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February 27, 2020

The role of technology in HR and financial operations

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By Julian Dietz, Managing Director at TMF Czech and TMF Services Slovakia. 

Advances in technology can help in all aspects of running a business more effectively. Incorporating technology into today’s ever increasingly complex world and changing global economy is imperative and should be part of your business’ key strategies.

Digitisation, artificial intelligence, self-driving cars, robotics – these buzz words are everywhere. Is this really the future, or just more trends that Wall Street and many others are betting on? Is it only reality for the Googles and Apples of our world, or also for the Czech Republic? 

We are witnessing a new industrial revolution which will change work and our lives and features an enormous push for efficiency, higher productivity and higher profits. New technologies allow us to automate very complex processes and predict human and corporate behaviour. 

Artificial intelligence is already helping to increase productivity in certain sectors where we have seen stagnation for many years, such as banking, insurance and financial sector. 

Technology as an enabler

Top US and Chinese companies such as Google, Amazon, Tencent and Apple are already implementing artificial intelligence to make recruitment and onboarding more efficient. Predictive analytics can be used to internally address employee concerns more quickly, while AI is being integrated into employee feedback systems to ensure problems are delivered to the most relevant of HR management. AI can help to determine which workplace strategy has led to the best outcomes in a conflict and have showed a significant improvement in employee retention. 

Recruitment and retention are not the only benefits to organisations using automation and AI. Automation has already revolutionised payroll processes. Overall time spent, costs and error margins have significantly decreased over the last decade, thanks to automation. AI can be used to run automated eligibility checks and reports, focussing not only errors, but also highlighting areas where errors were made or have led to complications. The quality and accuracy of payroll is often an underestimated employee retention function.  

Risks 

While the implementation of technology has many benefits, it also opens your business to cybersecurity threats. Companies must make sure that they are doing everything they can to keep employee and client data safe. The types and severity of cybersecurity risks depend on where the HR tools and systems are set up and which vendor was contracted. 

Where does this leave us?

The point of no return has already been crossed. When we look at our daily lives, although signs of advanced technology and artificial intelligence are not clearly visible, we are still impacted by it. 

However, in day-to-day activities, there is still paper all around us. Original signatures must be submitted, original files must be stored at large archiving companies, sometimes up to 30 years, for the personal records of employees. Tax inspectors expect to see original invoices, sometimes signed and stamped. Timesheets are on paper, signed by hand and stamped and holiday requests are waiting in the drawer of the line managers to be approved. 

This is the reality in the Czech Republic. The question is – why is the second biggest car producer per capita, so far away from adopting digital advances?

Firstly, concentration on the production industry and investments (foreign and domestic) in the service sector have mainly been based on low salary levels and higher educational standards. Human capital theory assumes that investments in education increases worker´s productivity, which in macroeconomy leads to productivity growth across sectors. Efficiency and productivity per capita was not the key motivation. Secondly, despite improvements Czech Republic ranks at 18 out of 28 in the DESI Index 2019. This index measures the evolution and the digital competitiveness of EU member states. Among all dimensions of DESI Index (Connectivity, Human capital, Use of internet services, Integration of digital technology and Digital public services), Czech Republic ranks highest in the integration of digital services domain especially thanks to high scores in e-commerce and online shopping. Despite Czech Republic improved its score in digital public services, its scores are still below the EU average. The level of digital skills in the population remains insufficient and the digitisation of business in not progressing as fast as it could. 

 Manual processes within the government services (digital archiving, automated filing and registration, etc., often prevent the private sector to invest more into digitization and automation. 

Today the tide is turning, with a rapidly declining unemployment rate, full employment in the main towns and cities, annual salary increases above inflation, the focus on efficiency, productivity and cost effectiveness has reached Czech Republic. Despite continuous growth, HR and finance departments need to reduce costs and increased efficiency is demanded of existing staff. The focus will automatically shift to a smarter way of working, by reducing paper, digitising processes, automating applications and filing, and digitising historical and future personal data. 

I strongly believe we are just at the beginning. HR and finance departments will be at the forefront of this process over the next two to three years. 

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