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 companies that want to remain competitive.
It is common for smaller companies to have doubts about how to properly digitize their business. Respecting the previous steps and implementing HR software that optimizes and facilitates digitization are the keys to the success of the process.
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 digitalization 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 digitization of its business fabric.
The gap is particularly large in the case of smaller companies, since, according to ONTSI's E-Pyme Report, barely 30.7% of SMEs have digitized 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 system to the new digital environment and thus observe how the process advances 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 in the digital transformation of SMEs
To carry out a successful digital transformation process in any SME, it is essential to build a roadmap that includes all areas of the business, as well as 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 digitization are and set its goals.
The Human Resources department plays a key role here. It has the task of identifying digital gaps in the workforce and bridging this skills gap with training or external talent. In the case of recruitment, this information will serve to develop more accurate competency-based recruitment and selection processes.
2. Proper organization 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 organization of tasks and employee functions. The risk of duplication or the difficulty of coordination also affects SMEs.
It becomes necessary to centralize all organizational aspects, including the assignment of tasks, the schedule 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 launching a business digitalization process is to put 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 digitization has to do with human capital: insufficient digital skills, lack of experience with tools and little time to learn.
On the contrary, people, with their knowledge and experience, are the ones who will make digital systems work properly.
As the Deloitte report shows, the pace of the digitalization process can slow down if both employees and managers do not do their part to familiarize themselves with the new tools as soon as possible. Without people with digital DNA, there is no transformation.
4. Involve the entire company and create a new corporate culture.
In line with the prerequisite of centralizing 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 is paid in the early stages of this transition.
This should not imply a two-speed or departmental digitization, as dysfunctions would soon appear and the company would lose competitiveness.
It is also important to convey the message that the digitization of the business is not merely a methodological change or a temporary commitment. The changes introduced affect all areas of business activity and the new work systems are here to stay.
What HR processes can SMEs digitize?
Improve the efficiency of each department
Beyond the specificities 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 recurring problems is poor communication with the workforce. Also recurrent is the loss of time in the management of routine processes such as vacation requests.
2. Keeping better track of the working day
This section will become increasingly important due to the rise of flexible work models and the implementation of work-life balance measures.
Working hours no longer have to be 100% in the office, which poses certain challenges for monitoring compliance with the planned schedule that can be solved by digitizing the working day register.
Optimize the recruitment process
Recruitment, selection and hiring processes take up a great deal of time and resources, which can cause serious disruption to SMEs. Digitizing these procedures significantly reduces the workload of recruiters.
This is achieved by automating candidate search processes, improving communication between the company and applicants, and optimizing assessments and their corresponding reports.
Remember that the best ATS programs can work simultaneously with dozens of recruitment sources in order to offer a pre-selection of candidates according to previously defined criteria.
4. Assess the work environment
In 2019, the job portal Boomerang disseminated 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 the success of the business, 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 work climate surveys help detect problems before they escalate and affect the bottom line.
5.Digitize to evaluate and incentivize workers.
Direct observation of employees is not always the best way to properly evaluate their performance, not to mention the fact that this mechanism takes up a lot of HR managers' time.
Digitizing 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 enables 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 expected objectives and are therefore 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 much 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. The increase in 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 greater autonomy and flexibility to workers (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, ask questions or remotely access contracted services.
Challenges of digital transformation for SMEs
The digital transformation of SMEs has considerable advantages, but to take full advantage of its possibilities it is important to ensure that the company is successfully overcoming the main challenges it will encounter on the road to digitization.
The first obstacle has to do with the mindset of all the players in the company. Digital transformation is not just a methodological change; it is a firm commitment to a new organizational 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 the SME is a long-term investment.
Tools to optimize SME management
Although 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 meet the needs of SMEs: talent recruitment, personnel management and time management.
When opting for one or another option, it is advisable to examine which ones are easier for employees to use and to prioritize the implementation of a software for SMEs that optimizes all the company's processes.
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Article translated from Spanish