Digitalization: Concerns and Common Misconceptions

By Juliane Rahmel  -  Nov 11,   2020



Digitalization is now affecting different areas of companies and different aspects of our daily lives. It's spreading through several different business areas and industries. The so-called digital change can be considered the main engine of progress of our time. One of the many lessons already learned in 2020 is that the digitalization of processes and communication channels can enable companies to react quicker to changing conditions and circumstances, and to work in a more agile and decentralized manner. Nevertheless, the term digitalization still triggers associations with job cuts, or unfair treatment of older employees. In this article, we'll take a closer look at this phenomenon and provide you with an overview of common opinions on digitalization in Germany.


How Is Digitalization Changing Jobs in Companies? 

The way we work together has been dramatically and constantly changing in the past years, and this isn't just an effect of the ongoing pandemic. Terms such as digital transformation, industry 4.0, internet of things, subscription economy, and video calls, are frequently heard in this context. A reverse trend back to landlines, fax machines, binders full of personnel files isn't anywhere in sight. Digitalization is leading companies into an even more networked, communicative and comprehensive documented future and employees. For example, a well-structured IT infrastructure enables different teams to work in a decentralized manner around the globe from the comfort of their own homes, and employees can communicate internally in a faster and more effective manner. 


In order for companies to remain competitive after 2021, it's recommended to start building bridges between the origins of the company and its future. This should be done in a way that it's perceived as a transformation in a positive sense rather than a disruption that will have definite negative consequences. The digitization of internal processes is a challenge primarily for the HR department. Ideally, changing these processes should be done with the supervision of competent partners, in order to ensure that all employees are optimally supported and empowered when it comes to adapting to the new ways of working. Naturally the basic prerequisite for this is adequate openness in management and amongst the employees towards the 'new and digital'. It's normal that a number of common work practices and processes might be reconsidered in order to become even more efficient. By digitizing business processes, the working time gained through this optimization will create new opportunities to work on tasks and issues that would usually be left out. In addition to the the optimized processes, there's also a number of processes that can be completely substituted with digital and automated tools. For example, the documents that need to be signed which the secretary was left wandering with from one department to the other, the time off requests that would usually take several days to weeks to be approved, or even the travel expense report that has all the physical receipts that were issues over the course of several days that would eventually have to be manually entered and processed in one spreadsheet. Having to do less of these tedious and repetitive tasks will make employees happier, since they can use the time to focus on other tasks that can make them feel more productive and have a higher added value.


How Digitalization Is Perceived by the Employees

According to a Bertelsmann study, 85% of the 211 expert participants believe that both working from home and mobile working will become solid alternative ways of working. The newly introduced tools for bridging physical distances will probably continue to shape how we collaborate in the future. A few years ago, this change already sparked a debate about potential job losses and the older generation's attachment for conventional methods of working, and how it might be more challenging for them to change how they work, in comparison to digital natives. However, experience in recent years hasn't provided any justifications for this fear of unemployment. The digital change has a revolutionary character; creating new jobs and pushing people to adapt to the current conditions of our times –just as it happened during the industrial revolution. A study by the Institut der deutschen Wirtschaft has shown that the fear and worry about digitalization being a threat to employment and jobs has no substance. For the purposes of this study 1,200 HR managers and managing directors of German companies were interviewed. The study showed that 62% of highly digitalized companies were hiring additional employees between 2015 and 2017.


85% of experts believe that working remotely will become the new and standard style of working


The development naturally depends on the flexibility of the employees and their potential to take on the additional tasks that have been created by the introduction of new technologies. The job descriptions are characterized by constant change, i.e. the division of labor between man and machine is always changing. Nonetheless, as long as employees are able to adapt to changing requirements and conditions, technological changes won't lead ti job cuts. Therefore, it's of particular importance that companies help support and empower their employees accordingly when digital changes are being implemented,


= Maximizing personal potential through digital technology


Digitalization Rate in Germany

The level of employee preparedness in Germany when it comes to a digital future is different from region to region. A study conducted by 'Wer liefert was' in cooperation with the market research institute Kantar EMNID surveyed 1,000 employees on the subject of digitalization and challenges. The study revealed that 67% of the employees in western Germany feel adequately equipped and prepared, whereas only 57% of employees in eastern Germany said they felt ready. In addition, only 17% of employees in the West and 7% in the East stated that their employers are prepared for this sort of technological change.


  Employee readiness for digitalization Employer readiness for digitalization
West Germany 67% 17%
East Germany 57% 7%


This type of comparison leads to the assumption that the digitalization strategies are poorly communicated in the companies surveyed here, which resulted in a poor employer image, in spite of employee willingness and readiness being rated way higher.

The differences in the digitalization index can also be seen when comparing different industries. The study 'Digitalization Index for SMEs 2019/2020' by Techconsult on behalf of Deutsche Telekom surveyed 2,095 small and medium sized companies on their level of development and found, that. the degree of digitalization has increased in all industries in comparison to the previous year. Medium sized companies scored 56 points (out of 100), which is one point higher than the previous year. So things are clearly moving in the right direction in Germany.

Service companies scored 51 points, which is 5 points lower than the average of that industry. Of course, this varies depending on the size of the company; larger companies scored 58 points. According to the study service providers, such as tax consultants, law firms, agencies, and real estate managers, have pretty good chances when it comes to being ranked in the digital index, if they make sure to take digitalization into account in their business model that is.


Circula is the ideal partner for your expense management. Circula's expense management app makes it easy to account for all employee expenses - per diems, cash expenses, travel expenses, and out-of-pocket expenses. The intelligent Circula corporate credit card adapts perfectly to your business processes and offers further premium benefits with attractive cashbacks. In addition, Circula offers companies tax-optimized employee benefits such as the digital lunch benefits and a flexible mobility budget with which employees can be supported.


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Juliane Rahmel

Juliane ist seit Juli 2020 Senior Marketing Manager bei Circula und verantwortet damit auch das Content Marketing des Startups. Vorher hat sie als Beraterin und Strategin in Marketingagenturen zahlreiche Kunden in der B2B- und B2C-Kommunikation betreut.