What Is HR Digital Transformation? Definition, Strategies, And Challenges

Table of contents:

  • What is digital transformation in HR?
  • Digital transformation strategy: how to enable digital transformation in HR
  • Challenges to the digital transformation of HR
  • Conclusion

What is Digital Transformation in HR?

HR digital transformation is the transformation in the functioning of HR, utilizing data to guide every part of HR including payroll, benefits, performance management, learning and development, rewards and recognition, and hiring.

  • By 2023, the investment in the technologies and services that enable digital transformation worldwide is predicted to reach 2.3 trillion U.S. dollars. (IDC)
  • The digital transformation market is expected to grow at a CAGR (compound annual growth rate) of 22.7 percent from 2019 to $3,294 billion by 2025. (Research and Markets).
  • 77% of CIOs name Digital Transformation as their biggest budget priority of 2021. (Constellation Research)
  • 42 Percent of CEOs Have Begun Digital Business Transformation. (Gartner)
  • Digital transformation and a focus on customer experience can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%. (McKinsey)
  • We undertake digital transformation in HR to:

    • To automate processes so that the time spent on repetitive tasks is decreased
    • To increase the experience of the workforce.
    • To put the freed-up time to better use by strategizing and eventually benefiting the bottom line of the business.

    There are two roles of HR teams in digital transformation:

  1. It uses automation and digital, data-led processes to transform itself.
  2. HR works together with IT to guide organizations towards digital transformation, empowering staff with a digital mindset to enhance processes and improve productivity.
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Digital Transformation Strategy: How to Enable Digital Transformation in HR

The first step towards beginning the digital transformation of HR is asking the relevant questions.

1. Define your goal by implementing HR’s digital transformation

The following questions need to be considered to set up value creation due to the transformation of HR:

  • Is it going to make things easier for all that is involved or affected by the process? The end-user should be benefited from the digital transformation. If an automated performance management system is implemented by the HR to collect data that will help them to decide salary appraisals, then managers and employees should also be able to view and update the platform
  • Is this goal measurable?
    The goal should not be output-oriented. Set an outcome-oriented goal
  • Will it have a positive financial impact on the business? The business value added by a digital transformation project decides whether it is a success or not.

2. Select those implementing this transformation
The responsibility for this transformation must be taken by the line managers and HR practitioners, as the former deal directly with employees, and any modification to HR practices influence these managers and their teams directly. These managers can relate to crucial aspects where HR processes should improve for them.

3. Hire extra resources for the digital transformation process if necessary.

You might need to invest in the tool required to do a task. Besides, you might need to hire additional resources for the role.

For instance, you might have to hire a data scientist if you are using AI to understand engagement and performance in your organization so that you can make sense of the data and the insights it provides to help you enhance business strategy becomes simpler.

4. Define a time frame within which you will establish that a certain tool is a success

Give every process sometimes time to show how it can be an asset to your organization. For example, a three-month time to use a new candidate-screening tool is sufficient to give you an idea of whether it is can provide you a quality candidate database or not.

5. Identify the processes that will be discontinued after the implementation of a digital platform.

The implementation of recruitment/screening software might eliminate the process of finding candidates via job boards and LinkedIn. The management might also be required to reorganize once the process to be replaced is identified. For example, even an intern might also provide inputs for low-level strategy or start the second cycle of candidate screening.

6. Make the case to the C-suite to invest in the resources you require

It is always a challenge to make a business case to the C-suite. Even though businesses are willing to invest more in digital transformation but entrusting an entire department to do it with the least possibility of failure is often seen as a challenge. However, by adopting a correct strategy, you can develop a business case that depends on meticulous research, and which will provide your leaders good reasons to invest in the software you require.

7. Prepare your team for the change

Prepare your team for a change in HR processes. However, you can start on a smaller scale to minimize the chances of failure (if any) instead of making a huge change in the entire organization, and consequently, leaving any digital transformation attempt. If you start from a pilot project, you will get opportunities to use the response from it, rather than starting big and making errors in an extensive rollout.

8. Develop a culture of digitalization

The focus of HR’s digital transformation is to develop a culture of digitalization. It includes knowing how to use automated solutions to improve human capabilities.

Challenges to the Digital Transformation of HR

Digital HR Transformation
Technology must deliver value to the organization. If technology is adopted properly and used effectively, it is worth the investment. One of the crucial challenges that companies face is the resistance to adoption. Some of the other challenges that you can face in the beginning include:
  • Not having a clear strategy or goal for digital transformation
  • Resistance from the C-suite to invest
  • Insufficient budget to facilitate digital transformation
  • Lack of expertise in implementing the digital transformation project
  • Not enough agility to advance to the latest digital solutions

These are some of the common issues and resilience from HR is required to address them. To keep up with technology trends and implementation, reskilling and retraining of HR employees is important.


Digital transformation develops an agile organization that advances with advancing technology. Digital transformation strategies can fail due to the absence of this agility. HR professionals need to prepare their company and team to remain involved in this process and implement the latest technology.

Stay aware and updated, and keep an eye on what your competitors are doing in the same field. This will help you to start, complete, and going forward with your vital digital transformation project.

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