Digitalization of human resource management and the significance of motivation in acquiring digital skills for employee retention

doi: 10.56294/sctconf2024887

Category: Finance, Business, Management, Economics and Accounting

ORIGINAL

Digitalization of human resource management and the significance of motivation in acquiring digital skills for employee retention

La digitalización de la gestión de los recursos humanos y la importancia de la motivación en la adquisición de competencias digitales para la retención de los empleados

Ebnezer¹ *, G. Rajini¹ *

¹School of Management Studies, Vels Institute of Science, Technology and Advanced Studies (VISTAS), Pallavaram, Chennai, Tamil Nadu, India.

Cite as: Ebnezer, Rajini G. Digitalization of human resource management and the significance of motivation in acquiring digital skills for employee retention. Salud, Ciencia y Tecnología - Serie de Conferencias. 2024; 3:887. https://doi.org/10.56294/sctconf2024887

Submitted: 03-02-2024 Revised: 20-04-2024 Accepted: 12-06-2024 Published: 13-06-2024

Editor: Dr. William Castillo-González

ABSTRACT

With an effect of digitalization, there will be an internal shift in the organization with the new ways of working by the human resource by adapting the technology in different levels to develop the organization with the fast-growing technology in order to achieve the organizational objectives and global competence. The role of human resource will be totally transformed with the factors of technology. The organization has to perceive and adapt the change by handling the pressure of the human behavior for the change and implement digital tools in human resource by motivating them in acquiring digital competencies among the employees. The key purpose of this paper is in evaluating the effect of digitalization on HR practices, and how Motivation, intermediary element which permeates the digital skill gap in making an employee digitally competitive and to be retainable.

Keywords: Digitalization of HR; Skill Gap; Employee Motivation; Digital Skill Acquisition; Employee Retention.

RESUMEN

Con el efecto de la digitalización, habrá un cambio interno en la organización con las nuevas formas de trabajo de los recursos humanos mediante la adaptación de la tecnología en diferentes niveles para desarrollar la organización con la tecnología de rápido crecimiento con el fin de alcanzar los objetivos de la organización y la competencia global. El papel de los recursos humanos se transformará totalmente con los factores de la tecnología. La organización tiene que percibir y adaptar el cambio manejando la presión del comportamiento humano para el cambio e implementar herramientas digitales en los recursos humanos motivándolos en la adquisición de competencias digitales entre los empleados. El objetivo principal de este artículo es evaluar el efecto de la digitalización en las prácticas de RRHH, y cómo la motivación, elemento intermediario que impregna la brecha de competencias digitales, hace que un empleado sea digitalmente competitivo y retenible.

Palabras clave: Digitalización de RRHH; Brecha de Competencias; Motivación de Empleados; Adquisición de Competencias Digitales; Retención de Empleados.

INTRODUCTION

Digitalization has changed the way the HR and the organization function. The successful implementation of digitalization is purely based on the strategy of the organization in ensuring smooth transition in fulfilling its vision. There is a need to switch over to digitalization, this change can be challenging to both the organization and to the workforce. Digitalization requires the adoption of new knowledge and working skills. Motivation is the means of propulsion that guides the human resource to the right direction. Motivation promotes individual participation in the knowledge transfer process. Motivation influences in acquiring skills and to be innovative. Employee skill development can have a significant effect on both the employer and the employee. Motivation aligns the interest of employer and the employee. By acquiring technical knowledge, employees become more valuable to the organization. Learning new skill gives a new sense of accomplishment of his purpose in the employee’s career. In the dynamic atmosphere of changing technology and work environment, the employee become more competitive in developing broader understanding in their field of work, in solving the problems, implementing a better atmosphere paving a way for creativity, imparting proficiency, influencing the spirit of unity, and long-lasting commitment towards the organization. But there is a sense of diffidence among the employees in digitalization.⁽¹⁾ When there is a healthy relationship with the organization which is the culture that is being created, the bonding between the employer and the employee will directly result in the fulfillment of the purpose of the organization. Retention not only retains an employee but also retains the goodwill, knowledge capital of the organization that escalates its image and reputation. The acquisition of digital knowledge and experience gained over a period of time by an employee is irreplaceable. The abundance of standard output is the extension of secured supports from the organization towards its existing manpower. This research paper presents the selected model and revealed the advantages of addressing the skill gaps in a systematic and meticulous way of handling the existing employees considering the fact of their loyalty to the organization in avoiding employee attrition during the period of digital transition integrating technology. We have done an extensive search how current model and proposed theories in a comprehensive manner.⁽³⁰⁾

