HR software as a driver of digitalisation in SMEs: Is it still a missed opportunity?

Digitalisation has long been a part of our lives – or at least it should be. Not least, the COVID-19 pandemic has shown how much digital backlog there is in many companies. Many work processes are still carried out manually. But the economic potential of digital efficiency gains should convince executives and managers. HR software plays a crucial role in this.

Unlike many other software solutions, HR software affects the entire company, not just individual departments. Digital HR tools are therefore predestined to trigger a major structural change towards digitalisation, which will have an impact on corporate culture. Read on to find out why the potential of HR software is often overlooked and what decision-makers can do about it.

Kick-starting digitalisation: the potential of HR software

New technology almost always brings change. HR software is no different. Especially in small and medium-sized companies, HR departments still use Excel spreadsheets to keep track of employee numbers, holidays and sick days. As a result, different data is recorded in different spreadsheets instead of being available in one place. This not only complicates the work process, but also makes it difficult to analyse this data to generate KPIs for management. In addition, many HR departments are still dealing with mountains of paper, such as filing cabinets full of personnel files.

For all these tasks, software solutions are now available that can make the work of HR staff more efficient and save the company money. At first glance, it may seem that HR professionals and managers benefit from the introduction of HR software, but it is the employees who are driving the structural change in the company and thus changing the corporate culture.

Driving digital structural change

Digital HR tools offer many benefits to a company’s employees, whether it is the simple recording of working hours with the click of a mouse or the convenient use of an app for home office days. The positive experience of how digital solutions make everyday work easier leads many employees to want to use them in their direct working environment. HR software is therefore the ideal basis for increasing acceptance of internal digitalisation and boosting motivation. This is where digital transformation comes in.

Changing corporate culture

Digitalisation is more than just a technical process. The use of software solutions fundamentally changes the way employees collaborate and communicate. In this way, structural change leads to a corporate culture that leaves manual processes behind and consistently focuses on a digital and efficient way of working.

HR software as a driver of widespread digitalisation

The impact of HR software on the world of work can be illustrated by the example of digital leave management. In many companies, it is still customary for employees to apply for holiday in writing to their manager. This means that the leave request is filled out, discussed with the manager and then forwarded to the HR department. In HR software, on the other hand, the employee applies for leave with one click. His or her manager is automatically notified and also decides on the request with a single click. The days off are then correctly recorded in the system, as is the remaining leave.

The process is as streamlined as the communication involved. As digital processes like this become more widespread, the entire company will benefit from more efficient processes. HR can play a pioneering role internally and initiate the necessary structural change – if it is allowed to do so.

As the Corona pandemic has shown: HR is significantly under-digitised

The COVID-19 outbreak has shown that HR departments in particular have a lot of digital catching up to do. This is all the more serious as HR staff generally enabled their colleagues to work under pandemic conditions, for example by setting up home offices. On the other hand, HR staff also worked in the office during the crisis, as personnel files were only available in paper form and were not allowed to leave the office for data protection reasons. This shows that HR departments, of all people, are lagging behind digital developments rather than fulfilling their role as drivers of widespread digitalisation in the business. But why is this?

What HR can do – if it is allowed to

According to an article in Manager Magazine, leadership and HR are among the most important strategic tasks in a company. Although the article, entitled ‘HR – the second most important job in a company’, is somewhat dated, it seems that this insight has not yet reached many C-suites. Although the pervasive skills shortage is forcing companies to compete for the best talent, most managers still see HR primarily as the administration and organisation of personnel matters. On the face of it, HR does not generate direct revenue. So why invest in digital tools?

If you believe that people are your most valuable asset, the benefits of digital HR are clear: efficient processes enable HR professionals to support management on strategic issues. Only when HR is given this new status in the organisation can it unlock its potential and act as a driver for widespread digitalisation across the business. So HR needs to be rethought – digitally.