Digital HR departments are becoming more and more critical as organizations scale and take on more employees. But successful HR digital transformations require more than a one-size-fits-all software approach.

A human resources digital transformation is about much more than deploying a new HRIS/HCM and calling it a day.

In fact, according to a Deloitte Human Capital Trends Report, it’s about “transforming HR operations on the one hand, and transforming the workforce and the way work is done on the other.”

That’s why it’s important to think critically about specific HR functions—like compensation, rewards and performance—and how they can work better together to motivate your team and drive better results.

The Human Resources Digital Transformation: What’s Missing?

Human resources digital transformation is, by definition, the process of turning manual HR processes into automated, digital ones.

This transformation has become a necessity in recent years—and mandatory in recent months. As teams continue to work from home, HR professionals need the right tools to effectively get work done.

But the story doesn’t end there.

Many organizations have already implemented HRIS/HCM software. But many of these one-size-fits-all tools leave out critical pieces. And HR departments still fill those gaps with spreadsheets, PDFs and SharePoint.

This is because HRIS/HCM vendors are limited by their hardcoded architecture and data structure. They can’t be customized to meet new business requirements without a heavy IT lift or cost burden. But modern, agile HR departments need to be able to customize and configure as business needs change over time.

So, what’s missing from these solutions?

Highly configurable compensation, rewards and performance management functionality. Here’s why these three areas are essential to success.

3 Essential Features for a Successful Human Resources Digital Transformation

#1. Compensation Management

Complicated spreadsheets. Long and stressful compensation cycles. Juggling different rules and budgets. Compensation management is a highly manual and complex process that can feel like a never-ending number-crunching name.

But a solid compensation strategy is one of the most powerful resources HR professionals have to attract, retain and motivate talent. To execute that strategy, HR departments need to include compensation in their digital transformation to effectively do three things:

  1. Guide, control and simplify the calculation and allocation of merit, bonus and equity awards.
  2. Provide transparency to line managers and, ultimately, employees about how the company’s compensation strategy and plans translate into individual awards.
  3. Execute a compensation cycle in weeks, rather than months, and free up managers and HR staff to focus on other important initiatives.

From budget modeling to employee communication, compensation management tools help HR professionals manage the entire compensation cycle while reducing cycle times and eliminating spreadsheet errors.

#2. Total Rewards Communication

Today’s employees have high expectations for rewards—many of which extend beyond compensation alone. Employer-provided benefits, 401(k) contributions and soft benefits like work/life programs and charitable giving set your company apart. How, and how often, are you communicating the full value of employment?

For companies with already limited resources, continuously showcasing the value of your rewards program can be cumbersome. To leverage your rewards program to the fullest extent, you need reward communication to be a part of your digital transformation. This is especially pertinent in today’s talent market, as organizations compete to offer the best employee experience to attract, retain and engage talent.

If you can find a way to automate rewards communication, it’s even better. Because then you can more easily:

  1. Keep employees informed and engaged.
  2. Alleviate the administrative burden of creating annual total compensation and reward statements.
  3. Unlock visibility at every level to make more strategic, data-driven decisions.

#3. Continuous Performance Management

Setting goals in January and evaluating them 12 months later is no way to hit key goals. Goals change throughout the course of a year, and employees want to be evaluated based upon the totality of their achievement of key business objectives.

That’s why more HR departments are favoring frequent feedback sessions and ad hoc check-ins over annual reviews.

To drive better feedback conversations, remove confusion around the process, and promote informed and justified decision-making, you need to digitally transform your performance management function.

Ultimately, goals aren’t confined to one individual. You need a way to connect managers, employees and peers—so they can more easily tackle big, complicated and cross-functional objectives. Including performance management in your human resources digital transformation is critical if you want to meet your organizational goals.

Here are some tips:

  • Schedule and track manager check-ins.
  • Measure performance against goals.
  • Encourage cross-functional collaboration.
  • Align company-wide objectives to individual goals.
  • Tie year end reviews to continuous year-long conversations and feedback.

One More Thing: Plug All 3 Into Your Core HR Suite

To digitally transform your business, you need to digitally transform your HR department. And to do that, you need to transform the way you approach compensation, rewards and performance management.

These areas require a more tailored and precise solution—which most HRIS/HCM vendors can’t provide. Core HR suites do a great job covering high level HR processes, but compensation, rewards and performance are often too complex to be handled effectively by these larger solutions.

The good news: All it takes for a complete human resources digital transformation is plugging a single solution for each process into your existing HR software. So, look for software that is specifically built to complement your broader tech stack. This is usually accomplished through a low-code application, which provides a more flexible, adaptable and secure environment to meet any HR challenge.

When all of your solutions work together, you can take control of your compensation, rewards and performance processes—and capture maximum ROI on your core HR suite.

Keep budgets, employees and communications on track – without ever having to leave your core HRIS or HCM suite – with HRSoft. See how it works by requesting a demo today.