The existence of digital skill gap is a challenge both to the employer and the employees which is very critical and highly essential in this era. The proposed model is implemented properly the skill gap can be curtailed moreover there will a smooth and successful transition to digital environment.

Motivation is the internal force that initiates, guides amplifies the cognitive process of an individual to carry out the goals and desires. It is the stimulation to take part in an activity with an eager passion to complete the task. The individual improvement and gaining the competencies depends on the perception of motivation. Research supports the element of motivation improves the self-efficacy, better commitment and retention. This paper contributed of Acquiring digital knowledge and skill enhance their competence and creates a sense of gratitude towards the employer as it shows the concern of the organization towards the employee in their career competence and to remain longer in the organization. With the fast-growing technology and business, the organization needs to be competitive. The innovative factors are very important among the workforce. The culture of creativity and innovation with the help of technology by acquiring digital knowledge should be well initiated and encouraged. There is significance impact of motivation in introducing technology and influencing the employees in acquiring digital skills. Motivation inspires an individual in getting the effective knowledge being transferred. Motivation induces retention. Employees who are motivated, avail the opportunities to acquire knowledge and advancement. This growth eventually leads to retention.

Literature review

Digitalization of HR

Digitalization is an incorporation of technologies in every aspect of business, society and transforming the way of life. Human Resource Department is in no exception in this. Employees are the human resource capital and the most valuable asset in the organization, which is assisted by digital technology for greater productiveness. The organization must be ready for the adoption of technology to remain competitive.⁽¹⁴⁾ The human resource must be retained, developed and must be improved with the impact of digitalization, the work culture in the HR shifts from traditional human resource to digital HR. Digital Transformation is the results of utilizing the new technologies, processes, and operations, and benefit in business structures by change. Redesigning the role of human resource professionals and developing new competencies results in employee wellbeing and organizational sustainability in the digital era.⁽¹¹⁾ Absolute change takes place with the use of technology.⁽²⁷⁾ There is a need for re-skilling or up-skilling of the employees. Addressing the skill gap is the major challenge and crucial to the organization. There is an importance of attracting an agile workforce to new ideas and responsibilities emphasizes in quick acceptance, adaptability, and activation in the organizations.

Upgrading Skills

Digitalization has changed the workplace environment especially with the employees. Addressing the skill gap and preparing the individuals for the technology enabled environment stimulates the crucial need for both the organization and the employee. The technology related collaboration have forced the organization to adopt the work practices. There is a need for developing their abilities to address the changing work place abilities. Employees have to carry out the work in the organization with the help of technologies. Upgrading the skillsets, and thinking process is vital in possessing and enhancing their IT ability with this opportunity and filling the skill gap in digital transformation.⁽¹⁰⁾

Employee Motivation

In Webster’s dictionary expounds Motivation as “the mental process of arousing organism to action”. Towards the desired goal”. Motivation is derived from Latin word ‘movere’ which means to move.⁽²⁾ It’s an extraordinary production of an uncommon effect in a delicate sensible mind which cannot be easily measured but can be recognized.⁽³⁾ Abraham Maslow assumed that every human is inherited with great potential and has the passion to consistent growth. Hezberg in his theory states that there are some factors which motivates the employees. Motivation is a dynamic process which begins with human needs to make people perform in a specific way to achieve the organizational vision into reality and also fulfil their needs⁽²⁾. It generates the power in living creature in activating the behavior towards the right direction. Define motivation as “the desire to make high level of effort to reach organizational goals, by satisfying an individual’s need”. The use of technology in workplace is a system which can be conceptualized with techniques to transform inputs into outputs, There are technical tools incorporated in a workplace in value creation. The most cited theories in management is Dual Factor Theory by Hezberg which contextualize the hygiene factor is one of the most important motivator when it is designed suitably and favorably. The Self- Determination theory addressed the competency needs and freedom of work which is possible with digital technology motivates the employees.⁽⁴⁾ Highlighted the notion of reward on the creative task based on the performance. The terminology of technology and technological environment was used, later was structured into ICT application in the areas like communicating, training, easy and fast access motivates the employee in enterprise management system.⁽⁶⁾

