HR Digital Transformation Guide AIHR
HR Digital Transformation Guide AIHR
HR Digital Transformation Guide AIHR
STAGE 1
TABLE OF CONTENTS
3 Introduction
20 Stage 3: Formalized
27 Stage 4: Strategic
34 Stage 5: Converged
Organizations that ignore digital transformation risk falling prey to disruption, and recent years have shown us that
no one is too big to be disrupted . And it was only a matter of time before digital transformation reached HR.
But how do you approach such a project of this size and importance?
That’s the question we answer in this practical guide. We have used our expertise in Digital HR to draw up a clear and
practical roadmap to help you on your path to digital HR transformation.
HOW TO
USE THIS GUIDE
HR Technology People
Technology isn't an end in itself. What is important is that your People can make or break your digital transformation. You need
selected HR technology supports your main business priorities, people with specific skills, guided by strong leadership, who can
both within HR and beyond. collaborate effectively for the project to be successful.
BUSINESS AS USUAL
At this stage, HR is operating with a familiar
Less than
legacy perspective of internal customers,
processes, metrics, operating models,
30%
of transformations
services, and technology. There is a
widespread belief that the current solutions
succeed
McKinsey, Unlocking success in digital
transformations, 2018
STRATEGY AND
LEADERSHIP
Start creating awareness with leadership and other
key stakeholders on the need for change and a shift
towards digital. Use inspiration to get them on board,
but also create a sense of urgency.
How to improve
● Invite an inspirational outside speaker
(e.g. from another organization or a
consultant)
● Organize a brainstorm on digital HR (is it
something we need to be aware of?)
STAGE 1 - BUSINESS AS USUAL
HR
TECHNOLOGY
At this stage, the HR technology landscape is most How to improve
likely scattered. Point solutions are not connected to ● Make a high-level assessment of the current HR
the HRIS. Business and HR processes are minimally technology landscape on the ability to support
supported by technology, and the impact of business on people challenges.
technology is low. ● Encourage incremental improvements where
possible and pilot new innovative solutions.
HR technology is most valuable when it connects to ● Interview key users of HR technology to gather
business needs. The technical infrastructure should information on the current match of HR
support employees in their journey through your technology to business needs.
organization and reduce workforce challenges. ● Hire an external expert to assess and benchmark
current business needs and determine HR
technology fit-gap.
STAGE 1 - BUSINESS AS USUAL
INNOVATION
HR
PROCESSES
HR processes are there to facilitate, streamline and
standardize key employee-related functions in an
How to improve
organization. Ideally, they work flawlessly and create a
● Start by writing down the HR processes
positive employee experience.
present in your organization. Then go
through the steps needed to complete
At the first stage of digital transformation HR processes
the HR process.
are typically not streamlined, nor standardized. To get a
● You will need domain experts in your
clear view of where you stand, create an overview of the
organization for this and an HRIT expert
HR processes and assess their level of formalization and
(internal or external).
standardization. Next, determine the potential to
● Discuss the results with IT and
digitize standard process steps and improve the
brainstorm on possible (digital)
employee experience. Discuss with (HR)IT.
improvements.
STAGE 1 - BUSINESS AS USUAL
PEOPLE
enthusiasm about the matter. At the same time, ● These ideas will serve as talking points in the
focus on attracting people with digital capabilities session with leadership (see component “Strategy
STRATEGY AND
LEADERSHIP
Now that you’ve created awareness among the How to improve
leadership, it’s time to develop a shared vision on digital ● Identify a business need or focus digital
HR. Find more leaders with whom to cooperate on transformation on a critical business area
experimenting with various digital solutions for key that needs to change.
people challenges. Create enough ‘buzz’ so executives ● Find an urgent people issue in a business
take notice. unit or department (e.g. a dramatic increase
in absenteeism, a dramatic decrease in
A high-impact business case is an excellent way to do employee satisfaction, or very low customer
this. Identify a critical business area with clear value for satisfaction/NPS somewhere in the
the organization as a whole, and propose a digital business).
solution. Work with business management to test the ● Partner with corresponding business
case and work out the details. management to experiment and shape the
business case.
STAGE 2 - PRESENT AND ACTIVE
HR
TECHNOLOGY
Start building a roadmap of HR technology for the
future. This includes (integrated) support of standard How to
HR processes by technology, data management, data
● Create a document for discussion on the
integration, service delivery models, and cooperation on
business needs and the current fit and
reporting and analytics.
needed HR technology.
