Creating a balanced digital HR strategy requires HR functions to effectively manage both the ‘what’ and the ‘how’ of their digital agenda. In this bitesized learning video taken from our newest learning pathway ‘An Introduction to Digital HR’ aimed at helping you build the technical skills and knowledge required to create a successful digital HR strategy for your organisation, Volker Jacobs outlines the three key pillars HR should be considering when building a digital HR strategy.

Companies are struggling to build a digital strategy and roadmap for their HR function. But is it a good idea to implement one at all? The answer is: yes, absolutely. We are in the midst of the 4th industrial revolution, the world of work is changing faster than ever before, it is a revolution that was anticipated by science fiction authors before economists and business leaders even became aware of it.

HR is often left out when digital strategies are discussed at an executive level, primarily because it is perceived as a digital latecomer, with a reputation of being ineffective at managing data. A digital HR strategy provides the opportunity for HR to shape the future of work for their business and have a clear view on how jobs will evolve. A roadmap sets course and speed for the HR function and for people priorities within the company. Companies with a distinct HR Digital roadmap create a foundation to not only cope with these changes but to influence them to gain competitive advantage.

The Conventional Way: Digital HR = HR Technology Roadmap

Of course, a digital world does not only require change from people and businesses. It also comes with new technology enhancing the activities and effects of an HR function. Technology being put into the hands of end-users, new digital listening techniques, interpreting vast amounts of social media information to better understand and even predict the wants, needs, and capabilities of people. This opportunity is mirrored by an evolving HR technology market. Gartner sees cloud-based HRIS on the ‘slope of enlightenment’, with Workday, SAP, and Oracle as market leaders, and mainstream adoption happening as we speak. The market is growing by 12% per year. From our research we know that the average Fortune 500 company spends $10M USD per annum on new, cloud-based HRIS. Obviously, the standard approach to the digital age in HR is a heavy investment in technology that helps to ‘do what HR does, but in a digital way’. This approach often leaves HR teams very busy – and often unnerved by the major efforts, in some cases two years of labour, it takes to implement the new technology.

The Better Way: Digital HR = Business Value in the New World of Work

Is there a better, more promising alternative to just trotting down the same alley as before, ‘doing what HR does, but in a digital way’? Yes, but HR has to identify the right levers that it can pull to generate business value in a digital world. TI People’s research studied this question and found that HR should set three new priorities:

1. Actively manage the customer’s experience of the function

   The ‘Customer Experience’ of HR (CxHR) is a decisively better way of measuring and managing an effective HR function. While digitalisation provides HR with the means and the responsibility to treat each employee individually, to get customer experience right, HR must begin thinking about employee experience in a more strategic way. It should be a cornerstone of your HR strategy. As Frank van den Brink explains “The overall purpose should be to design and engineer a high value, integrated and relevant experience for all your employees”. Ultimately HR is required to define HR processes fast and in a user-centric way; from the perspective of the customer.

2. Develop the organisation from job-based to skill-based

   HR has a huge opportunity to deliver real business value by reconstructing the way jobs are crafted, moving from job-based to skill-based jobs. As John Boudreau explains to David Green in an episode of the Digital HR Leaders podcast automation makes traditional jobs somewhat more flexible, meaning that a lot more ‘work’ will take place outside of the traditional constructs of a job. In order to design jobs based on the skills employees possess requires the technology to be able to detect the current skills of employees as well as the ability to predict future skill demands. Additionally, they require a new type of leadership culture, one in which trust, indirect management and continuous feedback are fostered and become the norm.

3. Provide workforce analytics insights

   People analytics or workforce analytics, is the third pillar supporting the creation of a solid digital strategy. With the right insight, leaders will be empowered to make better people decisions and talent outcomes. To be successful they require a comprehensive definition of analytics, consisting of descriptive analytics predictive analytics and a modern, less cumbersome and more skill-focused version of workforce planning. 

In order to really drive value for the business, HR teams should focus on these three levers and not allow ‘the new HRIT system’ to dominate their digital agenda. HR teams should not only change the WHAT of the digital agenda but also build new HR capabilities to operate in this new environment – and in that way shape the HOW. When executing these ‘What’-priorities, companies often face a disconnect between their own HR capabilities and the requirements to execute against the HR strategic plan. Bridging this gap and developing these capabilities is the ‘How’ and is outlined in more detail in this article.

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ABOUT THE AUTHOR

Volker Jacobs is the CEO and founder of TI People and an Executive Director and co-founder of Insight222 Limited. Volker holds degrees in economics and information sciences, has worked for U.S. and European consulting companies and started his own HR management consulting business that he sold to CEB. At CEB, Volker held a senior management position with a global responsibility for HR consulting and HR technology before co-founding TI People.