Digital Skill Acquisition

The adoption and acquisition of new knowledge may create inertia and resistance because of the agitation of current job positions.⁽⁹⁾ But the dynamics of motivation will make an employee to participate and acquire digital skills.⁽²⁶⁾ The development of information and communication tools and its application, makes the employee to perform better. Motivation is a tool that retains the manpower in creating an atmosphere for learning; transmit the advanced knowledge to comprehend the task with much greater capacity, fabricating the adroitness to ensure the manpower. In the traditional environment, the knowledge sharing was in the process of newspapers and books whereas the knowledge resource in digital atmosphere is through digital based contents such as web, podcast, videos which are easier to acquire the digital knowledge. As stated above, the human capital which is the most valuable asset in the organization when acquires the digital skills it becomes intellectually very strong. Motivation directs the employees to acquire knowledge in recognizing the problem and generating solution for the same. Upgrading with new skills motivates the employees to feel exceptional and makes them to remain longer.⁽⁵⁾

Employee Retention

The concept of retention can be traced back to Hermann Ebbinghaus, a German psychologist in the late 19^th century. This concept of retention evolved over time and adapted to work place training and development.⁽¹⁹⁾ Retaining an employee during digitalization is crucial and valuable to an organization as the existing employee has the rich experience and deeper understanding of the organization’s culture.⁽⁸⁾ work revealed the outcome of how motivation leads to retention. It is more cost effective to retain an employee than recruiting a new one. The culture and ethics of the organization is familiar to the employee who is with the organization who will be loyal and with a special bonding. Existing employees will adapt to change effectively and quickly and the reputation of the organization will be greatly escalated. Organization must know how to motivate and inspire the employees to be retained. Retention is the result of Motivation and the key element of Retention is Motivation. Retention of employees is an ongoing process in motivating them to stay longer which is very vital in the success of human resource.⁽⁷⁾

METHOD

Motivation and Digital Skill Acquisition

The sole focus of motivation may not be adequate in manifesting the effective in employee retention. Technical knowledge is the crucial prerequisite in using the information communication tools. This preconditioning of employees needs motivation to concentrate and use the critical advantages of using digital tools. Motivation integrates the employees and the digital tools thus engage more deeply with it resulting in enhanced quality and performance. The creative task give the power to influence. The development of technology changes the work process motivates the workplace, and the employees.⁽¹⁸⁾ Motivation influences not only the learning mechanism but also supports the new ideas. The results obtained are moderate where motivation substantially reach out to digital skill acquisition in employee retention (Outcome).⁽²¹⁾

Data Collection

The primary data collection was done on online mode, questionnaire pertaining to topical question obtained from the review literature.⁽³²⁾ Purposive sampling technique is adapted in this study. The pilot study was conducted on HR professionals to evaluate the viability of the variables. In this assessment, questionnaire was prepared in two different parts, the former part consists of the demographics of human resource employees and the latter part consists of the factors of digitalization comprising eight different sections steering to retention was measured in order to test the hypothesis.⁽¹⁶⁾ The questionnaire designed aptly with clarity to procure the attributes via Google form.

Within the time span of four months from October 2022 to January 2023, the survey was done on HR on selected companies in Chennai. The survey link was shared thru online. Each and every factor appraised on a five-point Likert Scale ranging from (1) Strongly disagree (2) Disagree, (3) Partially agree, (4) Agree (5) Strongly agree. Architectural Diagram shown in figure 1.

