HR digital transformation: keeping up with the latest tech trends

HR digital transformation: keeping up with the latest tech trends

March 15, 2022

Andrea Di Stefano

Technology Research Analyst

"More human than human" is our motto.

With this sentence, the visionary head of the Tyrell Corporation, Eldon Tyrell, summarized the underlying philosophy of his company in the legendary science fiction film "Blade Runner". Anyone who has  watched this masterpiece certainly knows the sinister implications of the aforementioned slogan, since Tyrell actually referred to the idea of creating bioengineered humanoids, known as replicants, to use them as a cheap, high-performing workforce.

Fortunately, we don't live in a cyberpunk dystopia, and we can all agree that a company's workforce should represent a valuable resource to nurture and to count on (as the term "human resources" reminds us) rather than a synthetic product to exploit.

With this in mind, how can we further amplify the most human aspects of our core social dynamics, including the way we approach work and manage our staff, with the help of something typically perceived as cold and depersonalizing like technology? In other terms, can we really make the HR field "more human than human" through artificial means? Probably yes, given that all the main tech trends driving HR software development seem to be pointing right in this direction.

Transforming…into what?

In recent years, following a logic comparable to that described by evolutionism, the HR industry has undergone a radical change to adapt to the new challenges of the labor market. This adaptation process, typically referred to as digital transformation, involved the implementation of cutting-edge technologies in a variety of HR-related business functions that were previously performed manually or with more basic software solutions. For instance, even such seemingly simplistic but in reality very time-consuming tasks like looking up information is increasingly automated with enterprise search software.

Among the key emerging technology trends paving the way to HR digital transformation, Sierra-Cedar's 2020 HR Systems Survey identified first and foremost analytical disciplines such as HR predictive analytics and benchmarking, followed by machine learning, robotic process automation (RPA), and the cloud-based PaaS model.

Emerging tech trends in HR

A more recent study by PwC, the HR Tech Survey 2022, substantially confirmed the strong interest of HR leaders in data analytics and cloud-driven HR system modernization, while pointing out other major challenges awaiting the organizations involved in digital transformation. These include recruiting, staff upskilling and development, and talent retention, along with the rapid spread of remote or hybrid work.

Top HR challenges according to human resources leaders

The "special mention" of  recruiting, training, and retention on the one hand and remote work models on the other is neither casual nor surprising.

Regarding the first point, many human resources professionals may confirm the actual existence of a human capital gap problem affecting several sectors of the modern economy in the last few years. As reported by PwC’s 2020 HR Technology Survey, 70% of recruiters struggled to find suitable candidates, while job openings in 2018 and 2019 surpassed the total unemployed workers for the first time in history. This shortage of qualified personnel forces us to radically rethink and enhance our recruiting techniques, as well as our corporate training programs.

As for the second issue, there is not much to say in light of the current situation with COVID and the consequent shift towards remote working solutions. However, this aspect of digital transformation is not just the effect of the global pandemic. Remote working, unlocked by the spread of tech solutions that deliver the digital workplace experience, such as virtual workplaces and collaboration tools, serves both the need for cost containment and the aforementioned shortage of skilled professionals - two factors driving many organizations to turn their gaze to job markets beyond the horizon.

That said, what role can technology play in addressing these challenges? Let's try to answer this question, as we investigate the current trends in HR digital transformation and potential future developments.

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HR digital transformation trends overview

HR digital transformation represents a holistic phenomenon encompassing several different technologies and an even wider range of use cases and applications. From speeding up administrative processes to assessing employee performance, from streamlining onboarding to providing essential services to your workforce, HR digital solutions can facilitate pretty much any staff-related business function.

Indeed, investments in HR software development and digital transformation as a whole have benefited from constant growth in recent years and are expected to increase further, as reported by Verified Market Research's 2021 Global HR Software Market Size And Forecast.

Global HR software market size, 2020-2028

As you can see, the widespread deployment of HR software applications (such as HRMS) for smoother business process management is an established fact, but the implementation of innovative features powered by new technologies is set to give further impetus to their adoption as it allows enterprises to achieve three important goals:

  • Gain valuable insights to improve decision-making
  • Automate the most repetitive and tedious processes
  • Improve the employee experience in the workplace

Since we previously mentioned analytics as the most important aspect of digital transformation in HR, we'll start by looking at the first point, namely how to get such insights.

