Digitalisation is transforming how companies work in ways that were previously unimaginable. COVID-19 has shown that mass remote working can succeed and new ways of doing business have taken hold at an unprecedented rate. Companies are trying to make the most of the benefits of digitalisation across all their functions and HR is no exception.
HR departments have traditionally been transactional service providers in Middle East companies, organising recruitment and arranging visas for overseas workers, among a range of tasks. However, over the past few years, we have noticed a desire among both private companies and the public-sector organisations we work with to transform the role of HR and make it a much more value-adding strategic function that shapes talent, develops leaders and enhances the overall employee experience. Digitalising HR is a critical lever that companies need to get right in order to achieve these goals.
To better understand what steps organisations need to take to digitalise HR, we carried out a survey between February and June 2020, adjusted in the later months to take account of the impact of the COVID-19 pandemic. In addition, we conducted a series of detailed interviews with private and public-sector executives across the Middle East.
Key findings
Our survey of 608 executives and HR professionals across the region highlighted the following key points.
72% of respondents confirmed that COVID-19 has accelerated digital transformation in the Middle East.
Only 9% of respondents believe that their HR function is leading or innovating with digital technologies.
Only 48% of respondents said back-office HR tasks are ripe for digitalisation.
Upskilling is the primary enabler of digital transformation. Bringing in digital skills from outside the organisation as well as flat & flexible organisational structures are also important.
49% of respondents identified the CEO as the main sponsor of digital. CEOs are 4-10 times more likely to lead digital transformation than any other C-level or senior executives.
64% of respondents believe HR should evolve into a talent developer or a change leader in the organisation.
Only 26% of respondents said HR should evolve to play a more advanced role in employee experience design, suggesting there is room for more digital ambition.
RoI (return on investment) is the most critical factor for organisations when deciding whether to invest in digital technologies, with innovation in second place.
55% of respondents believe HR’s biggest contribution to digital transformation is digitalising HR processes
Currently, only 9% of participants reported that their organisations are innovating in HR with digital technologies and 55% see HR’s biggest contribution to the overall digital transformation of their organisation as digitalising HR processes.
These results clearly indicate that HR principally promotes digital transformation through adopting technologies to enhance HR processes, rather than by driving innovation or ensuring the organisation has the capabilities to support broader digital objectives. Yet a well-designed digital transformation of the HR function will achieve both outcomes.
Companies in the region certainly understand that increasing the digital skills of their workforce is crucial. However, there is still a great deal of work to be done. 48% of the respondents believe that, going forward, the HR function will be expected to support the digital transformation of the whole organisation by driving changes in company culture and mindset. Additionally, 64% think that HR should evolve into a talent developer or a change leader of the organisation.
Overall, the survey responses showed a lack of awareness of the emerging technologies that exist, and their potential impact on businesses, beyond automation and cost reduction. Our report aims to help bridge this gap by considering the steps that organisations are planning to take to drive digital upskilling and transformation, and the potential role that HR can play.
What is the digital maturity level of the HR function in your organisation?
In what direction do you believe the HR function should change in the future?
Recommendations from Middle East executives
- Top benefits of HR digitalisation
- Key obstacles to overcome while digitalising the HR function
- Advice to HR leaders seeking to make digitalisation of HR a priority for their CEOs
Top benefits of HR digitalisation
Faster
Automation streamlines routine tasks and supports HR teams to work in more agile ways and focus on strategic priorities.
Smarter
More accurate data and better analytics support decision-making and identify gaps in capabilities.
Happier
Digital records enable transparency about how employees' careers are managed, and tools such as apps to access payslips improve the employee experience.
Key obstacles to overcome while digitalising the HR function
Cultural barriers
Leadership support is lacking, and organisations are not yet digitally mature enough to see how digital tools could transform HR into a strategic function.
Skills barriers
There are too few people with digital skills in the organisation to support the transformation and maintain the systems once they are in place.
Funding barriers
Digital investment in the core business is often prioritised, with support functions including HR overlooked by IT teams. HR teams must make a clear business case.
Advice to HR leaders seeking to make digitalisation of HR a priority for their CEOs
Have a financial goal as well as an operational one
Automating processes frees up admin staff to carry out value-creating tasks, or brings down headcount and need for office space.
Highlight oversight benefits
Daily dashboards of employee performance metrics delivered to leadership teams paint a real-time picture of where issues are occurring.
Show the potential in talent acquisition and retention
Using AI in CV screening can speed up recruitment and digital processes provide a better service to employees, with clear oversight of career development.
Key takeaways
Our survey, conducted while COVID-19 severely disrupted how companies normally work, shows that HR functions in the Middle East still have a significant opportunity to use digital technology to play a key role in their organisation’s broader digital transformation, as well as further automating processes such as CV screening, assessments and training.
Seizing this opportunity will turn HR into a more proactive function, which survey respondents have identified as a key priority for organisations across the region. As automating the most day-to-day HR processes becomes a given, staff trained with the right skills can instead spend their time managing every step of the employee experience and identifying skills gaps ahead of time, using digital tools. Building up these capabilities will still involve hiring outside digital HR talent and leveraging this infusion of external capabilities to boost upskilling of own HR employees – internal digital HR capability-building remains key to successful digitalisation.
The biggest obstacle to digital transformation is changing deeply-rooted organisational mindsets that may regard digitalisation as a means to cut jobs, while remaining unsure of how to implement it and unaware of all the potential benefits. Our survey responses show that leaders expect HR departments to help address these cultural barriers. Doing so will require all their expertise in managing the human aspect of organisational change, through incentives that motivate employees to change their behaviours to ensure that digital transformation succeeds.
Digital HR across industries
21% of respondents from the Public Sector said that their organisation is innovating HR with digital technologies compared to just 9% of all respondents. Find out more about how the Government and Public Sector are utilising digital to transform their HR functions.
45% of the health sector believed that HR should invest in advanced recruiting tools. As the health sector is largely a contingent workforce, it is important for organisations to focus on employee experience and journey, as attraction is more important than retention. Find out more about how the Government and Public Sector are utilising digital to transform their HR functions.
About the survey
PwC Middle East and SAP surveyed 608 executives and HR professionals from different industries and countries across the Middle East for the Digital HR Survey 2020. The purpose of the study was to better understand the steps organisations need to take to transform the role of HR into a more strategic, value-adding function. The study included both questionnaire responses and in-depth interviews with select senior participants.
The survey was fielded between 16 February and 28 June 2020.
Respondents by location: 39% United Arab Emirates, 27% Saudi Arabia, 10% Egypt, 8% Qatar, 11% other Middle East countries, 5% outside the Middle East
To validate the findings, PwC Middle East also conducted 13 interviews with government and private sector representatives working in organisations based in the UAE, Saudi Arabia and Kuwait. These interviews are summarised in the ‘Recommendations from Middle East executives’ section.
Digital HR Services
What if you were able to invest in new digital initiatives while reducing overall organisational costs and improving your performance? PwC Middle East has 70+ digital HR experts who can help modernise your HR function by simplifying processes, shifting technologies to the cloud, and embedding wider digital HR solutions, such as self-service, automation, AI and other predictive talent tools.
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