Architectural Diagram

Figure 1. Architectural Diagram

Implementation details

Digital Skill Acquisition and Retention

In the above stated framework (Framework-1) elucidates the variable factors of Digital Technology which impacts the HR and the significance of Motivation as a mediating role in acquiring the digital skills. The employees are positively motivated to acquire new skills by using digital means with no restriction of time and location. Acquiring digital skills are organized through proper strategies in empowerment of employees with digital skills. Employee motivation is predictor of Knowledge and skill acquisition.⁽¹²⁾ Motivation creates awareness about the potential of technologies and the development of digital competence by acquiring digital knowledge.⁽²²⁾ Motivation is an influence to shift from traditional to digital skills. Thru motivation the workforce is imparted with digital skills.

The maximization of the efficiency of human resource are achieved thru effective integration of factors of digitalization and the human resource. Technology is always favorable to encourage employees in engaging the learning process. The innovative practices increase the level of cooperation and collective learning. Has the opinion that the innovation leads to learning and learning stimulates to the development teams.⁽²³⁾ Motivation recognizes the trust, commitment, responsibility which considers the loyalty in improving the intellectual capital of any organization. Argues that motivation that makes technological system successful in the organization.

Hypothesis Development

H1: There is a significant impact of Technology, Innovation Knowledge Transfer, Autonomy and Teamwork on Employee Retention.^(13,15)

Technology assists in creating a strong HR. Human Resource and Technology have wide impact on each other. The human resource must adapt in re-engineering the function of HR with technology.⁽²⁰⁾ The work of the human resource has been made easier and simpler with the help of technology. Technology works as a change agent in human resource. Technology is an instrument in human resource to be innovative to create new thought, strategy and idea. According study technology is a set of processes that gives skills and techniques that creates an atmosphere for effective knowledge transfer and management. Technology has made it possible to reach information anywhere. States that in technology there is a transitional change from individual to teams. The organization helps the employees to accept and embrace technology as they are the life blood of the company.

H2: There is significant relationship between factors of digitalization and motivation.⁽³⁶⁾

According to interacting an individual in a situation to bring an expected change is the result of motivation. Digitalization positively changes the shape of the organization. Employee feels using latest technology is modern and progressive, Digitalization has made HR function easy and convenient. Digitalization empowers the HR significantly with digital factors clarifies motivation as “high level learning strategies, which focuses, connects, plans, and monitors”. It’s challenging in making employees to use technology; Motivation is an encouragement to the workers to work with technology.

H3: There is a significant influence of level of motivation and digital skill acquisition

Adoption of technologies necessitates the digital skills required for the present and future assignments and requirements.⁽³⁷⁾ The electronic based learning is promoted through web-based learning to develop their technical skills. Employee feels secured and motivated when the organization is technology friendly making their job simple an enjoyable. The continuous growth of technology motivates for development of greater digital competence among the HR and increased their level of motivation. Digital skills initiate in beginning of digital network in the organizations. Research has proved knowledge and skill acquisition is linked to motivation as digital skills improve the efficiency of existing employees in diversified, healthier workforce. Digital technologies modify employee’s perception and change the structure of mindset by motivation.⁽³⁵⁾

H4: There is a significant connection between digital skill acquisition and the employee Retention.⁽¹⁷⁾

By acquiring digital knowledge and skill, the employees become proficient in digital skills.⁽²⁵⁾ Technology helps organization on focusing each and every employee not only on training but also to retaining. Knowledge and Skill acquisition helps to overcome the inefficiencies, which enable employee development and retention.⁽²⁴⁾ The knowledge transfer impacts on loyalty and in turn results in retention. Success of any organization is based on the quality of human capital. The digitalization fills the skill gap which develops the loyalty among the employees resulting in retention of knowledge-based asset.⁽²⁸⁾

RESULTS AND DISCUSSION

Software (SPSS) was applied in evaluating Descriptive statistics, Multiple Regression in analyzing the various ‘factors influencing digitalization of human resource’. The relationship between factors of digitalization and level of motivation is derived from multi correlation.⁽²⁹⁾ The mediating effect of knowledge & Skill acquisition between level of motivation and employee retention computed using Hayes process. Cronbach’s Alpha was used to determine the consistency of the factors and the result is 0,877 giving the reliable scale within the variables.