● Discuss the possibilities for replacing HR
With a document like this, it is important to look beyond
technology that doesn’t meet the current
the HR department. It’s best to involve IT and business
(and future) needs.
stakeholders to provide additional insight and
● Make sure to involve at least business and
information.
IT stakeholders when designing the
roadmap.
STAGE 2 - PRESENT AND ACTIVE
INNOVATION
Find out which methods could benefit the HR department and find the best ways to train the department on these
methods. Discuss with leadership the best possible new way-of-working and ally with L&D to create an offering
for everyone. And don’t just discuss matters: set up pilot projects to that you can experience and evaluate changes, and
start building a culture of experimentation within HR.
How to
● The best way to learn is to experience. Pilot methods in project
teams to learn what works and what doesn’t.
● Don’t oversell new methods but gradually introduce them and give
people room to adjust.
● Introduce a culture of experimentation and failing forward.
STAGE 2 - PRESENT AND ACTIVE
HR
PROCESSES
Redesign HR processes by taking excellent employee experience, process integration and business impact as key
objectives. Find out which technology is best suited to meet the technical and functional needs of the designs. Plan
incremental improvements and connect with your vendors to discuss how to realize these improvements.
How to How to
● Create high-level employee journey maps. incremental steps for improvement, e.g.: reducing
● Decide on the preferred employee experience, the number of steps in onboarding process from X
level of integration of processes and potential to Y (employee experience) or reducing the
improvements in business impact. Do this with time-to-hire for key roles from X to Y (business
domain experts, IT and possibly an external impact).
consultant. Write these down ambition ● Check with current vendors how these
statements. improvements can be achieved. Discuss with
● Use these ambition statements to plan potential new vendors if the current HRIT
landscape cannot provide what you need.
STAGE 2 - PRESENT AND ACTIVE
PEOPLE
Train and/or attract people with digital capabilities (such How to improve
as HRIT specialists, HR analysts, technical consultants, ● Hire 1 or 2 digital talents for short-term
software developers) in order to execute the desired success (might be interim), train selected
improvements properly. Build alliances with other few for future skills.
departments to stimulate integral approaches where ● Identify business issues and create an
possible (such as a data warehouse, a KPI dashboard or impact-effort matrix. Focus on the
collaboration tools). high-impact, low-effort issues.
● Learn by doing and form a few
Don’t be afraid to act: form multidisciplinary teams and multidisciplinary project teams to achieve
learn by doing. Create an impact-effort matrix and focus small changes with big impact.
on making a big impact with small changes.
STAGE 2 - PRESENT AND ACTIVE
DATA AND
ANALYTICS
Create some customized reports with key insights How to improve
and/or perform an advanced analysis on people data ● Team up with a business manager and data
with a data scientist from another department. Focus on analyst and decide on a specific and current
actionable insights and data that is crucial for challenge they are facing.
decision-making. Demonstrate the value of data analysis ● Collect relevant insights from a people
by presenting results that are relevant to the business. perspective and build a report with
actionable insights.
● Identify what data is missing but is crucial
for decision-making and achieving business
results.
STAGE 3
FORMALIZED
7%
of respondents are using
AI and robotics
to restructure work entirely
Deloitte Global Human Capital Trends, 2018
STAGE 3 - FORMALIZED
STRATEGY
AND LEADERSHIP
Find sponsorship from executive leadership to gain
access to resources and optimize efforts and start How to improve
building a formal digital HR strategy. Convince them to
● Use examples (internal and external) to
free up the resources you need with internal and
make a compelling case for the allocation
external examples (make sure to be clear about what
of resources.
you need, and be specific about why you need it).
● Identify relevant stakeholders and
Reshape the HR operating model to the desired new
sponsors.
situation. For added clarity, create a rough timeline.
● Be specific in what is needed and why.
● Create a rough timeline.
STAGE 3 - FORMALIZED
HR
TECHNOLOGY
Start buying and/or building new technological solutions How to improve
to replace legacy systems. When selecting replacements ● For every technology replacement or
(or additions), make sure to be specific about business addition, be specific about business and user
and user requirements before you decide on your exact requirements and decide on a build, buy or
strategy. Implement these solutions with proper change ally strategy.
and implementation management. When replacing key ● In large key technology replacements,
technology, consider working with an implementation choose a capable expert implementation
partner. partner.
