Brief

Human Resources 4.0: Digitalization sweeping aside analog HR management

Human Resources 4.0 is the key to the successful digitalization of companies.

By Dr. Jörg Gnamm, Dr. Gunther Schwarz and Dr. Melanie Oschlies

First published on janeiro 10, 2019
min read


Executive Summary Human Resources 4.0 is the key to the successful digitalization of companies Digitalization of human resources can boost efficiency by 20 to 30 percent At the same time it can enhance employee satisfaction and an employer’s attractiveness. The digital future in human resources started long ago. Algorithms can evaluate application documents and video interviews, software tools are able to adapt training modules to individual needs or update complex shift plans within seconds. Yet these possibilities are still not being actively applied. The truth is that traditional manual processes still predominate in many HR departments. In other words, Human Resources 1.0 instead of 4.0. In recent years, digitalization has rarely focused on administration and, by extension, on human resources. Companies across all industries were primarily concerned with deploying digital technologies in the near-customer areas and with upgrading IT - in both cases an enormous undertaking in itself. However, the realization is increasingly dawning that digitalization can only be successful in the long run if it also encompasses the back office area - above all the HR department. Significant boost to HR efficiency Moreover, the systematic use of artificial intelligence, machine learning or advanced analytics has a positive impact on profitability. Bain's experience shows that HR efficiency can be raised by 20 to 30 percent on the basis of simplified and automated processes and improved decision-making. The potentials that can be unlocked here are revealed in a comparison of the number of employees per HR employee between German companies and US high-tech corporations. The big Silicon Valley players actually have one single human resources manager looking after more than twice as many employees. Yet these companies still have a good reputation as employer. More than that: the applicants being sought by them appreciate the simple and fast digital processes.

Executive Summary

Human Resources 4.0 is the key to the successful digitalization of companies
Digitalization of human resources can boost efficiency by 20 to 30 percent
At the same time it can enhance employee satisfaction and an employer’s attractiveness.

The digital future in human resources started long ago. Algorithms can evaluate application documents and video interviews, software tools are able to adapt training modules to individual needs or update complex shift plans within seconds. Yet these possibilities are still not being actively applied. The truth is that traditional manual processes still predominate in many HR departments.

In other words, Human Resources 1.0 instead of 4.0. In recent years, digitalization has rarely focused on administration and, by extension, on human resources. Companies across all industries were primarily concerned with deploying digital technologies in the near-customer areas and with upgrading IT - in both cases an enormous undertaking in itself. However, the realization is increasingly dawning that digitalization can only be successful in the long run if it also encompasses the back office area - above all the HR department.

Significant boost to HR efficiency

Moreover, the systematic use of artificial intelligence, machine learning or advanced analytics has a positive impact on profitability. Bain's experience shows that HR efficiency can be raised by 20 to 30 percent on the basis of simplified and automated processes and improved decision-making. The potentials that can be unlocked here are revealed in a comparison of the number of employees per HR employee between German companies and US high-tech corporations. The big Silicon Valley players actually have one single human resources manager looking after more than twice as many employees. Yet these companies still have a good reputation as employer. More than that: the applicants being sought by them appreciate the simple and fast digital processes.