Demographic Variable Chart

Table 1. Demographic Variable Chart

Demographics

Frequency

Percentage

Gender

Age (in years)

<25

26-35

36-45

Above 45

Education

Diploma

Professional

Others

Experience in the company

(in years)

0-5

06-10

10-15

<15

Total Experience (in years)

0-5

06-10

10-15

<15

Annual Income (in INR)

Less than 5,00,000

5,00,000-7,00,000

7,00,000-900,000

Above 9,00,000

Family Income (in INR)

Less than 7,50,000

7,50,000 to 10,00,000

10,00,000 to 15,00,000

Above 15,00,000

Does the department have the uninterrupted internet supply?

Yes

100

Type of family

Independent

Joint

Prefer not to say

Demographical Data

In table 1, the female respondents outnumber the male by 62 percent to 38 percent. According to respondents the age group 26-35 has the highest percentage of (61 %). With regard to the professional level, post-graduation level and fresher have answered the questions with 47 percent. Based on their annual income respondents between 5, 00,000-7, 00,000 INR is high with family income of less than7, 50,000 INR. Hundred percentages of internet connection and majority in the type of family are independent in nature.

Descriptive Statistics of Digitalization of HR

Table 2. Descriptive Statistics of Digitalization of HR
	Minimum	Maximum	Mean	Std. Deviation
Technology	3,20	5,00	4,6270	,47030
Innovation	3,50	5,00	4,5130	,45230
Knowledge Transfer	3,40	5,00	4,5140	,46298
Autonomy	3,00	5,00	4,3540	,49735
Teamwork	3,30	5,00	4,5050	,43330
Motivation	3,20	5,00	4,5160	,46639
Skill Acquisition	3,50	5,00	4,4980	,45704
Retention	2,40	5,00	4,2880	,54574

Above the table 2 shown in Descriptive Statistics of Digitalization of HR.⁽³³⁾ The numerical information presents the descriptive factors of digitalization on HR, revealing an overall mean score of 4,47 % of human resource being impacted by digitalization. This result will be the initial indicators to digitalize the HR practices in different organisation enabling employees to possess the necessary technological skills to work innovatively thru proper knowledge transfer, independently, connected virtually as team thru motivation and skill acquisition in promoting employee retention.^(38,43)

Multiple Correlation

Table 3. Multiple Correlation
	Technology	Innovation	Knowledge Transfer	Autonomy	Teamwork	Motivation
Technology	1
Innovation	,725^**	1				.
Knowledge Transfer	,557^**	,640^**	1
Autonomy	,552^**	,604^**	,631^**	1
Teamwork	,470^**	,411^**	,531^**	,582^**	1
Motivation	,607^**	,567^**	,628^**	,603^**	,537^**	1
**. Correlation is significant at the 0,01 level (2-tailed).

The above table 3 reveals that there is a correlation analysis between the factors of digitalization and motivation. Karl Person method of correlation co efficient is performed in SPSS to evaluate the degree of relationship between the factors of digitalization; technology, innovation knowledge transfer, autonomy, and teamwork with motivation. The correlation is perfectly positive with its p-value is 0,00 and is less than significance level.

Process of Andrew F Hayes

Y: RETENTION

X: MOTIVATION

M: DIGITAL SKILL ACQUISITION

Findings in Process of Andrew F Hayes

Table 4. Findings in Process of Andrew F Hayes
R	R-sq	MSE	F	df1	df2	p
,5471	,2993	17,1825	13,6687	3,0000	96,0000	,0000

	Coeff	Se	T	p	LLCI	ULCI
Constant	39,2576	,4883	80,3898	,0000	38,2883	40,2270
Motivation	,1824	,1196	1,5248	,1306	-,0550	,4199
Digital skill acquisition	,3526	,1156	3,0510	,0029	,1232	,5820
Int_1	-,0453	,0199	-2,2761	,0251	-,0847	-,0058