● With every technology replacement or
Keep experimenting with new tools to improve addition, collect and be precise about the
collaboration, dashboarding, employee experience and data requirements and data collection
project management. protocols as this will be crucial for future
functionalities.
STAGE 3 - FORMALIZED
INNOVATION
Target specific teams with the best training material on a selection of innovation methods so they can act as change
agents and introduce new ways of working gradually.
HR
PROCESSES
Start systematically ‘cleaning up’ HR processes by eliminating non-essential time-consuming steps and/or automating
essential time-consuming steps (if technologically possible and permitted by privacy laws). Continuously gauge the
employee experience and implement potential improvements.
PEOPLE
How to improve
● Identify the skill gap.
Once you have a clear understanding of the (digital) skill
● Train for digital expertise, design thinking,
gap in your organization, it's time for action. Integrate
and customer-orientation to enable
new L&D offerings to stimulate digital literacy, and make
people to get the most out of tech and
sure your colleagues understand the necessity of
innovation.
cultivating these new skills. If there are certain skills
● Explain and communicate clearly the
that you can't train for in your organization, and identify
added value of these digital skills, for the
what digital expertise exists internally and what must be
organization and also the employees
hired for the future (employee or agency).
themselves.
● Actively build data-driven skills among
your strategic HR (business) partners.
● Implement data practices and awareness
to promote consistent high-quality data
(entry).
STAGE 3 - FORMALIZED
DATA
AND ANALYTICS
Create a service delivery model specifically for the How to improve
delivery of HR information, insights and advanced ● Collect business needs for structural
analyses. Collaborate with IT and other departments to delivery of people insights.
systematically enrich and improve data. Finally, build a ● Decide with your team what needs to
prototype dashboard (e.g. Tableau, PowerBI) for a key happen on the following topics to meet
strategic theme. these business needs:
○ Dashboards and reporting
When working on your data and analytics projects, focus ○ Data
on business needs: your goal is (structurally) deliver ○ Skills
people insights that support the business. Keep this in ○ Processes and governance
mind when creating a plan for dashboards, processes ○ Roles and responsibilities
and roles. ● Align with HR services (or a similar
department) as they might already have a
service delivery model.
STAGE 4
STRATEGIC
In this stage, HR teams recognize the
strength in collaboration as their research,
work, and shared insights contribute to
digital transformation, ownership, efforts,
and investments. Most digital HR initiatives
85%
are executed by multidisciplinary project
teams.
of business service executives
said that digital transformation
strategies are
critical or high
priorities
Hackett Group, 2019 Key Issues Study
STAGE 4 - STRATEGIC
STRATEGY
AND LEADERSHIP
It's time to take the lead and propose a digital HR
roadmap. With executive leadership, agree upon a solid How to improve
digital HR strategy and transformation roadmap. Define
● Take the lead in proposing a digital HR
short and long-term goals and allocate resources
roadmap and be bold in doing so.
accordingly. Ensure you secure the resources you need
● Invest in mapping employee journeys and
by clearly communicating how this will benefit the
touch points for HR.
business in the long term.
● Create a set of compelling reasons to
invest in digital HR and specify how it can
In this strategic phase, HR leadership should visibly and
enable future growth and
actively support the digital HR vision, strategy and
competitiveness.
roadmap. But don't forget about IT: a strong relationship
● Make sure you get proper buy-in from IT
with IT executives will be crucial.
executives and build a solid relationship
with them as you will need them. A lot.
STAGE 4 - STRATEGIC
HR
TECHNOLOGY
Align the HR technology roadmap with the organization’s overall digital roadmap. Work with IT to integrate with other
organization programs, knowledge bases, and data platforms (e.g. a data warehouse). This is essential for successfully
creating value with HR tools such as dashboards and collaboration tools.
How to improve
● Work with IT to build connections from HR technology solutions to an existing business data
warehouse or data lake (e.g., Microsoft Azure, Oracle Autonomous Data Warehouse, SAP S/4HANA,
Snowflake).
● Develop a process to combine and extract data from the data warehouse or data lake in a uniform
way.
