What Is a Digital HR Strategy and Why Do You Need One?

To stay competitive and prepare for the future, your business needs a digital HR strategy. Find out why, and how to create the perfect roadmap for your company.

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What Is a Digital HR Strategy and Why Do You Need One?

Here's what you need to know:

  • When creating your digital HR strategy, observe your workplace, workforce, and HR service delivery to figure out what should stay as is and what must be improved upon
  • When handling a digital transformation effort, start by considering your company culture and understanding how your people work
  • Maintain robust communication with all stakeholders throughout the digital transformation process
  • The digital HR strategy is an ever-evolving document — as workplace needs shift, so will your HR technology requirements

The days of managing HR largely through manual processes have basically ended. HR has gone digital — a trend that shows no sign of slowing or stopping. In fact, digitization in HR has accelerated, especially among cloud-based platforms.

But it’s 1 thing to go digital, and another to successfully implement it. To get it right, you need a digital HR strategy. Before we get into the strategy, let’s define digital HR.

What is digital HR and what’s fueling the need for it?

According to Deloitte, “Digital HR is the application of advanced technologies and analytics, digital traits and behaviors, and HR customer centricity through the lens of the organizations HR Operating Model to optimize HR to deliver sustainable organizational performance.”

Continuous disruptions in business climates along with the future of work are fueling the need for digital HR. Factors like social changes, demographic shifts, remote work, and technological advancements all play a role.

Deloitte confirms, “HR is in the middle of these disruptions. This is an opportunity for HR to take the lead and model how the rest of the organization can thrive in a continuously disrupted environment by ‘Being Digital’.”

Per Deloitte, digital HR transformation is occurring primarily in these 3 areas:

  • Digital workforce. Focuses on adopting new management practices, a healthy workplace culture, and talent management processes that facilitate a multifaceted workforce — e.g., employees, contingent workers, contractors, and robots.
  • Digital workplace. Focuses on designing a workplace that promotes productivity, utilizes modern communication tools, and champions engagement and wellness.
  • Digital HR service delivery. Focuses on digitizing/automating HR activities to provide excellence in HR service delivery. This process streamlines workflows, reduces manual labor, increases administrative accuracy, and boosts regulatory compliance.

By digitizing these 3 areas, employers can better adapt to increased globalization, the fierce competition for talent, and employees’ demand for fast access to information

However, employers cannot blindly adopt digital HR. A sound strategy is needed to ensure alignment with business goals and to minimize operational disturbances. 

What is a digital HR strategy for organizations?

It is a clear path to executing the company’s digital HR transformation. The strategy/roadmap serves as the foundation for digitizing the current HR function and coping with future changes.

As 1 expert states, “Digital transformation is all about actively leveraging technology and data to help us steer our people strategy in a future-focused way.” A digital HR strategy contains the necessary details for achieving these outcomes in a way that influences competitive advantage.

Note that a digital HR strategy is not a reaction tool for 1 specific problem area, but rather a map of ideals to be achieved. For instance, it does not respond singularly to absenteeism. Instead, the employer observes the workplace holistically and then builds a strategy for promoting a productive work environment.

As mentioned earlier, there are 3 common areas of HR digitization:

  • A digitized workplace
  • A digitized workforce
  • Digitized HR service delivery

Which areas should your organization digitize?

Ideally, employers should aim to digitize all 3 to their optimal capacity. However, circumstances (e.g., financial constraints) might not allow you to tackle all 3 areas to their maximum potential.

If money is an issue, you can identify the most important activities to digitize now versus those that can be done at a later, more feasible time.

If money is an issue, you can identify the most important activities to digitize now versus those that can be done at a later, more feasible time.

Details of the strategy will depend on many variables, such as:

  • Employer industry
  • Workforce size
  • Employee work location
  • Reasons for digitization
  • Which activities should be digitized, such as payroll
  • Which activities should be done manually
  • Business forecasts, such as future expansions and operational modifications
  • How digitization affects compliance with federal, state, and local HR-related laws
  • Change-readiness of the organization
  • Budget for each aspect of the digital transformation
  • Timeline for executing each aspect of the strategy

Why does your organization need a digital HR strategy?

Without the strategy, it will be extremely challenging to properly adopt new HR technologies and adjust current processes. You will not have a guide to keep you on track. Most likely, this will cause confusion and frustration in your HR team along with disruptions in your business operations.

Additionally, investments in HR technologies should be tied to specific business objectives and a detailed execution plan. Your digital HR strategy will help ensure your investment and execution are done strategically, not impulsively.

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3 tips for building a digital HR strategy for your company

Keeping in mind that the specifics depend on your unique business situation, below are 3 things to consider when creating a digital HR strategy.

1. Determine your goals for digital HR

  • What outcomes would you like to achieve with digital HR?
  • What obstacles are you presently facing (regarding digital HR)?
  • Then, what steps must you take to attain the desired results?
  • What challenges might you face in the future, and how do you plan to overcome them?

You will need to observe your workplace, workforce, and HR service delivery to figure out what should stay as is and what must be improved upon. For example, to increase productivity and efficiency in your workplace, workforce, and HR service delivery, you may need to:

  • Enhance the employee experience
  • Move from job-based hiring to skill-based hiring
  • Leverage technology that integrates HR, benefits, and payroll

 2. Make communication a support pillar

A change management effort will not succeed without strong communication at its center.

As noted by Management Study Guide, “For implementing a change program successfully, communication is the key and one of the most complex parameters as it involves an exchange of ideas and feelings with people in an organization through various mediums.”

This holds true for your digital HR transformation and strategy, as well. You will need to maintain robust communication with all stakeholders throughout the process, including with:

  • Executives, managers, supervisors, and team leaders
  • Rank-and-file employees
  • Legal
  • Business partners
  • HR technology vendors
  • Service providers
  • Customers

Of course, the level (and content) of communication will vary. For example, interactions with managers, rank-and-file employees, and HR technology vendors should be conducted on a need-to-know basis.

Important: Although the digital HR change initiative centers around technology, make sure you keep your communications human-centric. According to 1 expert, when handling a digital transformation effort, “never lead with technology… Start with leadership; your culture; and an in-depth understanding of how your people work, how they want to be hired and where they want to be.”

3. Select the most fitting HR technology vendor

The right HR technology vendor will provide services that align with your business objectives, including those outlined in your digital HR strategy. The wrong vendor will cause you headaches — such as in the form of poor communication, inadequate service offerings, weak security measures, hidden fees, and more.

Here are some suggestions for choosing an HR technology vendor:

  • Take stock of your HR technology needs.
  • Consult with key stakeholders, such as finance, legal, and information technology.
  • Determine how much you can spend on the digital HR initiative.
  • Request and view product demos from potential vendors.
  • Submit a Request For Proposal (RFP) to each potential vendor.
  • Examine the potential of the partnership, not just the technology. (Quality support and customer service are just as crucial as modern technology.)
  • Select the vendor that best aligns with your current and forecasted digital HR needs.

Update your digital HR strategy to stay competitive

The digital HR strategy is an ever-evolving document. As the business climate, the talent landscape, and workplace needs shift, so will your HR technology requirements. When these changes occur, you must adjust your digital HR strategy accordingly.

Are you looking to digitize your HR department, or improve its current state? Zenefits HR software can help.

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