R2-chng	F	df1	df2	P
,0378	5,1805	1,0000	96,0000	,0251

The above stated calculation derived from Hayes Process which displays model where Motivation handout to digital skill acquisition in employee retention (Outcome).⁽³⁹⁾ The model provides R, R-Sq, F statistics and overall p value of the model. 29,93 % (R-Sq) change in the employee retention is being accounted with the factors of motivation and digital skill acquisition its p value which is less than,0251. Findings in Process of Andrew F Hayes shown in table 4.⁽⁴⁰⁾

Regression Analysis

Effect of Digital Skill Acquisition on Retention

The relationship between digital skill acquisition and retention was conducted using SPSS software. The regression evaluation reveals the effect of correlation between skill acquisition on employee retention.⁽⁴²⁾ Digital Skill Acquisition significantly predicted Retention F (1, 98) =27,574), p<0,001, which indicates that skill acquisition can play a significant role in employee retention (b=,499, p<,001). The model also explains the 72 % of the variance in employee retention with the predictor graph. Effect of Digital Skill Acquisition on Retention shown in table 5. Hayes process are shown in table 6.^(41,44)

Table 5. Effect of Digital Skill Acquisition on Retention
Model	R	R Square	Adjusted R Square	Std. Error of the Estimate
1	,769^a	,720	,712	4,32975
a. Predictors: (Constant), Digital skill acquisition

ANOVA^a		Sum of Squares	Df	Mean Square	F	Sig.
Regression		516,926	1	516,926	27,574	,000^b
Residual		1837,184	98	18,747
Total		2354,110	99
a. Dependent Variable: Retention; b. Predictors: (Constant), Digital skill acquisition

Coefficients^a		Unstandardized Coefficients		Standardized Coefficients	T	Sig.	5,0 % Confidence Interval for B
Model		B	Std. Error	Beta			Lower Bound	Upper Bound
1	(Constant)	16,236	4,294		3,781	,000	7,715	24,758
1	SUM_ACQU	,499	,095	,469	5,251	,000	,310	,687
a. Dependent Variable: RETENTION

Hayes process

Table 6. Hayes process
Hypothesis	Regression Weights	Beta Coefficient	R Square	F	p-value	Hypothesis supported
H4	SK A -> RET	,499	,720	27,574	,000	Yes

Figure 2. Predictor Graph

DISCUSSION

The linear line shows the constant result (Y=16,24+0,5) of digital skill acquisition and there is an increase in employee retention rate. And increase in the unit of digital skill acquisition the employee retention score also increases.

CONCLUSION

Increased employee knowledge, encourage career planning, and create balanced organizational structure. Acquiring digital skills and their receptiveness is not only important but priority in digitalization of HR. Expanding employee knowledge and skills fills the existing skill gap and increases employee motivation.^(31,34) A digitally trained employee must be retained as a productive work force. It retains the knowledge within the organization. It would be very difficult to substitute the competence of the skilled employee. According to the ability of the organization is the result of retaining its skilled employees to achieve the set goals. When knowledge and skills are transferred, the employee will be fully equipped to the job ensuring the application of his digital capability and taking the organization’s vision to the pivotal stage. Coming to the end of this research cessation, the digitalization of human resource and its consequences in influencing digital skills will have greater result both to the employer and to the employee. This research still has some drawbacks. The analysis is limited to geographical location of Chennai city. Furthermore, this study appraised the influence of digitalization on human resource within the scope of the organizational requirement without taking into consideration of competitive opportunities which matches their skills and interests in a global level. These limitations can be taken for further research.

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FINANCING

None.

CONFLICT OF INTEREST

None.

AUTHORSHIP CONTRIBUTION

Conceptualization: Ebnezer, G. Rajini.

Research: Ebnezer, G. Rajini.

Writing - original draft: Ebnezer, G. Rajini.

Writing - revision and editing: Ebnezer, G. Rajini.