Digital
technologies have become essential INDUSTRY for HR to engage top talent and add value to
the business.

· No facet of HR remains untouched by digital technologies, and the
potential is just emerging. Applications range from machine learning predicting
who will resign to chat bots handling out-sick notices.
· Yet the digital transformation has not been easy. In a new
survey, three-quarters of HR executives and managers say their current
technologies have not yet achieved optimal performance.
· Beyond the substantial cost savings digital can yield, respondents
cite business outcomes such as speed, quality and accuracy as the primary
reasons to invest.
· While adopting new technologies, companies should still focus on
simplifying and standardizing processes, data and systems.
In the ongoing battle for top talent, digital
technologies play an increasingly prominent role. Seismic changes in the
workforce and workplace, driven by demographics, alternative work arrangements
and various distance-busting technologies, are rewriting the rules of
engagement. While digital tools accelerate that shift, they also offer new ways
for human resources teams to attract great talent, then motivate and equip
them.
Employment practices are evolving every which way:
from compensation and benefits to total rewards, from managing the employee
population to managing a workforce ecosystem, from lifelong jobs to a career
based on continuous learning, from annual performance reviews to continuous
feedback, from individual achievement to team collaboration, and from personnel
administration to workforce engagement.
Digital technologies form the engine of this
transformation. Those HR departments that master the deployment of technology
will create a distinct and lasting competitive advantage in the hunt for talent
in their industries. Bain & Company’s new survey of 500 HR executives and
managers in the US, UK and Germany illuminates how to take advantage of
digital’s potential and where the pitfalls lie.
HR departments that find themselves falling behind can
take solace in the fact that the digital transformation is still in early stages,
so they can still catch up. Some 87% of respondents believe that digital will
fundamentally change HR, but 75% acknowledge that their IT systems and
technology have not yet achieved optimal performance or the business outcomes
they desire. The window of time may be closing, however, as 57% of respondents
plan to increase their IT budgets by 1% to 10% over the next two years, and 25%
plan to increase budgets by more than 10%
Figure 1
HR leaders are investing to close the gaps in their digital systems
Practical applications abound
Artificial intelligence (AI), in all its forms from robotic process automation (RPA) to machine learning to natural language processing (NLP), has already demonstrated promising results. For example, machine learning can be up to 17 times more accurate than other methods at predicting who will resign. AI-based candidate screening in talent acquisition can improve hiring accuracy and, at Unilever, cut the time to hire by 75%. Recruiters at Johnson & Johnson, Atlassian, Twitter and other companies are using NLP to improve the quality of their job listings to devise a more inclusive workplace. And the Bain survey finds that roughly half of companies are now using or piloting RPA in at least one HR process, with adoption expected to reach 74% within two years.
Figure 2

Artificial intelligence applications such as these are
proliferating in HR
Figure 3
HR departments plan a major shift from manual to digital processes
Figure 4
Most HR departments plan to adopt AI by 2020
Points of aggravation
That’s a hugely ambitious program. HR executives may
be overconfident in how quickly they can make the shift, given how rocky the
road has been so far in most HR departments. Which issues have caused the most
aggravation? Respondents cite too many digital tools, especially unintegrated
tools; interfaces that users find difficult to understand; and tools that are
missing critical functions (see Figure 5) . Now, combine those problems with
the most commonly cited reasons for increasing IT spending: replacing older
systems, upgrading existing HR management systems (HRMS) and adding new
functionality from current vendors (see Figure 6). In fact, a significant share
of HR leaders are planning to buy more technology through HRMS suites rather
than through third-party standalone tools or custom, in-house tools (see Figure
7). Not only do these responses signal big expectations of HRMS vendors, they
suggest that HR departments could face even more complexity as they adopt new
applications, unless they make a concerted effort to integrate
functionality into their existing HRMS. The challenge will be to integrate all
of the new technology on top of already disparate tools.
Figure 5
HR departments most often struggle with unintegrated tools and
data sources, lack of functionality and a poor user experience
Figure 6
Most companies plan to invest primarily in replacing older systems
and upgrading their HR management systems
Figure 7
HR departments plan to buy more technology through HRMS suites and
move away from custom, in-house tools
Leading HR teams have found ways to navigate these
challenges. Their experiences, combined with insights gleaned from our survey,
suggest how companies can take the reins of their digital transformation,
rather than be overwhelmed by it.
Measure
success based on business outcomes. Historically, HR used its technology to improve the
productivity of HR processes. Today, the role of technology in HR has become
more prominent. Companies turn to technology for reasons far beyond cost
savings. In fact, for areas other than payroll and recruiting, reducing
process-level costs is a much lower priority than broader business outcomes
such as speed, accuracy and quality (see Figure 8).
Figure 8

