Tech questions to answer before undertaking an HR digital transformation

 

While many companies are still dealing with the pandemic’s impacts, enabling enterprise digital transformation is a top consideration for 2021.

By David Winkler

Reprinted with permission from the July 20, 2021 issue of BenefitsPRO magazine

A digital transformation promises to increase an HR department’s ability to operate with speed and efficiency, as well as provide a better employee experience.

Well before COVID-19 started impacting the business world, HR professionals were already struggling with gathering, managing and extracting value from the sea of documents moving in and out of their departments. HR professionals were constantly challenged to secure and regulate information while making it easily accessible when it was scattered everywhere, processed separately, and managed by different people. Ongoing reliance on paper-based documents has dictated the continued use of antiquated manual processes and workflows which, in turn, has made the HR function ripe for digital transformation.

For companies that had not already started their HR digital transformations in some manner, last year should have certainly been a catalyst for beginning that journey as human resources staff from around the world faced unprecedented challenges managing remote workforces. “Digital transformation” is a wide-ranging term used for describing the change from traditional, manual processes to digital, automated ones to improve the efficiency and effectiveness of business operations. What typically was planned to take place over three to five years, has now been fast-tracked to occur over several months.

Recent research by The Hackett Group points out that while many companies will still be dealing with the pandemic’s impacts for the foreseeable future, enabling enterprise digital transformation is a top-10 consideration for 2021. Seventy-four percent of HR departments have plans focused on enabling continued digital business transformation.

HR digital transformation affects companies of all sizes, from large enterprises to small- and mid-sized businesses. The common challenge they all share is where to start—in terms of setting a digital strategy, establishing the right infrastructure and selecting the appropriate technologies in order to build a sustainable delivery model to scale with operations. A new survey from Headspring found that almost one-third of senior HR and learning and development leaders weren’t sure where to start, or where to go next, to further their companies’ digital transformations.

HR departments need to be methodical when charting a digital transformation journey. All corporate stakeholders should be involved in discussions around the challenges that can be addressed through the adoption of digital HR processes and the key areas within the HR department that stand to benefit most. Additionally, HR and IT departments should work collaboratively to answer the hard—and sometimes complex—questions when it comes to selecting technology solutions to facilitate digital change.

Challenges HR departments face when jumpstarting digital transformation

In today’s business world, there seems to be a lack of appreciation for the complexity of the HR function. HR deals with a proliferation of information, in a variety of formats, coming in through a number of different sources—from applicants for new positions, existing employees, departmental managers, third-party partners, auditors, government entities, legal, etc.

Information comes in through different media and communications channels—the postal mail, fax machine, emails with file attachments, and web forms. Documents are also being produced by hundreds of disparate technology applications, applicant tracking systems and so on.

Add on top of that, HR departments archive millions of boxes of paper records in storage, with those numbers growing exponentially on a daily basis. Then, there are poor practices still being utilized, even with technology in place. Does this sound familiar? Staff members still print documents, mark them up, send them out on a fax machine or place them in a mailing envelope or FedEx pouch. Or, after digitizing a document that’s already in an app, they still print it out, make an annotation, scan it, and email it as a file attachment.

Needless to say, HR is a very document-centric corporate function. However, these documents are mission critical and they’re strategic when it’s applied to the HR function in any organization. But there are a lot of hidden risks in documents from an HR perspective that pose a number of different challenges in terms of how to bring it all together to manage those documents and automate all the associated processes and workflows.

Unfortunately, there is a big misperception that when a company adopts a human-capital-management platform or some type of back-office or ERP system, that it will be a panacea for solving all of HR’s problems. Data and information on employees and candidates will be housed in one monolithic system—making everyone’s life so much simpler. Not so fast.

This approach doesn’t solve the problem; it produces gaps between technology applications and creates silos in disparate systems.

To actually fix this problem, companies need to take a more process-first approach, followed by technology enablement in order to make the HR department more productive and impactful—and on a more solid course to measure its contribution to the rest of the organization. If HR leaders are going to jumpstart their digital transformation, it’s like anything else, they’ve got to “eat the elephant one bite at a time.”

Key areas to assess when building a foundational strategy

One of the biggest mistakes HR departments make in their digital transformation journeys is putting the “technology cart” in front of the “process horse.” Organizations must have a process-first mindset followed by technology enablement when approaching digital transformation. HR department leaders need to take a step back, look at the problems they’re trying to solve and self-assess the associated processes. Key areas to examine:

HR information: Conduct an assessment of all information that flows through the HR department. Examine the document formats and the different types of content to gain an understanding of the depth and breadth of information.

Technology systems: Evaluate the different systems and applications being used. More than likely there are different technologies for recruiting, onboarding, talent management, benefits administrations, performance management, time and attendance, payroll, and tax to name a few. It’s mindboggling that companies can use up to 31-plus separate HR systems—all housing information in their respective silos.

Security: Understand the security, access control, retention parameters and privacy requirements around all this information. A thorough risk-assessment should include examining areas such as acceptable-use policies, audit trails, need-to-know versus secure-access-only, and document classification types—all aimed at preventing the ultimate risk of an ad-hoc breach of corporate data or personally identifiable information.

Government regulations: Pay close attention to the complex and every-changing regulatory environment. Look at the different document types that may be impacted by federal guidelines, state regulations, local statutes of limitations and industry best practices. Make note of the time required to retain these documents.

Top tech questions to answer before starting the journey

A digital transformation promises to increase an HR department’s ability to operate with speed and efficiency, as well as provide a better employee experience.

Here are the top technology questions HR leaders should answer before starting their digital transformation journey:

  • Is there an inventory of the volume, variety and sources of HR information? Are the sources, media types and locations of this information well documented?
  • Is there a good understanding of the HR technology infrastructure? What technologies are in place and where are they being used? Is each being used to its full potential?
  • How is information secured? Is encryption used? Does a centralized, secure repository exist? How is information currently shared?
  • Is the right team member in place to advise on the changing, complex regulatory environment? (Even though that’s not a technical question, it’s a question that’s going to impact how technology will be applied.)
  • Where do technology gaps exist? Are there capabilities for information-document capture, storage, uploading, retrieval, data extraction, data validation, data retention, data indexing? How about enterprise search? Are rules-based workflows in place? Is the latest technology and/or updates to mitigate the newest security threats being implemented?

Ensure process comes before technology for successful digitization

For HR, securing and regulating information while making it easily accessible to the right people from the right place has been a constant challenge—especially when HR deals with more content from more sources than ever. Without standardized controls for managing it, HR staff can’t know what information they have, where it is, who has access to it or if policies for compliance are being followed.

In order for digital transformation to be successful, HR departments should take a process-first approach, so they can evaluate whether there is already technology in the organization that can be applied or re-applied to help address their challenges. They then need to identify where gaps exist between these technology applications. It’s wishful thinking to believe that one giant system will solve all of these problems.

Companies that have digitally transformed their HR functions have found measurable success. With the right strategy, supported by a well-thought-out technology infrastructure, HR can eliminate the reign of information chaos—enabling faster access to information from where it’s needed, digitizing manual processes, better protecting employee data and simplifying compliance.

David Winkler is executive vice president and chief product officer at Docufree, a business-process services provider of large-volume document scanning, cloud-based document management and intelligent process automation.