Exploring the Effects of Digital Transformation on the Human Resource Management Function of SMEs in New Zealand

Abstract

In today’s rapidly evolving digital landscape, Human Resource Management (HRM) practices in small and medium-sized enterprises (SMEs) are undergoing significant change as they integrate new technologies into everyday operations. However, much attention has been given to large corporations, and the lived experiences of SME managers navigating HR digitalisation remain underexplored. This study delves into how digital transformation reshapes HR functions within New Zealand SMEs, where formal HR departments are often absent and SME managers are responsible for recruitment, performance management, and employee engagement.

Using a qualitative, interpretivist approach, this research captures the lived experiences of 11 SME managers through semi-structured interviews. These participants, selected via snowball and convenience sampling, share practical insights into using digital HR tools. This study used the Technology Acceptance Model (TAM) and the Resource-Based View (RBV) as the theoretical framework. Findings reveal that some SMEs are increasingly integrating technologies such as payroll, rostering, and communication tools to automate routine HR functions and reduce administrative burden. However, some SMEs use more advanced HR ecosystems for their day-to-day operations. These tools were being adapted and customised to suit internal workflows. This allowed SMEs to build strategic digital capabilities and transform the HR function. This supports efficiency, transparency, and data-informed decision-making. Finally, the study identifies key barriers that shape digital adoption, including cognitive overload, skill limitations, and low awareness. Yet, it also shows how SME adapt and learn through experience, reshaping their digital strategies over time.