Human Development Index for employees in digital workplace: A conceptualization and proposed measurement

Abstract

Purpose

The Human Development Index (HDI) measures the quality of education, health, and standard of living at the macro level. This study proposes a conceptual framework of the Digital Employee Human Development Index (DE-HDI), introducing a novel construct and its measurement dimensions within the digital workplace context at the micro level.

Design/methodology/approach

This study adopts a qualitative research design using a hermeneutic approach grounded in action theory. Data were collected through semi-structured interviews and focus group discussions, enabling an in-depth interpretive analysis to develop the conceptual definition of DE-HDI and to systematically construct its key dimensions and corresponding indicators.

Findings

The findings advance a novel conceptualization of DE-HDI as a multidimensional construct encompassing digital capability, digital well-being, and digital livelihood, along with their corresponding measurement indicators.

Originality/value

This study contributes to the literature by extending the human development paradigm to the employee level and offering a theoretically grounded framework for understanding employee development in the context of digital transformation.

Keywords

digital workplace Human Development Index employee values human resource management

Introduction

Digital transformation has changed all areas of life, including the workplace.^1,2 Countries typically use the Human Development Index (HDI) to assess health, education, and quality of life. This metric, established by the UNDP, is widely referenced to evaluate national progress. As society becomes increasingly digital, experts predict that exposure to digital technology will influence human development. While researchers have explored adapting the HDI to digital life, most studies focus on the macro level rather than the micro level.^3,4 Often, HDI is measured across broad population groups or demographics,^5,6 but examining human development at smaller units, such as families, workplaces, or communities, is necessary. Most people belong to the productive age group (18–57 years old) spend much of their time working. Thus, workplaces play a vital role in supporting employee development.^7,8

Today’s workplaces are almost certainly utilizing digitalization practices to enhance work efficiency.^9–11 Therefore, measuring HDI at the employee level is crucial. This is because employee well-being in the workplace directly impacts the quality of human development. This research aims to develop a measurement metric, which we refer to as the Digital Employee-Human Development Index (DE-HDI). DE-HDI can be utilized by HRD managers, researchers, or digital workplace policymakers to assess an organization’s readiness for sustainable digital transformation. The DE-HDI can also be linked to digital corporate social responsibility (CSR) and corporate social contribution. The DE-HDI, a development of the HDI and the digital HDI, will contribute to efforts to improve the welfare of citizens and the productive-age population, particularly those working in sectors or patterns of digital transformation in the workplace.

The next question is, what about blue-collar jobs? Like factory workers, production operators, etc., who may have minimal exposure to digital work transformation? While automation can displace specific blue-collar jobs, it also creates opportunities for workers who adapt and acquire new skills. However, the transition can be challenging, especially for workers in industries that rely heavily on manual labor. Policies focused on reskilling, education, and social safety nets are crucial for mitigating the adverse effects of automation and ensuring job security. Overall, digital transformation reshapes blue-collar jobs by introducing new technologies, requiring skill development, and changing job dynamics, while also presenting challenges related to adaptation and job displacement.

In general, automation impacts blue-collar job security in both negative and positive ways. Negative impacts include job displacement as automation replaces repetitive, manual tasks, leading to layoffs across industries such as manufacturing, logistics, and construction. Skill Mismatch, by which workers lacking technical or digital skills may struggle to transition into new roles created by automation, thereby increasing unemployment risks. Meanwhile, the positive impacts include, first, the creation of new roles as automation generates demand for jobs in areas such as robotics maintenance, programming, and data analysis; second, upskilling opportunities. Employers may invest in training programs to help workers adapt to new technologies, improving employability. Thirdly, improved workplace safety, where automation reduces the need for workers to perform hazardous tasks, enhancing safety and job satisfaction and fourthly, higher productivity, where automation leads to more efficient operations, potentially stabilizing industries and creating long-term job opportunities. Therefore, we argue that there is no significant difference in the measurement of the Human Development Index in the digital workplace between blue-collar and white-collar workers. Our proposed measurement can be used to look up both types of employees.

