Digital transformation of HR in SMEs
Digital transformation in SMEs is no longer a mere possibility but an unavoidable task for small and medium-sized enterprises that want to remain competitive.
It is not uncommon for smaller companies to have doubts about how to digitise their business correctly. Respecting the previous steps and implementing HR software that optimises and facilitates digitisation are the keys to the success of the process.
The digital transformation of HR in Spanish SMEs
At the start of the 2010s, in the midst of a severe economic crisis, many voices insisted that the digitalisation of businesses was key to their survival. Ten years later, the digital transformation of Spanish companies is still below the European average. According to the 2018 Digital Economy and Society Index prepared by the European Commission, Spain is the tenth country in terms of the degree of digitisation of its business fabric.
The gap is particularly large in the case of smaller companies, since, according to ONTSI's E-Pyme Report, only 30.7% of SMEs have digitised all or part of their business (compared to 51.4% of larger companies).
As a result, companies are exposed to a progressive loss of competitiveness, either due to a lack of response to market demands or to the inefficiency of their processes. The digital transformation of SMEs can no longer be postponed.
HR leaders must be the first to adapt their work systems to the new digital environment and observe how the process is progressing in the rest of the company. A Deloitte Human Capital Trends study summed it up nicely in 2017: leaders transform HR operations while helping employees adapt to their new work environments.
Stages of digital transformation for SMEs
To carry out a successful digital transformation process in any SME, it is essential to build a roadmap that covers all areas of the business and the objectives to be achieved.
1. Identify priorities
The first aspect that SME managers should focus on is the definition of the company's needs and priorities. Remember that digital transformation is not an end in itself, it is a channel to achieve other goals and solve problems or dysfunctions that have been detected in the business model. The company must clearly identify what the business objectives of digitalisation are and set its goals.
The HR department plays a key role here. It has the task of identifying digital gaps in the workforce and bridging these skills gaps with training or external talent. In the case of recruitment, this information will be used to develop more accurate competency-based recruitment and selection processes.
2. Proper organisation of tasks and employees
The fact that a company does not have a large operational structure does not mean that it is free from problems in the planning and organisation of tasks and employee functions. The risk of duplication or difficulty in coordination also affects SMEs.
It is necessary to centralise all organisational aspects, including the allocation of tasks, the timetable of each employee or the responsibilities of each department. In this way, any member of the company can quickly check which tasks are pending and how tasks assigned to other colleagues are progressing.
3. Finding a balance between technology and human capital
One of the most common mistakes when starting a business digitalisation process is to focus all the attention on the technologies to be implemented in the different departments. Of course, it is advisable to choose the most appropriate technological resources for each area of the company's activity.
But this does not mean that the new tools should displace the human factor. A study conducted by Deloitte in SMEs showed that the main barrier they face in the face of digitisation has to do with human capital: insufficient digital skills, lack of experience with tools and little time to learn.
On the contrary, it is people, with their knowledge and experience, who will make digital systems work properly.
As the Deloitte report shows, the pace of the digitalisation process can slow down if both employees and managers do not do their part to familiarise themselves with the new tools as soon as possible. Without people with digital DNA, there is no transformation.
4. Involving the whole company and creating a new corporate culture
In line with the prerequisite of centralising HR management as much as possible, the digital transformation process must involve the entire company from the very first minute. There may be certain strategic areas to which greater attention should be paid in the early stages of this transition.
This should not imply departmental or two-speed digitisation, as this would soon lead to dysfunctions and a loss of competitiveness.
It is also important to convey the message that the digitisation of the business is not just a methodological change or a temporary gamble. The changes introduced affect all areas of business activity and the new working systems are here to stay.
What HR processes can SMEs digitise?
Improve the efficiency of each department
Beyond the specifics of each department, the ultimate goal of a good digital transformation plan is to make them all work more efficiently. It is therefore advisable to focus on those areas where the most dysfunctions have been observed.
In the Human Resources department managed by SMEs, for example, one of the most recurrent problems is poor communication with the workforce. Also recurrent is the waste of time in the management of routine processes such as holiday requests.
