Do you really know and understand your workforce and can your organization proactively use Human Resources (HR) data to make fact-based decisions? For example:
If the answer is “no” to some or all of these questions then your organization is most likely experiencing similar issues as many others.
HR is lagging in the digital transformation
Employees are digital in their personal lives, using and engaging in social media, making purchases and paying their bills online. There is a major unlocked potential in the employees’ digital interest and knowledge that organizations ought to capture.
From a functional perspective, HR is lagging behind. In the Nordic countries, it is often easier to make your tax declaration online than to register your time report at work. What if your organization could provide an application for your smart phone with just one sick leave button that triggers all the need-to-know information for time reports, scheduling, salary and management? Well-designed HR processes should provide instant value and be so simple that all employees can take the right action from start and thereby saving a lot of frustration and valuable time.
Many organizations are still struggling with old legacy HR and payroll systems by a range of different system providers. Employee master data is also often stored in transactional salary systems with very limited data models – making it impossible to support and align all HR processes throughout the “annual HR cycle” and throughout the employee lifecycle. It is also common for international organizations to have country specific master data – so in reality, there is no real master data.
There is no “right approach” when it comes to HR IT strategy. Organizations that use consolidated cloud based Talent Management Suits (TMS) with a state of the art master data module, however, experience higher HR efficiency and business value as well as lower total cost of ownership compared with industry peers without such infrastructure. Local, country specific payroll systems will still be needed to be compliant with national laws but should as a ground rule not include master data.
Describing an organizations’ Human Resources digital maturity in three phases
1. Operational HR efficiency: The first phase can best be described as fully integrated and streamlined internal HR processes supported by digital tools or IT systems that provide high value and make every day easier for the employees.
It is oftentimes the performance management process that triggers other processes such as learning & development, compensation & benefits or positioning management. Together with well-designed master data, organizations can benefit from valuable output from data-driven HR to respond to the current and future needs, dealing with e.g. competence management, recruitment, workforce planning, onboarding, succession planning, transition and more core HR processes, delivering high HR efficiency and business value.
Organizations often struggle to establish a clear relation between pay and performance. In reality, it is common for middle managers to simply divide the salary increase pot among their team based on excel sheet calculations. They do not dispose a clear and consistent overview of team and employee data including e.g. competences, performance rating, internal/external benchmark and employee history. This work is time consuming and does not provide the expected quality by far, and consequently results in overpayment.
What if your organizations could guarantee that your “top performers” and “performers” got accurate pay for performance while reducing or eliminating overpayment to your “solid citizens?” i.e. approximately 80% of organizations workforce.
For an organization with 150 M€ in annual salary cost, a salary increase of 2% equals 3 M€ in salary increase. Avoided overpayment with 10% represents 300.000 € in HR efficiency effect. Salary is cumulative so over time this sums up to a considerable amount.
HR is commonly measured on this HR efficiency effect, however even more important to consider is the attributed business value, which for the given example would refer to strengthened pay for performance, improved talent acquisition, retention and employee engagement.
2. HR omnichannel: We spend more and more time online, we increase our expectations from current and future employers, we do thorough research before making our next career move and we share our experiences with others on social media. HR omnichannel refers to new ways of interacting and engaging with current and future workforce, creating a seamless experience throughout the entire workforce lifecycle through a number of different touch points.
An HR omnichannel strategy aims at increased loyalty, better usability and more frequent communication with relevant workforce to achieve e.g. more successful recruitments, a strengthened employer brand and demand driven segmentation. Indepth understanding of what the workforce needs as well as where, how and when they need it key so that specific solutions then can be provided.
In todays’ competitive marketplace where talent and experience is a scarce resource a strategic HR omnichannel approach is an important competitive advantage.
3. HR digital ecosystem management platform: A vast majority of businesses are still linear in their operating models and operates in their value chain with more or less horizontal and vertical integration. However, looking at the world’s top brands, today’s and future leader are using and/or managing a digital ecosystem. They have understood the value of using digital platforms for business innovation and understands how to harness the most value together with other platform tenants; weather they are suppliers, business-to-business customers, partners, third parties or end clients. The players that will manage to orchestrate and monetize on such HR Digital Ecosystems (HR DEM) will heavily challenge traditional recruiting, and leverage on sourcing human capital.
BearingPoint help organizations develop and realize their digital HR roadmaps. Everything from strategy, competency frameworks, master data models, vendor selection, implementation and omnichannel strategy to program and change management and continuous support throughout the transformation journey.
Digitalization and connectivity have changed our lives and opened up new opportunities in the HR field. Wherever your organization may be on your digital HR journey today, the increased competitive talent environment justify making HR strategy and HR IT central to every organizations strategic priorities. BearingPoint’s experience in HR, IT and transformation can help your organization solve its most important shortcomings, creating competitive advantages and ultimately help your organization win your talent battle.