Digitalization in Human Resource Management Strategies and Policies

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In the modern ever-changing business environment, the reliance on technologies and digital means of communication or process handling has never been as important. Human Resource Management (HRM) practices have also experienced some changes due to digitalization, with organizations employing the latest Information Technology (IT) solutions to leverage the functions of their human resources (Claus, 2019). This literature review aims to critically synthesize the empirical studies and theoretical research conducted on the topic of HRM and digitalization, with a focus placed on employment classification and related processes. It is necessary to identify a gap in research in order to formulate a narrow and argumentative hypothesis that will be used in further research. A set of research objectives will also be included to support the research question.

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Synthesis

The role of digitalization in HRM has been widely explored in modern research literature since the topic is directly associated with the way in which organizations can improve the handling of issues with personnel. According to NEERAJ (2018), after introducing digitalization within the environment of an HR department, it was possible to achieve rapid changes more effectively and at minimum cost. It was also shown that digitalization facilitated the improvement in processes regarding the recruitment of personnel because of user-centricity (Falk, Rommele and Silverman, 2017). Because IT encompasses a broad range of options and capabilities while also allowing users to access multiple informational resources, making HRM decisions has become more efficient. Looking from another angle, the general workforce also can use IT to their advantage when looking to change their career orientation or finding a better job opportunity (Falk et al., 2017).

Digital transformation has significantly changed the way in which organizations approach their business models and how they organize themselves because of the opportunity to integrate social, mobile, cloud, and digital analytics services (Fenech, Baguant and Ivanov, 2019). They facilitate a competitive advantage, and since HRM is a strategic asset to firms that contributes to it, it is imperative to ensure that it functions efficiently and strategically (Shroeder, 2013). However, Palmer, Dunford, and Buchnan (2017) claimed that HRM expects varied results due to its orientation on people as well as the responsibility to develop diverse and engaging work opportunities that would keep employees motivated. Because of this, digital transformation plays a vital role in questioning the conventional functions of HRM that are being carried out at organizations (Palmer et al., 2017). This suggestion was also supported by Larkin (2017), who argued that the changes in HR departments that digital technologies bring would affect the whole structure of companies and the directions toward which they are moving. With the shifts occurring in HRM as related to digitalization, the processes can change more than just facilitating the daily administrative work of departments. Technologies facilitate the regular functions of HR managers, which include planning, employee selection, and work design (Fenech et al., 2019). However, new demands for the HR function will be added to ensure that the human capital within an organization aligns with the strategic needs of the digitalized workplace.

When changes occur in the broad environment, HRM is usually highly sensitive to any shifts and adjustments. Technological innovation often pushes the traditional personnel practices to their expiration date, with new and advanced methods becoming integrated into the environment (Alves e Silva and da Silva Lima, 2018). An example of such changes is the Human Resource Information System (HRIS) that contributes to the functions of HR at organizations (Fenech et al., 2019). HRIS represents a system used for acquiring, storing, manipulating, analyzing, retrieving, and distributing any information that is relevant to the human resources at organizations (Nagendra and Deshpande, 2014). Modern information systems that are embedded into the human resource management processes can bring value to organizations through automating the majority of HR functions. It is an essential strategic tool due to the variety of capabilities that are being enhanced with the help of technologies. HRIS offers HR departments more significant opportunities associated with information processing, enhanced communication, and the reduction of costs spent on HR (Maditheti and Gomes, 2017). Computer-based information technologies have shown to significantly improve the application of IS within HR departments due to the provision of rapid information dissemination as well as immediate feedback regarding the contribution of employees.

According to the findings by Kassim and Sherah (2012), HRIS has shown to bring essential changes to the role of HRM wat organizations. The researchers found that the use of advanced technology systems can empower professionals to provide increased value to their organizations because of the increase in information accuracy and more excellent responsiveness. Furthermore, because HRIS tools decrease the time necessary for completing HR tasks and assignments, the workers at departments will have more time to see organization-wide problems, issues associated with strategy development, as well as the needs for change efforts to reach improvement in the needed areas (Kassim and Sherah, 2012). HRIS provides multiple opportunities for organizational improvement because professionals operating at HR departments have more free time to spend on observing the overall environment and pointing out issues that should be addressed to reach better performance as well as motivate employees.

