, analytics, and cloud (SMAC) technologies. Simply put, it’s when HR teams start using different types of technology to streamline tedious, repetitive manual processes.

  • Social technology refers to social media platforms’ capabilities. For example, HR uses social media to post and advertise job openings, find and vet candidates, and build talent pools.
  • Mobile devices have become ubiquitous, so HR teams ensure job applications are accessible on cell phones and tablets. In addition, many talent acquisition teams use text message applications, allowing job seekers to apply by text message.
  • Data analytics offer unprecedented insight into the workforce for HR teams. Accurate, real-time people data helps HR make better decisions and develop more effective strategies.
  • Cloud-based technology enables greater transparency and collaboration among HR teams — and the rest of the company — by making it easier to access accurate information. In HR, cloud-based systems can help teams cut costs and work more efficiently.

The digitalization of HR has several goals:

  • Improve the candidate and employee experience
  • Reduce HR operating costs and increase productivity
  • Automate and accelerate HR functions
  • Increase visibility into the workforce
  • Get maximum ROI from companies’ human capital investment
  • Enhance HR strategies by providing data to inform decisions

The demand for a digital HR transformation

HR wasn’t seen as a department in need of cutting-edge technology or even much software at all — that is, until a few years ago when the pandemic forced companies to go remote. That created a sharp increase in the demand for technology, especially HR tech, for managing the switch. 85% of companies say the pandemic “greatly” or “somewhat” sped up their adoption of technology.

Now, HR is in what leading analyst Josh Bersin calls a time of transition. Post-pandemic, we’re still seeing lots of competition for top talent on top of high expectations for busy teams. HR teams are tasked with motivating a near-burnt-out workforce to improve employee satisfaction and retention. That’s on top of regular hiring, onboarding, performance management, engagement, and strategic planning duties.

As a result, companies are investing in HR tech and analytics, with 46% saying they plan to increase budgets this year. These investments may save money in the long run, but first and foremost, they provide companies with insights that help drive success.

46% of HR leaders say they’re spending more on #HRtech and analytics to keep up with the competition and increase efficiency:

“Instead of opting for simple cost-cutting measures, leading organizations are focusing on growth and determining which investments will drive competitive advantage in the year ahead,” said Seyda Berger-Böcker, director in the Gartner HR practice.

The benefits of digital HR

“It sounds simple, but investing in (or leveraging existing) workflow tools is the easiest and most effective way of managing a high volume of tasks. It prevents anything slipping through the gaps – whether that’s employee well-being concerns, appraisals, compliance, or recruiting.” - Stacey Harris, Sapient Insights Group

Technology is the best way for HR teams to do more with less, according to HR experts like Stacey Harris, chief research officer and managing partner of Sapient Insights Group.

“It sounds simple, but investing in (or leveraging existing) workflow tools is the easiest and most effective way of managing a high volume of tasks,” said Harris. “It prevents anything slipping through the gaps – whether that’s employee well-being concerns, appraisals, compliance, or recruiting.”

These are just a few of the benefits of going digital:

  1. Get fresh insights and informed decision-making with custom reports and data analytics
  2. Increase efficiency with automated repetitive tasks and HR workflows
  3. Save money and valuable work hours for your team
  4. Design engaging, effective candidate and employee experiences
  5. Streamline communication between recruiters, HR teams, hiring managers, candidates, and employees
  6. Cloud-based software assures accuracy and consistency for users and enables easier collaboration

Your company’s digital HR journey

Whether you’re well into your digitalization journey or just beginning to build a digital HR strategy, here’s a quick look at the steps you should take for a successful switch:

  1. Assess your current HR processes and identify areas where technology can automate, accelerate, or otherwise improve them.
  2. Select the right digital HR tool that integrates with existing HR software and reduces the number of applications your team uses. 
  3. Train your teams on how to use the new software and ongoing support for new features and updates.

Get our guide to optimizing your HR tech stack and learn how to get the most out of your people data by consolidating your systems.

The future of digital HR

It’s a unique time for HR professionals — we’re watching the future of digital HR play out in real time, and HR software is evolving at breakneck speed. Here’s what to watch for now and in the future for HR tech.

Predictive analytics and AI-driven HR solutions

Though they seem futuristic, predictive analytics and artificial intelligence (AI) are already here to stay. Predictive analytics use data to forecast what could happen — like predicting future turnover based on past years’ turnover. AI is already being used to help talent acquisition teams write job descriptions and respond to candidates’ questions via chatbots.

Remote work and the gig economy

Hybrid and remote workers, as well as contingent workers, are becoming more and more common in the competitive talent marketplace. HR will need to embrace technology to find, hire, manage, and engage these workers.

Ethical considerations and data privacy in digital HR

Did You Know?

56% of HR managers say they still don’t have access to the data and insights they need, a sign of the need for a digital transformation in HR.

Your HR team needs to ensure that they’re handling sensitive people data safely and using secure systems. You also need to remain compliant with data use, for example, only texting employees if they have opted-in to receive texts. A consolidated HR system keeps data from being spread out among systems, ensuring accuracy and simplifying security.

Digitalization already has so many benefits for HR teams today; its future is bright; and it’s the key to maintaining a competitive advantage and standing out to job seekers. Going digital helps your team remain agile and keep up with trends, breakthroughs, and essential new tools in HR to attract and retain top talent.

Despite its benefits and the strides made in digital HR, 56% of HR managers still say they don’t have access to the data and insights they need to make strategic decisions. This could be because they’re using their HR technology inefficiently. Using too many different types of software for people management can lead to data silos and make it impossible to analyze and learn from your data.

Join the digital HR revolution with improved data insights and an optimized, modern tech stack. Discover how to update your HR tech tools and increase transparency with ClearCompany’s guide to optimizing your tech stack. You’ll learn:

  • Why optimizing your HR tech stack matters now
  • How to assess your current HR and recruiting technology
  • The benefits of optimizing your tech stack
  • Actionable steps to take to find the right HR software
  • Ways to maximize and maintain your tech stack

Download the guide and start optimizing your HR tech stack now.

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