STAGE 4 - STRATEGIC
INNOVATION
Methods such as design thinking and the lean startup How to improve
experimentation methodology should now be ● Work with L&D and a selection of ‘early
mandatory in the HR curriculum, at least for specific adopters’ to create an inspiring continuous
groups. Work with L&D and selected colleagues on a learning program for HR for innovation.
continuous learning program that stimulates continuous ● Challenge and feed HR leadership to set the
learning. right example through suggestions and
quick sparring sessions.
In the meantime, challenge HR leadership to set the ● Move away from classical Excel and
right example by leading programs using innovative language learning into relevant fields that
methods. have the potential to cross-pollinate each
other and spur innovation.
STAGE 4 - STRATEGIC
HR
PROCESSES
An integral approach to HR processes is key. Optimize
business impact, the employee journey and employee How to improve
experience by continuously looking for ways to have HR
● Create highly detailed employee journey
processes ‘communicate’ with each other. To this end,
maps.
create in-depth employee journey maps.
● Discuss this integral approach with
domain experts and business
Work with domain experts and business stakeholders to
stakeholders. Determine the best way to
determine how to best add value by linking HR
add value by linking HR processes
processes. For example, performance management goals
together.
are directly linked to L&D offerings and strategic
● Involve vendors and IT to plan for a first
workforce planning goals feed into talent acquisition
experiment where 2 HR processes are
requisitions.
linked and add value.
STAGE 4 - STRATEGIC
PEOPLE
DATA
AND ANALYTICS
Communicate clearly to all stakeholders how any information request should be handled. Implement proper tools so
any information request (from simple list to advanced analysis) can be processed, either by self-service dashboards or a
dedicated team of analysts who can provide the right HR insights quickly based on a solid dataset.
How to improve
● Build and pilot report(s) or dashboard(s) and/or hire/train people to address gaps in information/insight
delivery
● Create communications materials that are simple and to-the-point. They should contain at least:
○ Which channel to use for which information request (e.g. list of successors -> Employee Dashboard
X or analysis on turnover trends -> People Insights mailbox).
○ The process of information delivery and what is expected from the requestor.
● Train your people to be consistent in showing requestors the right ways to request an HR insight.
Digital transformation success is
STAGE 5 more likely at companies with
CONVERGED enterprise-wide
workforce planning and
Now is when a dedicated digital talent-development
practices
transformation team forms to guide digital McKinsey, Unlocking success in digital transformations, 2018
STRATEGY
AND LEADERSHIP
Boost the digital HR transformation by regularly aligning business developments and needs with the new HR operating
model. Integrate digital components in the people strategy. Collaborate with IT leaders on new plans for the future.
Stimulate ‘pop-up’ teams that experiment with new ways of working and innovative ideas.
HR
TECHNOLOGY
Work towards an integrated set of platforms and tools to suit every need on people issues. For
employees, management and executives, all relevant HR tools should be easily accessible, fed by one single data source,
and provide real-time information. Work with IT and vendors to ensure this is possible.
How to improve
● Exchange of data is crucial to deliver value for the organization and employees, so work with IT and
vendors to create a situation where any data can (safely) be accessed by any HR-related app or solution.
● Develop smart algorithms (with data scientists and vendors) that combine information from different
apps and platforms to deliver suggestions and custom HR services to both employees and teams.
● Estimate the value of data and the cost of gathering data for both existing and non-existing data sources.
STAGE 5 - CONVERGED
INNOVATION
HR
PROCESSES
Gather feedback from employees and business
stakeholders on process effectiveness with quick pulse How to improve
surveys, and use this input to continuously optimize HR
● Use quick pulse surveys to gain input on
processes, HR effectiveness, and measure employee
process effectiveness (e.g. quality of hire
experience and business impact. Make sure to also look
feedback from managers after 6 months).
to HR systems for relevant information: data analytics
● Capture information from HR systems
and process mining can be invaluable.
that fuel algorithms designed to optimize
HR processes (e.g. L&D suggestions for
courses and resources, continuously
optimize suggest algorithms using a
rating/Netflix approach).
STAGE 5 - CONVERGED
PEOPLE
As data analytics becomes increasingly important and complex, more data-savvy people should be trained and hired.
Make a business case for hiring specialists, such as data scientists with HR affinity to work on advanced analyses, or
developers to build in-house software solutions. But be aware: talent is in high demand, so it's important to make your
organization more attractive to the right profiles, such as by emphasizing your digital ambitions.