HR is turning to digital for reasons beyond cost savings
Bring
rich, consumer-grade experiences to the workplace. HR’s customers across the lifecycle—including
candidate, new joiner, retiring employee, manager and contractor—increasingly
expect an experience as easy, convenient and personalized as they encounter
with the best retailers or service providers. Leading companies are using
digital technologies to meet these expectations
Raise the
game on analytics. Analytics is proving to be a critical means of
informing HR decisions. Google fields a dedicated People Analytics team to
improve decision making in HR. People Analytics has helped Google on numerous
HR issues, such as how to contain the number of required candidate interviews;
what the best size and shape of a given department should be; how to reduce
defections after maternity leave; and how to spot hidden gold in the millions
of engineer candidate applications.
Test and
learn.
Companies can get a lot of mileage out of technologies even at the experimental
stage. Take chatbots, for instance. Online retailer Overstock relies on a bot
named Mila to field notifications from call-center employees who are too sick
to come to work. Mila passes on the information to managers and adjusts
schedules automatically. This system replaced an outdated call-in hotline,
saving Overstock time and money on lengthy phone conversations. The Marriott
hotel chain deploys MC, a chatbot for initial interactions with job candidates
over Facebook Messenger. MC responds to typical questions, matches candidates’
interests with open positions and educates on company’s culture and values.
Marriott reported that more than 60% of candidates who interact with MC return
later to initiate new conversations. While limited in functionality today,
chatbots could become a viable way to communicate in many situations.
Build
ecosystems, not islands.
As employees increasingly expect access to best-of-breed content, services and
networks, HR departments no longer can staff all activities themselves.
Instead, they are turning to partners outside the organization. Mastercard
partnered with Degreed to create a learning platform for employees to discover,
curate, share and track internal and external resources on thousands of topics
in a variety of formats.
Fix and
simplify processes, data and systems.
RPA and machine learning have a broad range of valuable applications. Often,
though, it would be better if companies could simplify and standardize
underlying business processes, data and systems. Take offer letter
administration. RPA can conveniently draft offer letters for new employees that
are tailored, accurate and compliant, by automating manual checking of data
across diverse databases and regulations. However, some companies write offer
letters in such a way as to create more questions than they answer, and there
may be too many versions of the letter. Redesigning the offer letter template
and moving to fewer versions, or to a single one, would reduce the manual work
in need of automation through RPA in the first place.
Similarly, machine learning can screen resumes from a
large applicant pool in less time and with more accuracy than manual resume
screening by human recruiters. However, a machine-learning algorithm works only
as well as the quality of the data. First, machine learning needs a large
volume of data to learn how to screen resumes as accurately as a human
recruiter. Second, since machine learning finds patterns in past behavior, any
human bias in the current recruiting process will need to be uncovered and
removed when constructing an algorithm. Without addressing data governance and
quality, algorithms have limited value.
While artificial intelligence can provide new
capabilities that traditional technologies cannot, these new technologies do
not eliminate the need to address the root causes of inefficiencies. In some
cases, such as with machine learning, the technology might not even function
unless these root causes are addressed.
For HR leaders committed to getting more selective in
their digital investments, and doubling down on those that hold the greatest
potential, it’s useful to answer several key questions.
Do we understand exactly where our digital strengths
and gaps lie? Based on that understanding, do we have a clear and compelling
digital blueprint, supported by competitive investment levels?
· How will we ensure that digital initiatives create a
better experience? For example, in onboarding, how can technology improve the
experience of new joiners and hiring managers?
· How will we deliver broader business value, such as
reducing time to acquire talent, in order to avoid disappointment?
· Should we consider adopting a cloud-first policy
across HR technologies?
· How will we contain the sprawl of applications that
could result from trying all the new tools available?
· Which organizational capabilities do we need to shore
up to achieve our digital goals?
To be sure, a chatbot or algorithm cannot address all
HR issues. Human judgment remains valuable for assessing and motivating people.
But the range of applications for digital continues to grow, and the mandate
for HR executives is clear: They have an opportunity to create a portfolio of
digital bets that will transform the workforce experience, make better talent
decisions through analytics, automate processes, free up time for higher value
activities, reduce costs and, most important, improve business outcomes.
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