Digitization in human resources – a lot of potential for improvement in Europe

A survey by S.D. Worx, which was conducted in eleven European countries, showed limited progress in digitization in many HR departments.

For the companies involved, this is the situation that makes them uncompetitive. While some countries like the Netherlands, Poland, Spain, Ireland, and the United Kingdom perform slightly better than the rest, less than half of the 3,000 companies surveyed are satisfied with digital HR tools and the level of automation in payroll and HRM. There is a lot of potential for improvement especially in small and medium sized companies (SMEs) with less than 250 employees. You can still make big leaps in digitization.

29 percent of German companies say they have achieved a high degree of digitization in their human resources, and therefore below the European average of 37 percent. A similar percentage reported fairly moderate progress in digitization, and 31 percent of German companies have to go ahead with digitizing their human resources 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 no longer necessary for them thanks to automation. But not all entrepreneurs and HR professionals are actually involved. The online survey, conducted on behalf of SD Worx in June 2020, showed significant differences between European countries and between small and large companies.

When asked about the degree of automation, it appears that Polish, Spanish, Dutch, Irish and Italian companies have made the best progress in digitization. Germany is lagging behind here. This is especially the case when it comes to payroll, human resource management, or HR analysis.

Only in the field of HR tools for submitting vacation days or requests for training courses places Germany in the middle field. Although other countries are leaders in digital human resource management, the number of dissatisfied companies there is still very high: between 30 and 50 percent. In Germany, on the other hand, the degree of automation is much lower – as confirmed by 57 percent of those surveyed who are dissatisfied with the degree of digitization in their work environment.

A true competitive advantage

The most digitally advanced companies in human resources are those with more than 250 employees. For example, nearly half of these companies rated their degree of automation in terms of payroll accounting as high or very high. Among companies with fewer than 100 employees, only fewer than 30 percent notice a similar development in their company.

Additionally, the majority of SMEs are dissatisfied with the advancement of digital transformation in human resources, and it has become evident 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. Investing in digital human resources can be an effective way for these companies to gain a competitive advantage in recruiting and retaining talent over the long term.

Difficult Budgeting

One of the biggest challenges entrepreneurs and HR professionals will face will be implementing stable and seamlessly integrating tools as well as tailored digital solutions to simplify the way they work. But this is not the only challenge that companies face. For successful digital human resource management, the areas of benefits administration, personnel administration, outsourcing, and employee experience must also be improved, managed, and embedded. This makes the work environment more exciting and demanding and the companies more competitive. With the right HR tools, nothing stands in the way of this future vision.