This guide is part of a progression set of Core, Advanced, and Emerging Digital Transformation practices for the HR function.

What it is

Digital transformation integrates digital tools, technology, and culture into all aspects of a business, fundamentally altering how an organization operates and delivers value to customers. It's a cultural shift that requires companies to continually challenge the status quo, experiment, innovate, and get comfortable with failure. It systematically reviews existing processes and systems to identify improvement areas and make changes to achieve the company’s goals. This often means abandoning existing ways of working.

Digital transformation is a strategic imperative for organizations seeking to remain competitive and relevant. This transformative journey involves integrating digital technologies into all facets of an organization, revolutionizing its operations, and enhancing its ability to deliver value. Understanding the multifaceted value proposition of digital transformation is essential for organizations aiming to thrive in today's digital age.

At the heart of digital transformation lies the promise of operational efficiency and a host of benefits across other business functions. It empowers finance departments to streamline processes and enhance decision-making capabilities. In information technology (IT), digital transformation revolutionizes how organizations manage their technology infrastructure and deliver services. Customer relationship management (CRM) is another area where digital transformation creates significant value for organizations with the use of artificial intelligence (AI), for example, to personalize the shopping experience for its customers. Human Resources (HR) is yet another function that can benefit from digital transformation in areas such as recruitment through AI-powered platforms that streamline the hiring process or with digital learning platforms that enable organizations to provide employees with continuous training and upskilling opportunities.

Even when digital transformation is focused on another business function, the role HR plays is front and center. HR shapes the human capital agenda for the enterprise and drives the adoption and realization of the human-centered digital vision. Reimagining the future of work – how work gets done, where work is performed, and who does the work – is central to digital transformation and falls squarely in the sites of the HR function. HR must see its digital transformation as an opportunity to improve its operations and functions to serve the new digital organization. When done well, digital transformation shifts how an organization operates – that takes organizational change, shifts in mindset, potentially structural changes, job redesign, and often a reframing of organizational culture. It can be daunting to think through all that must happen for a successful digital transformation and even more daunting to plan and execute the work. Digital transformation is an organizational journey that will reframe the status quo for the organization.

Why use it

As organizations invest in digital transformation efforts, they often zoom out and take a ‘big picture’ view to evaluate where they can better optimize their operations. Digital transformation is disruptive and complex. Having a playbook that defines the HR role in digital transformation can help drive business change, reshape the organization around the digital vision, and futureproof the organization for the new digital future. HR must lead digital transformation's organizational and human side to position the enterprise for successful transformation.

Organizations across industries urgently need to adapt and evolve to stay competitive in the digital era. Digital transformation is a cornerstone of this adaptation, promising enhanced agility, efficiency, and innovation. However, navigating digital transformations poses significant challenges, from understanding the imperative of digital transformation to overcoming common pitfalls, making guidance and strategic frameworks indispensable for success.

The imperative of digital transformation

Digital transformation is no longer a choice but a necessity for organizations seeking to thrive in today's hyper-connected world. Rapid advancements in technology, changing consumer preferences, and evolving market dynamics have disrupted traditional business models, compelling organizations to embrace digital strategies to remain relevant. Whether optimizing operations, enhancing customer experiences, or driving innovation, digital transformation is the key to unlocking new opportunities and sustaining long-term growth.

One of the primary reasons organizations need help through digital transformation is the complexity of the digital landscape. The digital ecosystem is vast and constantly evolving, encompassing technologies such as cloud computing, big data analytics, artificial intelligence, and the Internet of Things (IoT), requiring a deep understanding of emerging trends, best practices, and industry-specific applications. 

Digital transformation involves more than just implementing new technologies; it requires a cultural shift within organizations. Embracing a digital mindset entails fostering a culture of innovation, collaboration, and continuous learning. Leaders must champion change, empower employees, and break down silos to drive meaningful transformation. However, cultural resistance, legacy processes, and organizational inertia often impede progress. Guided interventions can help organizations overcome these barriers and cultivate a conducive environment for digital innovation and agility.

Common challenges in navigating digital transformation initiatives

Despite the potential benefits, digital transformation initiatives often encounter various challenges that can derail progress and undermine success. One of the most common challenges is resistance to change. Employees may feel apprehensive about adopting new technologies, fear job displacement, or perceive digital transformation as threatening their roles. To foster buy-in and ownership, overcoming resistance requires effective change management strategies, clear communication, and ongoing employee engagement.

Another common challenge is the lack of alignment between digital transformation initiatives and business objectives. Without a clear understanding of organizational goals and priorities, digital initiatives may lack direction and fail to deliver meaningful outcomes. Aligning digital transformation efforts with broader strategic objectives is essential to ensuring that investments in technology translate into tangible business value. A playbook can help organizations define clear goals, establish KPIs, and measure the impact of digital initiatives on key performance metrics.

Outcomes

Adoption of the practices at this level provides a base strategy, vision, and execution plans for supporting an enterprise's digital transformation. They will establish a refreshed HR strategy that aligns with and enables the digital transformation vision. It will define the fundamental tenets of a strategy, including HR’s vision of the Digital Enterprise, the digital transformation HR case for change for the HR organization, the objectives HR sees as part of the digital organization, and the expected timeline of activities. They will produce a current state understanding of the organization, its ambitions, and opportunities to address to support the digital vision. This will include an understanding of the skills across the organization and the planned learning opportunities to enhance those skills in line with digital transformation objectives.

Finally, this guidance will help make the adjustments necessary to the organization’s structure and operating model, including HR's role in the future state organization. Using these practices will produce the partnering and engagement strategy for HR to support the rest of the organization. It provides tools to determine critical roles, assignments, and responsibilities to engage and partner with organizational stakeholders. They result in an updated HR initiative timeline plan for proper resourcing results in a clear and documented set of activities HR will pursue to achieve digital transformation objectives. The plan will assist HR in resource and cost planning during the digital transformation journey. It will give the HR organization structure to plan communications, stakeholder engagement, and change management activities to drive support for the digital transformation.

Practice guides at this level

Refining the HR strategy for the digital future.

The HR strategy, philosophy, and objectives are analyzed to be updated in the context of and support for the organization's digital transformation.

Mapping the organizational landscape to establish the current state and future needs. 

Formally assessing the organization’s needs and talent implications, identifying the gaps to be filled, and developing plans to fill those gaps at an organizational, functional, and individual level.

Determining HR partnering opportunities for delivery to maximize impact.

Identifying where and how HR can partner with the business functions to support digital transformation efforts and their impact on the organization’s people.

Defining and updating the HR initiative timeline plan for proper resourcing.

Creating or revising overall HR plans to identify the necessary investment and improvement areas in focus for the function by defining the sequencing, timing, and dependencies on the various projects and initiatives.

Preparing the organization for Digital Transformation to manage the change. 

Developing guidance for the organization and shaping the experience, culture, and support for the transformation effort through organizational change management, employee communication and engagement, and culturally reinforcing behaviors.