With the changes in the frameworks within which HR departments operate, digitalization has also influenced the classification of employees within the process of hiring to ensure that skilled individuals who have knowledge of technology use are being hired. Specifically, wider dissemination of digitalization across companies affects the current occupations of employees because they have a higher likelihood of changing occupations or becoming unemployed (Fossen and Sorgner, 2018). As mentioned by Frey and Osborne (2017), technological possibilities have enabled the performance of work-related tasks automatically, and the situation is expected to exasperate in the future. However, even if technology offered to perform specific tasks more quickly and efficiently, this does not mean that job replacements will be put in effect. For example, as suggested by Fossen and Sorgner (2018), the labor market regulations that exist, as well as the absence of necessary infrastructures, may limit the immediate deployment of technologies. Therefore, it is not evident as to whether the expected challenges associated with the digitalization of work processes necessarily lead to higher levels of employment.

Even in the case if technologies replace many jobs due to the increased digitalization, the presence of entrepreneurship can become a viable option to move away form paid employment. More organizations will look for workers who have entrepreneurial skills and can offer their knowledge and expertise that has been lacking at companies (Fossen and Sorgner, 2018). Moreover, digitalization can enable and facilitate start-up processes by increasing access to finance by reducing ICT infrastructure costs through cloud computing, accumulating financial support through crowdfunding, as well as decreasing initial investments in human resources through using artificial intelligence (von Briel, Davidsson and Recker, 2018). As suggested by Fritsch, Sorgner, and Wyrwich (2018), the choice of entrepreneurship, which is facilitated through digitalization, over paid employment is usually driven by higher levels of satisfaction with job and life that result from being one’s own employer and manager. The possibility of people becoming entrepreneurs can greatly decrease the forecasted levels of unemployment because of the automation of job positions.

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For employees who are being hired for new positions or retain in their places at work, digital skills have become a requirement that applies to any specialization. According to the findings of the European Commission (2017) report “ICT for Work: Digital Skills in the Workplace,” which explored the impact of IT and communication technologies on the transformation of jobs and skills, digitalization applies to a broad range of occupations, including health care, farming, construction, and many others. As suggested in the report, the majority of jobs require workers to have basic digital skills, which include the ability to communicate via social media or email, create or edit digital documents, search for information, or to protect personal data online. For example, 98% of organizations require their workers to have at least basic digital skills necessary to operate effectively within company environments (European Commission, 2017). While there are still jobs that do not consider digital skills important, such as waiters, cooks, and craft workers, workplace settings that deal with information processing are likely to hire professionals who know how to use technologies in their everyday operations.

The relationship between workers’ digital skills and their likelihood of being employed is an area of research that has not been explored in detail as the majority of studies instead focus on the connections between digitalization and the overall performance of organizations. However, in their study, Pirzada (2013) aimed to determine whether such a relationship exists. Based on the researcher’s findings, basic digital skills were strongly associated with job attainment while advanced skills were connected to getting the desired job in combination with other factors such as higher education and health attitudes. According to Pirzada (2013), all variables showed to have a positive relation to employability, which more or less affected the determination of whether a person would get a job that they desired. Beyond being proficient in the use of technologies, workers were expected to have excellent communication skills and higher education, which means that employability is instead a combination of multiple factors that characterize valuable potential workers.

Bridging the gaps between the digital skills of employees and their opportunity of being selected for good jobs is a matter of education and training. According to the report by Oxford Cambridge and RSA (2016), there is a need to work in partnership with individuals seeking work and support their education by enabling them to reach their full potential regarding digital skills. Digital employability is a component of a general skill framework that has the capacity to improve the lives of individuals by installing a sense of self-esteem and confidence in one’s abilities.

Research Gap

There is insufficient research studying the connections between the influence of digitalization on HRM policies associated with employment classifications. The majority of available studies have explored the impact of digitalization on the overall HRM practices, with the focus placed on the shifts in the way that HR professionals change their everyday tasks with the help of technologies. It has been indicated that HRM policies usually change because digitalized methods offer greater flexibility and are less time-consuming than traditional frameworks (Cascio and Montealegre, 2016). Since many processes within HRM become automated, there is more time for HRM to spend on identifying organizational issues that should be solved (Tursunbayeva, 2019). However, the way in which employee classifications change has not been reflected in available studies.

While it is common sense that the expectations of employees’ skills and knowledge change with the integration of digitalization at organizations, researchers have failed to determine how HRM policies will be affected within the aspect of employment classifications. Therefore, there is a potential for exploring this research topic in the current study and involve real employees and Human Resource Managers into a conversation about how their work has changed with the rise of digitalization as well as how the classifications have shifted. Usually, employee classification depends on the extent to which they work at an organization, including jib duration. Digitalization can offer great flexibility, and workers who are highly knowledgeable in technologies can be both valuable and practical regardless of job duration. It is also imperative to make connections between employment classifications and the eligibility for benefits among workers exhibiting the improved digitalization skills.