1. Complementing intuition with data analytics

Any decision-maker constantly facing challenging choices would give their right arm to get a comprehensive and accurate overview of the scenario in which their company operates...and their left arm to see into the future. This also holds true for HR managers.

No one can count on magic and crystal balls, but data analytics (including its AI-enhanced version known as augmented analytics) has proven to be a reliable replacement. So much so that nowadays most of the HRMS and other HR-related software on the market come with embedded analytical features or can easily be integrated with ad hoc data analytics solutions to help managers replace simple conjectures with data-driven decision making. Such capabilities can be leveraged in a multitude of HR use cases, such as:

Employee recruitment

Data analytics solutions can help HR managers segment candidates according to their expertise and calculate recruitment conversion rates to evaluate the effectiveness of your hiring campaigns.

Performance assessment

HR analytics is commonly used to monitor employees' most relevant KPIs while keeping track of their workload to streamline staff allocation and avoid corporate process bottlenecks.

Staff development

Following the same approach taken by AI-augmented education, HR analytics platforms can probe employees’ competencies and skill gaps to set up tailored mentoring and upskilling programs.

Employee experience

Data analytics tools are fully equipped to assess workforce sentiment and recommend targeted support initiatives by gathering feedback from employee surveys or monitoring the turnover rate.

To turn HR data into such valuable insights, modern data analytics solutions typically rely on machine learning algorithms. These self-improving sequences of instructions are designed to process huge datasets, identify recurring patterns and relationships among variables, and therefore clarify the underlying dynamics driving the most significant HR trends or even predict future developments.

Some of the AI-powered social media leverage these algorithms as well, including Linkedin. Its recommendation system can analyze and segment candidates into skill groups to provide recruiters with a ranking of the most desirable ones for specific positions, as well as fine-tuning its suggestions according to recruiters’ feedback.

Linkedin's recommendation system architecture

2. The human dimension of artificial intelligence

By now, we've mentioned the role played by machine learning algorithms in HR digital transformation, specifically in powering analytical systems. What we still haven't pointed out, however, is that machine learning actually falls under the ensemble of AI-related technologies and represents only a fraction of the immense domain of artificial intelligence.

Indeed, the scope of AI goes far beyond "mere" data analytics, extending to fields of application such as speech recognition, natural language processing (NLP), behavioral analysis, computer vision, including its sub branches such as photo and video object recognition, and other so-called cognitive technologies developed to mimic some of the most innately human abilities.

All these subfields of AI are technically connected with machine learning and tap into its algorithms, as they aim at teaching machines to develop such skills through experience (for example, by training systems with millions of pictures or texts so that they can start to recognize recurring features). These capabilities can be applied to HR management in a variety of ways, including:

  • Using image and speech analysis during job interviews to identify candidates' behavioral patterns and assess their attitudes.
  • Spotting signs of harassment, distress, and attrition among staff members by scanning chats, emails, or comments.
  • Powering  the chatbots and virtual assistants in employee portals with NLP to provide your workforce with HR services 24/7.

Regarding staff well-being and empowerment, several major institutions have already embraced this embodiment of digital transformation and achieved very promising results by implementing AI in the workplace. Deloitte's 2021 HR intelligent assistants study, for example, reported that the implementation of HR intelligent assistants enabled a global bank to reduce response times by 50% and significantly improve employee satisfaction.

Digital assistant architecture

3. The long road towards process automation

Chatbots can be great helpers and conversation partners, but they're not the only "artificial employees" that are spreading in the HR field as a result of digital transformation. As you might expect, we are not referring to the aforementioned replicants, but to robotic process automation (RPA) bots.

The idea behind RPA in HR is to replicate in the service sector what manufacturers did after the industrial revolution and replace human workers with robots to perform the most monotonous and time-consuming clerical tasks. In a modern corporate scenario, this means deploying software robots for sending multiple emails, filling out forms, extracting data from documents, and so on. In HR, this facet of digital transformation implies:

  • Candidate screening automation via bots to rapidly check thousands of CVs and select those matching an open position.
  • The adoption of bots for onboarding procedures, such as providing credentials or uploading employee information to corporate systems.
  • Faster and more accurate document management, including payrolls, leave applications, expense reimbursement requests, and more.
  • Bot-assisted fiscal reporting to minimize accounting departments' error rates and ensure strict legal compliance.

