CHAPTER 1 - Digital Transformation in HRM

The digital revolution has changed HRM practices around the world. Organizations are adopting Human Resource Information Systems (HRIS), artificial intelligence, and cloud-based platforms to improve recruitment, performance management, and employee engagement (Bondarouk and Brewster, 2016). Deloitte's 2024 report shows that 73% of organizations see digital HR transformation as essential. AI-powered recruitment tools can cut hiring time by 40% (Tambe, Cappelli and Yakubovich, 2019).

However, algorithmic bias is still a big issue. Amazon's discontinued AI recruitment tool routinely discriminated against women by learning from hiring patterns that favored men (Dastin, 2018). Research shows that AI systems continue to reflect racial, gender, and socioeconomic biases found in the training data (Raghavan et al., 2020). The "digital divide" prevents candidates without tech access from applying. Organizations need to perform algorithmic audits, use diverse training datasets, and establish human oversight (Ajunwa, 2020). 

AI-driven talent acquisition and recruitment

One of the most powerful facets of digital transformation in HR is integrating artificial intelligence into recruitment. AI-powered tools can screen and rank resumes, assess candidate-job fit using predictive modeling, and even conduct preliminary interview rounds using chatbots. This would accelerate hiring, reduce manual workload, and minimize human bias. This can also allow the HR professional, at the same time, to reorient their role from screening candidates toward nurturing relationships, strategic employer branding, and high-level decision-making. As Al-Tikriti & Fadel discuss, AI and analytics are central to reshaping global workforce management.

Hyper-Personalization and Employee Experience

Digital transformation gives HR the ability to apply a hyper-personalized approach to employee experience. Using data analytics and cloud-based human resource systems allows organizations to personalize services like learning programs, performance feedback, and career development around an employee's needs, strengths, and work style. This increases engagement and retention because employees feel noticed and supported. Sandra Parker says that HR tech trends are becoming increasingly focused on hyper-personalization, offering tools that adapt to individual performance dynamics and individual preferences.

Digital Self-Service and Employee Empowerment

Other critical trends include the rise in self-service HR platforms, enabling employees to independently manage many of their HR functions, such as updating personal information, requesting time off, accessing pay slips, or enrolling in training. This shift reduces administrative burden on HR teams while giving employees more control and transparency over their own data and experience. Digital Directions also cite other baseline expectations now developed within transformed HR ecosystems: self-service platforms, mobile HR apps, and real-time HR interfaces.

Challenges and Strategic Implications of Digital HR Transformation 

While digital transformation brings many benefits, significant challenges also arise for HR: data privacy management, the security of sensitive employee information, and developing digital competencies among HR staff. Furthermore, not all HR professionals are ready to make this shift themselves; they may also need to upskill in analytics and technology and support their colleagues through new systems. As Barišić, Rybacka, and Miloloža discuss, the rapid pace of technological change demands that HR evolves not just operationally but strategically, aligning digital transformation with wider business goals.

Theory for Digital Transformation

Sociotechnical Systems Theory (STS) (Trist & Bamforth, 1951)

Sociotechnical Systems Theory explains that the success of organizational change occurs when technology and people, or human systems, are aligned in support of that change. It suggests that digital tools alone cannot succeed in bringing about change unless the employees, processes, and culture also change accordingly.

How the STS connects with Digital HRM

Digital transformation in HR involves not just the implementation of HRIS, AI recruitment tools, or cloud platforms but also preparations by employees, workflow redesign, and the creation of a supportive culture.

Example: AI-Powered Recruitment

• Technology part  - An AI-powered tool sifts through CVs, pinpoints the best candidates, and expedites recruitment. 
  
• Human part - Training the HR staff to understand AI results, reducing bias, and making final decisions. 
  
• STS in action - People and technology perform together, making recruitment both quicker and more precise.

References

• Bondarouk, T. & Brewster, C. (2016) ‘Conceptualising the future of HRM and technology research’, The International Journal of Human Resource Management, 27(21), pp. 2652–2671. doi: 10.1080/09585192.2016.1232296.

• Deloitte (2024) Deloitte’s ‘2024 Global Human Capital Trends’ Report Identifies Trust and Human Sustainability as Top Issues, Deloitte Malta, 6 February. Available at: https://www.deloitte.com/mt/en/about/press-room/global-human-capital-trends-report-identifies-trust-and-human-sustainability-as-top-issues.html
• Tambe, P., Cappelli, P. & Yakubovich, V. (2019) Artificial intelligence in human resources management: Challenges and a path forward. SSRN. doi: 10.1177/0008125619867910.
• Dastin, J. (2018) ‘Amazon scraps secret AI recruiting tool that showed bias against women’, Reuters, 11 October. Available at: https://www.reuters.com/article/us-amazon-com-jobs-automation-insight-idUSKCN1MK08G/
• Raghavan, M., Barocas, S., Kleinberg, J. & Levy, K. (2020) ‘Mitigating bias in algorithmic hiring: Evaluating claims and practices’, Proceedings of the Conference on Fairness, Accountability, and Transparency (FAT ’20)*, January 27–30, 2020, Barcelona, Spain. ACM. doi: 10.1145/3351095.3372828
• Ajunwa, I. (2024) The paradox of automation as anti-bias intervention, Carolina Law Scholarship Repository, University of North Carolina School of Law. Available at: https://scholarship.law.unc.edu/cgi/viewcontent.cgi?article=1490&context=faculty_publications
• Trist, E.L. & Bamforth, K.W. (1951), Some social and psychological consequences of the longwall method of coal-getting, Human Relations, 4(1), pp. 3–38.