European companies struggle to connect with digital HR

27 October 2020

A new survey by HR & Payroll services provider SD Worx conducted in 11 countries across Europe reveals the limited digital maturity of many HR departments. While some countries, like the Netherlands, Poland, Spain, Ireland and the UK, are performing slightly better, less than half of the 3,000 polled companies are satisfied with the automation level of their HR and payroll processes and digital HR tools. Mainly SMEs (<250 employees) can still take big leaps.

37% of European organizations claim to have reached a high level of digital maturity in HR, a similar share reports a rather moderate level and 27% urgently need to step things up on this front.

The digital revolution has given HR a chance to bring more strategic value to the table as administrative and routine tasks disappear, thanks to automation. But not all entrepreneurs and HR professionals are already on board. An online survey conducted in June 2020, on behalf of SD Worx, shows that there are significant differences between countries and between smaller and larger organizations.

Finding the digital leaders

When asked about their level of automation, Polish, Spanish, Dutch, Irish and Italian companies appear to have reached the highest digital maturity in these domains:

  • HR and payroll processes and systems
  • HR reporting and analytics
  • Digital HR tools

The UK is trailing Italy for a top 5 position, but for the question how pleased companies are with their digitization efforts, British companies easily overtake their Italian counterparts. It’s worth to note that even though these countries lead the way in digital HR, the number of (somewhat to very) unsatisfied organizations is still fairly high: between 30% and 50%. In France – furthest behind in automating HR – that figure goes up to 66%.

SMEs can gain a competitive edge

The most digitally advanced companies in HR are organizations with more than 250 employees. For example, nearly half of those companies rate their automation level for HR and payroll processes and systems to be high or very high, while only 30% of companies with less than 100 employees dare to say the same. Furthermore, with the majority of SMEs being moderately to very unsatisfied about their digital maturity in HR, it has become apparent that many of them still have a lot of ground to cover. Investing in digital HR can be an effective way for SMEs to gain a competitive edge in the attraction and retention of talent and can lead to long-term savings.

HR and payroll processes and systems:

Large companies with (very) high automation levels: 48.8%
SMEs with (very) high automation levels: 30.4%

Digital isn’t top of mind

During the first months of the coronavirus pandemic, HR process automation and digital transformation weren’t considered to be very urgent. On a list of 19 possible HR priorities, these objectives came in at 15th and 16th place, respectively. Furthermore, only 20% of European companies think it’s very important to automate or digitally transform HR going forward. Belgian and French companies in particular turn to other strategies to achieve success.

To paint a more nuanced picture, the majority of polled organizations have projects in place or plan to launch projects within the next 12 months to tackle HR process automation (51.2%) or digital transformation (51.7%). Still, there seems to be a lot of room for optimization.

“Because of budgetary constraints, the automation and digitization of HR aren’t priorities for most companies during COVID-19. But from an HR perspective, they are. Advanced digital maturity allows you to focus on strategic tasks and to raise the value of your HR team as a business partner”, says Ferdi Claes, MD HR Europe at Computer Task Group.

Various balancing acts

One of the biggest challenges for entrepreneurs and HR professionals will be to implement stable, frictionless tools as well as tailor-made digital solutions to fine tune their own ways of working. But that’s far from the only challenge that companies face. Others include similar balancing acts in the fields of reward policy, workforce management, outsourcing, payroll and employee experience.

“Technology is freeing up HR to take on big-picture matters, making the field more exciting, more demanding and perhaps more competitive as well. We can’t ignore the importance of digitization, as it affects us in so many ways. Productivity soars, it helps us maintain a general overview of the company and the work efficiency keeps growing. Thanks to digitization it is possible to connect data with each other and that can lead to predictive analytics. That makes the HR function becoming even more strategic”, Cathy Geerts, Chief HR Office at SD Worx, comments.

Today’s HR challenges, which all require both stability and fluid movements, are addressed in the SD Worx e-book ‘The Future of Work and People in Europe – HR, Fluid as Hula-Hoop Shaking’.