Digitalization and the adoption of digital tools accelerates economic growth, increases productivity and improves the efficiency of business processes. Artificial Intelligence increases this digital transformation even more. As such, digitalization is of high interest to corporations and governments alike. Digital technologies are particularly common in human resource management (HRM).
In this research paper, digitalization in HR management, which has the second highest digitization rate for business entities after Finance, is analyzed across small, medium and large sized firms within Germany. Chugunova and Danilov survey 57 German firms in order to 1) assess current digitization levels of HR, 2) document how digital tools support companies in attracting new talent and 3) understand the benefits and explore potential barriers of digitization within HR management.
The focus of digitalization within the HR function is due to its importance of human capital on the overall economic success of a company. Digital tools and information technologies support HR management in talent acquisition (selecting, training and retaining talent), workforce planning and also supports the operational and strategic levels in HR.
Chugunova and Danilov report that most respondents already digitized their core business processes and already store data digitally with a notable increase in digitalization due to the Covid-19 pandemic. Further, it is reported that such expansion of advanced digital HRM tools is viewed positively by respondents, as these tools facilitate faster processes, higher efficiency and are positively correlated with ease of talent acquisition.
External barriers to adopt advanced digital HRM tools include a shortage of HR professionals with IT skills, high costs of digital tools and legal uncertainty. Internal barriers include the concern of how increased digitalization could potentially be perceived by employees and whether such digital transformations may trigger a perception of surveillance. This last barrier opens the discussion of who should be responsible for auditing HRM tools (the entity, a certified third party or government), data protection and potential discrimination.
Ultimately, there is a general positive attitude towards the increased adoption of digital tools within human resource management, which shows that if barriers are to be addressed appropriately, one may expect a shift in the use and quality of advanced digital tools in HR.
Danilov, Anastasia and Chugunova, Marina, (2022), Use of digital technologies for HR management in Germany: Survey evidence, MPRA Paper, University Library of Munich, Germany, https://EconPapers.repec.org/RePEc:pra:mprapa:111530.