How to improve
● Identify a clear business case for bringing data-savvy people and developers in – or cooperate with other
business lines for this expertise.
● Make yourself attractive to outside talent by emphasizing digital ambitions for the future. Developers and
generally technically-minded individuals like a tough challenge and forward-looking vision.
● Explore the added benefits of Centers of Excellence to foster unique and hard to come by skills.
40
STAGE 5 - CONVERGED
DATA
AND ANALYTICS
Work with other departments to determine data How to improve
definitions and formats for the entire business. Start ● First and foremost, align on data definitions
building integrated dashboards and reports across and formats with IT, Finance, Control and
multiple departments, starting with Finance. Deliver rich Business before you start building
analyses with business impact by combining business integrated dashboards.
(customer) data with employee data. Encourage HR ● Challenge your HR business partners to be
business partners to provide research questions, and creative and come up with research
proactively provide the business with advanced analyses questions that address pressing business
based on these. issues.
● Ensure you have the capability to analyze
data and answer these research questions.
STAGE 6
STRATEGY
AND LEADERSHIP
Use feedback from data and analytics to finetune the digital components in the people strategy that seem to work and
impact business success. Allocate significant budget and resources for experimentation and pilot programs that might
bring business impact.
HR
TECHNOLOGY
In the final phase of your digital transformation, it's best
to have your HR technology set up in such a way that a How to improve
continuous feedback loop is created for employee
● Train algorithms with behavioral data to
experience and business impact. Work with IT and
continuously learn from the organization
vendors to achieve this, and continue to finetune your
of people and their actions, preferences
configuration over time. What works now might not be
and other input.
enough in the (near) future. For that reason, also be
● Link these data to business performance
mindful of whether your current solutions are enough,
measures and identify patterns that work
or need to be replaced to achieve your desired results.
in your specific business contexts.
● Set up the frontend of HR technology
solutions in an intuitive way, so that
employees can always query for the best
next action to boost their development,
happiness, and/or effectivity.
STAGE 6 - INNOVATIVE AND ADAPTIVE
INNOVATION
In the final stage of digital transformation, it's time to make HR innovation more than a program or a siloed process: it
should be a continuous process. To achieve, this, stimulate an innovative mindset in every team by creating time and
resources for new approaches and collaboration. Keep everyone focused on the right goal by identifying value-adding
innovation KPIs, and encourage continued innovation by stimulating intrapreneurship.
How to improve
● Carve out extra free roles for people tasked with the continuous delivery of outside-in inspiration,
connection, innovation and ideation. Networking is key as they will gain access to promising startups and
frontrunners in the HR innovation field.
● Identify relevant innovation KPIs that add long-term value to the business. Commercialize your
innovative capacity.
● Stimulate intrapreneurship and tolerate failures (to a certain extent).
STAGE 6 - INNOVATIVE AND ADAPTIVE
HR
PROCESSES
Optimize the employee experience in such a way that
HR processes are practically invisible. Users of digital How to improve
solutions should enjoy their interactions and employees ● Analyze system data and business data to
are happy to share data if they can benefit from it. discover distinguishing patterns and
Analyze data to reveal organizational patterns and profiles in the organization.
profiles. ● Find out how to customize HR processes
in such a way that departments, teams
Customize your HR processes for departments, teams, and individuals receive (slightly)
and individuals. Make sure to continuously measure how customized HR services (e.g. online
tweaks and customization of HR processes impact career coaching works best to develop
business outcomes. What works for one department group A but peer-to-peer coaching works
might not work for another. best to develop group B).
46
STAGE 6 - INNOVATIVE AND ADAPTIVE
PEOPLE
DATA
AND ANALYTICS
Set up architecture and processes in such a way that real-time data analysis is made possible. Ensure your analytical
tools are lean and actionable (design thinking is ideal for this). Create self-service dashboards for all HR employees and
provide quick and actionable custom advanced analytics for more complex people challenges. It's also vital to keep
asking HR business partners and domain experts about what analytical insights they need to add value.
How to improve
● Regularly ask for input from HR business partners and HR domain experts in their needs for analytical
insights to deliver value to the business.
● Use design thinking to make analytical tools as lean and actionable as possible (e.g. signal deviating or
highlighted results from a KPI dashboard instead of a flat list of KPI results).
● The analytics unit should be able to handle multiple projects and initiatives effortlessly and deliver
constant business value.
Sources: