Tough budget negotiations are particularly tricky when it comes to HR technology.
While CHROs can see the benefit clearly, the playing field is tilted against such spending because it is perceived as costly to the business, rather than critical to revenue generation and customer satisfaction.
Too often, HR is the poor relation to anything sales- or customer-related, with planned improvements the first to be discarded when money is tight.
Digital transformation for CHROs
The challenge for CHROs, then, is to tell the C-suite a compelling story in which investing in HR technology is much more than improving HR systems or IT software; rather, it is an investment in the future of work and the business.
With standardized data, accessible analytics, clean reporting, and self-service tools, what does daily life look like for CHROs, CFOs, CIOs, or Chief Digital Officers? For the CHRO at least, it transforms HR from a player to one of the main characters driving business value.
This is because there is a strong alignment on a company’s digital journey between how they shape the employee experience internally and how they do business externally. In Mercer’s Global Talent Trends Study, they found those who were further along on their digital journey reported higher scores on change agility, a more compelling and differentiated Employee Value Proposition, and a stronger partnership between the C-suite and HR. In this context, boards of directors are increasingly asking what contribution HR is making to the company’s overall digital transformation.
It also puts a stake in the ground that companies care about their employees’ experiences at work, and this can be expressed in their interactions with their customers. We know this matters to employees, yet less than half said they have the digital tools to do their job and only 43% of workers reported digital interactions with HR.
So, how can CHROs sell their vision of a digital business, a transformation that starts with HR? There are three benefits to focus on:
First, shine the spotlight on the potential cost-savings of a HR system. E.g. X reduces the overall costs of ERP (Enterprise Resource Planning) by allowing companies to rent, rather than own, the technology and its infrastructure. The savings become apparent particularly over the medium- to long-term (three to five years and beyond): with X taking on the burden of innovation and updates, businesses no longer need to pay for costly upgrades and the business disruption that goes with it.
An analysis of business benefits should consider the implications of having a clear overview of the workforce, and the opportunities that creates to optimise resource planning. Self-service tools rebalance effort across the organisation leading to a virtuous circle of savings: with the right tools, managers gain greater visibility on processes – data that continually highlight areas for further improvement. Moreover, there are knock-on benefits of time saved through reduced processing time and access to business process tracking online.
It takes robust data points, both internal and external, and a good sales pitch to justify the expected benefits of a new digitized working environment.
In summary, the financial impact needs to show how:
- Clearer resource planning and reporting leads to more informed decision-making when allocating funds.
- Automated controlled processes lead to manpower efficiency savings.
- System costs become predictable and eliminate the need for major upgrades and reimplementation projects.
- Self-service increases business efficiency and flexibility as units view, control and manage their own activities.
- The IT business unit saves effort and risk related to security access, data backups and recovery.
This brings us to the most compelling reason for digital transformation: released from repetitive tasks, it empowers HR to be more data-driven and more strategic. Thanks to standardised and aggregated data, HR is the guardian of valuable people insights. We know the C-suite yearns for more data in the quest to build people, skills and thus a business fit for the future. Two of the top data requests from executives is ‘When is it best to build, buy, or borrow talent?’ and ‘Which training programmes are most effective?’ We also know that HR struggles today with obstacles to delivering on the vision of predictive analytics. Top of the list of challenges is poorly integrated data systems, which digital transformation helps overcome.
Technology also enables HR to keep pace with changes in the business. Software can be reconfigured easily, and a more agile business process framework enables faster restructuring of divisions during reorganisations, mergers, acquisitions and divestitures, for example.
People expect frictionless, online interfaces in the workplace.
It is hard for people to do their jobs, when part of the job involves wrestling with cumbersome and outdated employee systems and spreadsheets. Instead, empowered by intuitive and personalised self-service tools, employees can concentrate on their job and perform at their best; a more positive experience lowers worker attrition rates. Yet, our results reveal a lag in delivering on these digital expectations, despite them clearly being on the radar.
A digital experience is good for attracting talent, too. Hornbach, a European DIY retailer operating in nine countries, is one example. The company digitised recruitment in order to compete for salespeople. On HR’s side, the cloud platform gave recruitment teams a clear overview of each step in the hiring process, for some 70 positions at a time; while for applicants, the hiring experience was designed to be as easy as online shopping. As a result, Hornbach claims it saw 37% faster recruiting time.
It’s never game over
There is a further stage for HR: making the case for digital transformation doesn’t stop once you get the green light to invest. CHROs need to circle back, assess the impact on talent and the business to repeatedly sell the case anew to executives. Building a workforce – and business – for the future is a game that keeps playing, and it’s one in which HR is a main player.
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