New York – Oct. 10, 2018 – Digital technologies power the evolution of employment practices, but the transformation has not been easy for many human resources departments. According Bain & Company, three-quarters of HR executives and managers say their current technologies have not yet achieved optimal performance, threatening their ability to attract, hire, develop and retain the best talent in their industries, and leaving them at a considerable disadvantage among their competition.

Bain & Company’s latest report, HR’s New Digital Mandate, which includes results from a survey of 500 HR executives and managers in the US, UK and Germany, illuminates where the pitfalls lie and how HR functions can take advantage of digital’s potential.

“In the ongoing battle for top talent, digital technologies play an increasingly prominent role,” said Michael Heric, a partner in Bain & Company’s Performance Improvement practice.  “Digital tools offer new ways for human resources teams to attract great talent, as well as reduce costs.  Business outcomes such as speed, quality and accuracy are also becoming major reasons to invest, but many businesses already lag in their adoption and application of these tools, leaving the door open to competitive threats.”

Survey results reveal that some 87 percent of respondents believe that digital will fundamentally change HR, but 75 percent acknowledge that their IT systems and technology have not yet achieved the business outcomes they desire. The good news is that digital transformation in HR is still in its early stages; however the window of time to catch up may be closing as 57 percent of respondents plan to increase their IT budgets by as much as 10 percent over next two years; one-quarter plan to increase budgets by more than that.

Despite the increased appetite among HR leaders for more digital tools, Heric cautions about HR departments’ ability to absorb them.  Depending on the HR process in question, the research found that 23 percent to 31 percent of HR departments still use manual, Excel-based or paper-based processes as their primary method for delivering different HR services.  Bain & Company anticipates that will change drastically over the next two years: for instance, from 23 percent of HR departments primarily using manual processes in recruiting to 4 percent, and from 31 percent to 7 percent in career management. Some 78 percent of HR departments expect to use machine learning in at least one HR process within two years.

The challenge will be to integrate all of the new technology on top of already disparate tools, many of which are unintegrated, have interfaces that users find difficult to understand or are missing critical functions.

Drawing on the experiences of leading HR teams, combined with insights gleaned from Bain & Company’s research, the report identifies six rules of engagement companies can follow to take the reins of their digital transformation:

1)      Measure success based on business outcomes. Historically, HR used its technology to improve productivity. Today, the role of technology in HR has become more prominent.  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.

2)      Bring rich, consumer-grade experiences to the workplace.  HR’s customers across the lifecycle – from candidate to retiring employee – 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.

3)      Raise the game on analytics. Analytics is proving to be a critical means of informing HR decisions, such as limiting the number of required candidate interviews; creating an onboarding agenda for an employee’s first week of work; and producing an algorithm to review rejected applications that allow companies to hire talent that a traditional screening process would otherwise have missed.

4)      Test and learn. Companies can get a lot of mileage out of technologies even at the experimental stage, such as chatbots that can field notifications from call-center employees who are too sick to come to work to help managers adjust schedules automatically.

5)      Build ecosystems, not islands.  As employees increasingly expect access to best-of-breed content, services, and networks, HR departments are turning to partners outside the organization to staff HR related events and resources.

6)      Fix and simplify processes, data and systems. RPA and machine learning have a broad range of valuable use cases. Often, though, it would be better if companies could simplify and standardize underlying business processes, data and systems, which would reduce the manual work in need of automation through RPA in the first place.

“Human intervention is still critical to HR to assess and motivate people, but the range of use cases for digital continues to grow, and the mandate for HR executives is clear,” said Heric. “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 importantly, improve business outcomes.”

Editor's Note: To arrange an interview, contact Dan Pinkney at dan.pinkney@bain.com or +1 646 562 8102

# # #