A carefully-crafted digital HR strategy can make the difference and boosts firm performance according to a study by Laura Ruiz Santiago, a NEOMA researcher.

With digitisation growing fast, companies have to do more than simply use information technology: they have to integrate it around-the-clock into all their business activities. And human resources is no exception to this rule: HR departments today are waging a war for skilled, talented employees, and they have to adapt and develop advanced technological expertise if they want to stay competitive. It follows that HR’s migration to digital technology integration plays a vital role in scaling up the firm performance

So, what are the implications of integrating digital technology within traditional HR practicesto manage human resources? The recent study by the NEOMA researcher and her colleagues looked at the combination of these two modi operandi and the ensuing variations in firm performance.

Shifting towards a digital HR strategy

Traditional HR strategies are evolving into what the researchers call “a digital HR strategy” as they integrate digital tools. This approach aims to bring about improvements in various areas, such as the employee experience, satisfaction, creativity and productivity. It generates a fully-fledged synergy with positive outcomes that are greater than the sum of the two individual approaches. Ultimately, the company’s all-round performance improves.

The study focused on the impact of this strategy on firm performance. The researchers looked at 351 major companies, paying particular attention to the transformations across nine key HR practices from inhouse communication channels to career management via wellness and training programmes.

A runaway success

The study highlights the case histories of a number of firms that have already delivered successful digital HR strategies. When the multinational Unilever, home to over 400 brands, decided to optimise its recruitment processes, it did so in three ways: embracing social media to publicise its job postings, introducing online games to assess candidates’ skillsets, and using artificial intelligence to sift through applications. The Ford motor company negotiated better agreements with health insurance providers by integrating a healthcare area into its online portal.

Researchers suggest that adopting a digital HR strategy can improve firm performance because it also leads to a better employee experience since it makes collaboration easier. Best Buy, a consumer electronics retailer, launched its own company-wide social network – Blue Shirt Nation – so that employees could exchange ideas freely, which then enhances collaborative work and business performance. A digital HR strategy can also add value to the employer brand. The Deloitte consulting company, for instance, has built one of the most ecological and best-connected offices anywhere in the world. And the Netherlands-based firm now ranks as one of the most attractive employers for undergraduate students.

In general terms, online learning offers greater flexibility, efficiency and convenience for trainees while reducing certain costs, such as travel or employee turnover. The same holds true for digitising procedures. At the IT specialist Cisco, new arrivals use an online portal to order office equipment, enrol in healthcare schemes, and perform numerous other procedures. All of these activities are carried out in a single day, compared to a week in many other firms.

Better performance across-the-board

This study suggests that the synergy that flows from a digital HR strategy may transform the employee experience, cut costs, boost the employer brand and make data-driven management easier. In broader terms, it is also instrumental in improving the all-round performance of a company, even giving it a competitive edge.

And yet, for this approach to be successful, the researchers underline the importance of a well-rounded, coordinated integration among HR and IT departments. This study highlights the need of a cohesive work of HR and IT managers to ensure that technology supports HR goals effectively.

Find out more

Laura Ruiz, Jose Benitez, Ana Castillo, Jessica Braojos. Digital human resource strategy: Conceptualization, theoretical development, and an empirical examination of its impact on firm performance. Information & Management. 2024. https://doi.org/10.1016/j.im.2024.103966