Digitization in HR - A lot of optimization potential in Europe

For the companies concerned, this is a state of affairs that makes them uncompetitive. While some countries such as the Netherlands, Poland, Spain, Ireland and the United Kingdom fare slightly better than the rest, less than half of the 3,000 companies surveyed are satisfied with their digital HR tools and the level of automation in their payroll and HR administration. There is a lot of potential for optimization, especially among small and medium-sized enterprises (SMEs) with fewer than 250 employees. They can still make great leaps in digitization.

29 percent of German companies report having achieved a high level of digitization in HR, behind the European average of 37 percent. A similar proportion report rather moderate progress in digitization, and 31 percent of German companies need to drive digitization in their HR or even start it in the first place compared to 27 percent in other European countries.

The digital revolution gives HR departments the opportunity to focus more on strategic values, as many administrative and repetitive tasks are eliminated for them thanks to automation. But not all business owners and HR professionals are already on board. The online survey, conducted in June 2020 on behalf of SD Worx, reveals significant differences between European countries and between smaller and larger companies.

When asked about their level of automation, Polish, Spanish, Dutch, Irish and Italian companies appear to have made the best progress in digitization. Germany is lagging behind in this respect. This is particularly the case when it comes to payroll and HR administration or HR analysis.

Only in the area of HR tools for submitting vacation days or requesting training does Germany rank in the middle. Although the other countries are leading the way in digital HR management, the number of dissatisfied companies there is still quite high: between 30 and 50 percent. In Germany, on the other hand, the level of automation is much lower - this is underlined by 57 percent of respondents who are dissatisfied with the level of digitization in their working environment.

Real competitive advantage

The most digitally advanced companies in HR are organizations with more than 250 employees. For example, almost half of these companies rate their level of automation in relation to their payroll as high or very high. Of companies with fewer than 100 employees, however, only less than 30 percent observe a similar development in their company.

In addition, the majority of SMEs are dissatisfied with their progress in digitization in HR and it was revealed that many of them still have a long way to go. When repetitive administrative tasks are eliminated, HR teams have more time for strategic tasks. Then, investing in digital HR can be an effective way for these companies to gain a competitive advantage in recruiting and retaining talent over the long term.

Difficult balancing act

One of the biggest challenges for business owners and HR professionals will be to implement robust tools that integrate smoothly, as well as tailored digital solutions to simplify their own way of working. But that is far from the only challenge facing companies. Because for successful digital HR management, it is also necessary to optimize, manage and incorporate the areas of benefits management, personnel management, outsourcing and employee experience. This will make the work environment more exciting, challenging and companies more competitive. With the right HR tools, nothing stands in the way of this vision of the future.