Research Question, Hypothesis, and Objectives

The core question to be answered in current research is the following: “With the rise of digitalization, how will HRM policies be affected in the employment classifications?” It is essential to determine the shifts that occur within HRM practices and policies as related to digitalization because of the increased reliance on technologies and their increased importance in the training of personnel and the development of organizational procedures. Since the synthesis of the literature showed that organizations are continuously moving in the direction of higher levels of digitalization, it can be hypothesized that HRM policies that affect employment classifications will change. Information technologies have been embedded into a range of organizational procedures, ranging from everyday communication between colleagues to the decision-making on core HRM changes and adjustments.

The current study aims to determine the changes that employees will be undergoing in the light of the increased digitalization of HRM and the implementation of HRIS. Adjustments are often disruptive to the existing organizational procedures because they imply shifts in everyday activities, resistance to change, the need to learn how to use new tools and technologies, as well as investment in training. The research objectives formulated for the current research the following:

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Research objective 1: To explore the underlying factors associated with digitalization that caused the changes in Human Resource Management strategies and policies;

Research objective 2: To assess the effects of the digitalization of HRM practices and policies in shaping employment classifications;

Research objective 3: To identify the perspectives of employees regarding the role of digitalization of HRM systems and their influence on employment classifications.

Overall, the potential for the current study is vast due to the significant gaps in the research literature. While the influence of digitalization on organizations overall has been widely discussed, there is a lack of empirical evidence illustrating the changes occurring in HRM frameworks and the way in which employee classifications will be adjusted based on the increased demand for digital literacy.

Reference List

  1. Alves e Silva, M. and da Silva Lima, C. (2018) ‘The role of information systems in human resource management’, Intech Open. Web.
  2. Cascio, W. and Montealegre, R. (2016) ‘How technology is changing work and organizations’, Annual Review of Organizational Psychology and Organizational Development, 3, pp. 349-375.
  3. Claus, L. (2019) ‘HR disruption – time already to reinvent talent management’, BRQ Business Research Quarterly, 22(3), pp. 207-215.
  4. European Commission. (2017) ICT for work: digital skills in the workplace.
  5. Falk, S., Rommele, A. and Silverman, M. (2017) Digital government: leveraging innovation to improve public sector performance and outcomes for citizens. Zurich: Springer.
  6. Fenech, R., Baguant, P. and Ivanov, D. (2019) ‘The changing role of human resource management in an era of digital transformation’, International Journal of Transformation, 22(2), pp. 1-10.
  7. Fossen, F. and Sorgner, A. (2018) The effects of digitalization on employment and entrepreneurship. Web.
  8. Frey, C. and Osborne, M. (2017) ‘The future of employment: how susceptible are jobs to computerization?’ Technological Forecasting and Social Change, 114, pp. 254-280.
  9. Fritsch, M., Sorgner, A. and Wyrwich, M. (2018) ‘Self-employment and well-being across institutional contexts’, Jena Economic Research Papers, pp. 78-91.
  10. Kassim, R. and Sherah, K. (2012) ‘Antecedents and outcomes of human resource information system (HRIS) use’, International Journal of Productivity and Performance Management, 61(6), pp. 1-10.
  11. Larkin, J. (2017) ‘HR digital disruption: the biggest wave of transformation in decades’, Strategic HR Review, 16(2), pp. 55-59.
  12. Maditheti, N. and Gomes, A. (2017) ‘Human resource information system: a review of previous studies’, Journal of Management Research, 9(3), pp. 92-119.
  13. Nagendra, A. and Deshpande, M. (2014) ‘Human resource information systems (HRIS) in HR planning and development in mid to large sized organizations’, Procedia – Social and Behavioral Sciences, 133, pp. 61-67.
  14. NEERAJ. (2018) ‘Role of digitalization in human resource management’, International Journal of Emerging Technologies and Innovation Research, 5(1), pp. 284-288.
  15. Oxford Cambridge and RSA. (2016) Digital employability. Web.
  16. Palmer, I., Dunford, R. and Buchnan, D. (2017) Managing organizational change: a multiple perspectives approach. New York: McGraw-Hill Education.
  17. Pirzada, K. (2013) ‘Measuring relationship between digital skills and employability’, European Journal of Business and Management, 5(24), pp. 124-134.
  18. Shroeder, H. (2013) ‘The importance of human resource management in strategic sustainability: an art of science perspective’, Journal of Environmental Sustainability, 2(10), pp. 75-82.
  19. Tursunbayeva, A. (2019) ‘Human resource technology disruptions and their implications for human resource management in healthcare organizations’, Journal of the American Medical Informatics Association, 19, pp. 268-276.
  20. von Briel, F., Davidsson, P. and Recker, J. (2018) ‘Digital technologies as external enablers of new venture creation in the IT hardware sector’, Entrepreneurship Theory and Practice, 31(5), pp. 713-731.

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