Executives Still Slow to See Value of Digital HR

Young Executive

While analysts, vendors and an increasing number of enterprise-level HR executives extol the impact technology-powered workforce management can have on business results, most corporate leaders don’t seem to be getting the message.

One result: the transformation to “digital HR” isn’t proceeding as rapidly as many would believe. While most HR departments have begun to adopt and meld new technology, most haven’t achieved the goal of becoming fully or primarily digital, according to The Digital HR Function, a study by HR.com’s Research Institute. Less than half of the practitioners surveyed—40 percent—said their departments were almost entirely digital (7 percent) or take a digital approach to “many things” (33 percent).

While analysts, vendors and more #HR executives extol the potential impact of digital HR, corporate leaders don’t seem to be getting the message. #HRTribe #HRTech @hrdotcom Click To Tweet

One drag on their progress may be the stubbornly held view that HR’s function is primarily administrative. Seventy percent of those surveyed said their department focused on administrative tasks. Just 30 percent said their role was strategic.

The results “clearly point to the need for leadership to support HR in striving for digital maturity,” said HR.com CEO Debbie McGrath. “Without digitization and the strategic decision-making within HR processes, organizations are not achieving their optimal performance and success.”

Digital HR Must Be Sold

Undoubtedly, contributing to this is the fact that evidence of technology’s impact isn’t reaching company leadership. However, it’s not clear why. Although some 60 percent of respondents said HR provides executives with detailed information—the kind that leads to “excellent” business decisions—only 38 percent measure key aspects of their work. Just 32 percent have technology that provides key HR metrics in the first place, and only 19 percent use predictive analytics.

Leadership’s priorities seem to play a role here. While 51 percent of respondents said their executives are “very” focused on productivity, only 22 percent believe they’re paying the same attention to workforce planning while 25 percent see them focusing on employee development. Meanwhile, less than half—45 percent—believe their organizations promote cultures of innovation and change.

With that in mind, it worth noting where HCM technology dollars being spent. According to the report, 88 percent of HR departments have a payroll system and 67 percent have an HRIS/HCMS, but only 45 percent have a performance management system and 21 percent have a rewards and recognition system.

Digital HR Chart
Chart: HR.com Research Institute

The report speculates that executives may not ask for HCM data besides basics such a new-hire count, turnover rates and compensation levels. If that’s true, it said, “then we view it as a huge lost opportunity for today’s executive leaders.”

That’s hard to argue with. However, we’ll add that the report provides evidence that HR itself hasn’t found a strategy for convincing the C-suite that the workforce becomes more valuable when it’s treated strategically. And we have to wonder if HR is wearing blinders here: Remember, 60 percent of respondents believe they provide executives with “excellent” metrics. However, only 38 percent have systems that measure key aspects of HCM. That implies a significant number of HR departments think they’re providing better metrics than they ares.

You can download a copy of the report here.

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Image: iStock