2.Keeping better track of the working day
This section will become increasingly important due to the rise of flexible working models and the implementation of work-life balance measures.
Working hours no longer need to be 100% office-based, which poses certain challenges in terms of monitoring compliance with working hours that can be solved by digitising the working day register.
3. Optimise the recruitment process
Recruitment, selection and hiring processes take up a great deal of time and resources, which can cause serious disruption to SMEs. Digitising these procedures significantly reduces the workload of recruiters.
This is achieved by automating candidate search processes, improving communication between the company and applicants, and optimising assessments and reporting.
Remember that the best ATS programmes can work simultaneously with dozens of recruitment sources in order to offer a pre-selection of candidates according to previously defined criteria.
4. Assessing the work environment
In 2019, the job portal Boomerang released a study revealing that 54% of Spanish employees were dissatisfied with their jobs.
A closer look at the report shows that more than 60% of professionals feel that the company does not care enough about them and 66% of those surveyed say they do not feel valued. It is clear that preserving a good working environment is essential for business success, otherwise productivity will soon suffer.
Although contact with employees is more direct in SMEs than in large corporations, there are signs that can go unnoticed, while some workers do not feel comfortable exposing these problems. Digital solutions such as workplace climate surveys help to detect problems before they escalate and affect the bottom line.
5.Digitise to evaluate and incentivise employees
Direct observation of employees is not always the best way to properly assess their performance, not to mention that it is a time-consuming mechanism for HR managers, and the process is not entirely fair to employees, as there is often bias in the assessment process.
Digitising this section means making the evaluation more objective and thus identifying areas for improvement and creating good feedback that allows the employee to grow professionally. The evaluation also serves to implement an incentive plan for the best employees.
6.Encourage career plans
Obtaining objective and constantly updated metrics on employee performance allows the creation of an internal promotion system. A career plan.
Employees know that they can improve their position within the company if they meet the objectives set and, therefore, they are more committed to the firm. Stability is achieved in the workforce and an adequate planning of the positions to be filled. Digital tools make it considerably easier to obtain the necessary data for these plans.
Benefits of digital transformation for SMEs
Throughout the digital transformation process we have seen how SMEs can benefit from the introduction of different technological resources. Increased productivity and competitiveness is the most important variable due to its direct impact on the company's results.
This can be deduced, for example, from the Deloitte report on the "Performance of SMEs in the digital world", which states that 85% of these companies have managed to improve the two aforementioned variables thanks to digital tools.
However, in order to reach such a happy outcome, other aspects of day-to-day business must first be strengthened. For example, providing workers with greater autonomy and flexibility (teleworking) and encouraging and facilitating teamwork.
All the company's departments see their efficiency reinforced and significantly reduce operating costs. Finally, we cannot overlook the improvement in the experience of customers, who find it easier to contact the company, make queries or access contracted services remotely.
Challenges of digital transformation for SMEs
Digital transformation for SMEs has considerable advantages, but to take full advantage of its potential it is important to ensure that the company is successfully overcoming the main challenges it will encounter on the road to digitisation.
The first obstacle has to do with the mindset of all actors in the company. Digital transformation is not only a methodological change, it is a firm commitment to a new organisational paradigm that requires all departments to be involved in the process.
Training is another essential chapter, especially in the early stages of digital transformation. Employees must have the necessary skills to properly manage all systems.
Otherwise, dysfunctionalities will be the order of the day and the transition period will take longer than expected. The digital transformation of SMEs is a long-term investment.
Tools to optimise SME management
While it may be tempting to focus on just a few aspects of the business, the digital transformation plan must necessarily be comprehensive.
This means that it is necessary to consider software for SMEs that responds to the specific needs of the company. Bizneo HR offers three major packages of tools to respond to any SME's needs: talent recruitment, personnel management and time management.
When choosing one or the other option, it is advisable to examine which ones are easier for employees to use and to prioritise the implementation of software for SMEs that optimises all the company's processes.
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Article translated from Spanish