To fully align with the momentum of a more agile business and contribute to overall competitiveness, HR departments face a major challenge: adapting and modernising their service models to keep pace with rapid changes in the expectations of both their companies and their employees.
Digitalisation and artificial intelligence (AI) are no longer options, but absolute necessities to remain competitive. Yet it must be said that Europe is significantly behind the United States and Asia when it comes to adopting these technologies. It is time to act!
“This concerns all leaders for whom awareness of an ongoing revolution in their professions is already a reality. We are all concerned.”
Guillaume Koch
Partner, People Transformation / Human Capital Management
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The digitalisation and AI revolution
Integrating digitalisation and AI into HR services promises productivity gains that have so far been out of reach.
- Automation tools can handle repetitive administrative tasks, freeing up time for higher value-added activities such as talent development and strategic human resources management.
- AI can also improve the recruitment process thanks to sophisticated algorithms capable of sorting through thousands of applications in record time, identifying the most promising profiles with unmatched accuracy.
This is reflected both in the development of HR efficiency, in favour of a service more focused on employees and their managers (quality and responsiveness), and in terms of financial efficiency: in the United States, trends point to spending of around 1.1% of revenue dedicated to running the HR function, closer to 1.05% in Asia. It is trending towards 0.85% in start-ups and scale-ups on these continents, which do not manage organisational or technical legacy and, starting from a blank page, are directly at the optimum in this area.
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For old Europe, there is no inevitability—let’s take action now!!!
Statistics show a worrying gap between Europe, the United States and Asia when it comes to the digitalisation of HR services. According to a 2023 study by Deloitte, 70% of US companies use AI solutions in their HR processes (China figures unknown), compared with only 38% in Europe.
PwC, for its part, reveals that 80% of US companies have already implemented digital platforms for talent management, compared with barely 50% of European companies.
These delays could have serious consequences. European companies risk falling behind in terms of competitiveness, challenged in their ability to attract and retain top talent, and struggling to meet the demands of a globalised labour market for the most educated populations.
Moreover—and this may be even more serious, the lack of HR investment—and the comparable efficiency spread with the US and/or Asia—will have a growing impact on the ability to raise capital from investors by durably weighing on their companies’ EBIT. Imagine, for example, what a saving of 10% of the payroll of your HR function does to your company’s value creation… Now imagine how durable that impact is, how it creates the capacity to invest in the top line rather than the bottom line, or enables you to return more value to your shareholders.
From this perspective, the question of HR performance is no longer only a matter for the CHRO; it also concerns the CFO, but above all the CEO, who must no longer accept seeing their investment capacity and strategic alignment reduced by an HR function carrying its technical and organisational debt.
What do we gain from it, I can already hear you asking?
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The benefits of HR Digital transformation:
- Efficiency and productivity: automating HR processes helps reduce human error, speed up processing times and improve employee satisfaction.
- Better decision-making: AI can analyse vast datasets to provide valuable insights, helping HR leaders make more rational, strategy-aligned decisions, beyond cognitive biases.
- Improved employee experience: digital solutions make it possible to personalise the employee experience, facilitate access to information and improve communication across hierarchical levels, breaking through the usual silos.
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A call to action!
It is crucial for HR departments in Europe to recognise this necessity and commit decisively to a digital transformation process. This is not only about adopting new technologies, but rethinking and reinventing service models to make them more agile, more responsive and more human-centred.
Investing in training and developing the digital skills of HR teams is an essential step. Working with technology experts and digital solution providers can accelerate this transition and ensure effective implementation.
Conclusion
Modernising HR services through digitalisation and AI is an essential step for European companies that want to remain competitive on the global stage. The accumulated lag compared with the United States and Asia is a wake-up call that must prompt swift action. HR departments now have the opportunity to transform their service model for the benefit of the company and its employees. It is time to rise to this challenge and embrace the future with the ambition it requires.
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