Regarding the effects of RPA-driven digital transformation on the recruiting process, take a look at Robotic Process Automation HR PoC, developed by Itransition to accelerate the addition of new job applicants to the enterprise HRMS. This solution could ensure 4x faster candidate processing with 100% accuracy, along with a 32% reduction in human interaction.

4. HR management in the clouds

One last major trend of digital transformation worth examining is the ongoing shift from in-house HR software solutions to a SaaS, cloud-based delivery model in which software is centrally hosted and made available to licensed customers via the Internet.

Both on-premises and cloud applications have their pros and cons. For example, the first model often involves custom solutions built from scratch and therefore fully personalized according to specific business requirements. However, the success of cloud technology is based on some relevant adoption drivers:

  • SaaS software ensures lower upfront costs, unlike in-house software requiring proper hardware, setup, and implementation.
  • The implementation procedures are relatively fast as the service is already available and accessible via the cloud.
  • SaaS providers generally offer contracts including support and maintenance services and covering disaster or any other disruption recovery.
  • Cloud-based solutions are easily scalable in terms of storage and processing capabilities as they can count on virtually unlimited external IT resources.

Furthermore, cloud-powered HR digital transformation seems to positively impact productivity, data security, and employee experience as well, as shown by PwC's aforementioned report.

Benefits of cloud-based HR

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HR digital transformation guidelines

After this brief rundown of the main trends in digital transformation, let's say a few words about the challenges you may face when implementing these technologies in your HR processes. After all, the relationship between society and new technologies can be as fascinating as it’s complicated, and human resources seem to merge the most distinctive aspects of these two worlds, especially now that digital transformation is gaining new momentum.

In this regard, if you plan to update your HR functions and embrace digital transformation, you should be aware of its key catalysts and potential obstacles. Once again, PwC comes to our aid by providing us with some useful insights.

Enabling factors and obstacles to HR digital transformation

Based on the statistics above, we can draw some conclusions:

  • Any tool is useful as long as someone knows how to use it. Digital transformation should always be carried out along with proper staff training and hiring specialized professionals with a solid tech background.
  • Digital transformation is a matter of technology but also organization. Appointing the most skilled HR managers to exclusively handle this process and establishing centers of excellence within your company to coordinate such changes can certainly help in this regard.
  • As explained in our previous article on AI use cases, defining specific fields of a particular technology’s application is the first step in maximizing its impact. A good rule of thumb is to select the business functions that ensure maximum value and therefore will get the most benefits out of digital transformation.
  • Gradually proceeding with digital transformation can be a good idea, as it will give your HR managers the opportunity to readjust old corporate processes based on the new tools at their disposal. This will also mitigate the doubts among employees and stakeholders, who will be able to become familiar with new technologies and ascertain the positive results of their adoption.
  • A solid corporate culture promoting digital literacy and software usage with proper incentives (including gamified activities, symbolic recognition, and material benefits) is another essential step towards full digital transformation.

Digital is the new human

We began our analysis with a question: can digital transformation and all those technologies driving it further "humanize" the human resources discipline? Well, considering its role in analyzing and addressing the needs of employees, making our workplaces more pleasant and safe, and delegating the most mundane and depersonalizing tasks to robots, we may say yes.

At the same time, HR digital transformation will need a fine balance between the artificial and human sides of this phenomenon, since the past is actually full of examples where the blind implementation of new technologies without proper human supervision ended up being more of a problem than an asset.

We may mention Randstad's 2017 survey reporting that a fully automated recruiting experience with bots completely replacing human interactions had been perceived as frustrating by 82% of respondents. Another striking case is that described by the Harvard Business School's 2021 Hidden workers: untapped talent study, which shed light on how automated hiring software mistakenly rejected thousands of potential candidates due to unreasonably strict parameters.

The lesson we can learn from these stories is that digital transformation can certainly spice HR up, but making them extra spicy will not help that much. If your employees love spice, organizing the next corporate dinner at the coolest Mexican restaurant in town might be the best bet.