Literature review

Reconstruction of the HDI from the employee perspective

Generally, the HDI is an index used to measure human development at the macro level. The measurement encompasses three main pillars: educational equity, health, and income/living standards. As we enter an era in which digital technology has become a primary tool in our lives, it is necessary to reconstruct the HDI measurement and the digital society index. We attempt to begin with a microstructure. This research focuses on the working environment, which constitutes the dominant segment of a country’s population structure. Productive workers typically fall within the age range of 18–57. They spend most of their lives working, and exposure to workplace policies influences their level of development. Therefore, the concept of the digital employee-human development index aims to capture the digital HDI at the micro level, resulting from digital transformation in the workplace.

Several studies have also attempted to measure the HDI from the employer’s perspective, including well-being. Due to automation and digitalization in the workplace, the digital employee HDI has become an exciting focus. The OECD Framework for Measuring Well-Being includes 11 dimensions of well-being outcomes.¹² These dimensions are Income and Wealth, Jobs and Earnings, Housing, Health Status, Work-Life Balance, Education and Skills, Social Connections, Civic Engagement and Governance, Environmental Quality, Personal Security, and Subjective Well-Being. They provide a comprehensive view of well-being, focusing on both material conditions and quality of life. Meanwhile, Siyi et al.¹³ and Nipo et al.¹⁴ stated that there are several approaches to measuring human well-being or the Human Development Index (HDI) by considering the digital era, especially in the context of workplace digitalization and employee digital well-being, covering three main dimensions: digital access (infrastructure and connectivity), digital literacy (ability to use technology), and digital well-being (the effect of technology on quality of life, mental health, work-life balance). Other researchers have shown that rapidly developing technology can sometimes create burdens or pressures, necessitating measurement of technostress.¹⁵

The measurement of the Human Development Index (HDI) using traditional methods differs significantly from its measurement in the digital era. These differences stem from the inclusion of several new concepts that capture the outcomes and impacts of digital economic activities. Table 1 highlights the key distinctions between these two approaches.

Table 1.

Classic Human Development Index versus digital transformation.

HDI dimension	Classical HDI	HDI in the digital transformation era
Health	Life expectancy at birth	Access to digital health services and digital health literacy
Education	Average and Expected Years of Schooling	Participation in e-learning, digital literacy, and access to MOOCs
Income	Gross National Income (GNI) per capita	Income from the digital economy and readiness for technology-based jobs
Infrastructure	Not explicitly included	Internet access, availability of digital devices, and overall connectivity
Ethics & Security	Not explicitly included	Awareness of digital ethics and literacy in data privacy and cybersecurity

The Human Development Index (HDI) is traditionally measured based on three key components; Health is represented by life expectancy at birth, education which measured by mean years of schooling and expected years of schooling, and standard of living which reflected by gross national income (GNI) per capita. However, in the era of digital transformation, the Human Development Index (HDI) should incorporate new dimensions that reflect the profound changes in human life driven by technological advancements. These proposed dimensions include:

(a) Digital Health

• Access to digital healthcare services (e.g., telemedicine, health applications).

• Enhancement of health literacy through technology-based platforms.

• Utilization of health data for disease prevention and early detection.

(b) Digital Education

• Participation in online education and Massive Open Online Courses (MOOCs).

• Digital literacy is significant for effectively using technology for learning.

• Access to AI- and VR-based e-learning platforms.

• Income generation from the digital economy (e.g., e-commerce, remote work, digital freelancing).

• Availability and affordability of digital infrastructure (including internet access and hardware devices).

• Workforce adaptability to automation and artificial intelligence (AI) technologies.

(d) Novel Indicators

We propose several additional indicators that need to be considered in the digital version of the HDI:

• Level of technological literacy in society

Technology literacy refers to an individual’s ability to understand, use, evaluate, and create technology effectively and responsibly. It includes basic technological knowledge, operational skills, and a critical awareness of technology’s role in daily life. At the societal level, technological literacy is a key indicator of a community’s readiness to embrace digitalization and address the challenges of the Fourth Industrial Revolution. A technologically literate society is better positioned to adapt to global changes and to contribute meaningfully to digitally driven social, economic, and political development.

• Digital workforce readiness

Digital workforce readiness refers to workers’ ability to adopt, use, and innovate with digital technologies in the workplace. It encompasses a range of competencies, including technical skills, digital literacy, adaptability, creativity, and the ability to facilitate virtual collaboration. In the era of digital transformation, digital readiness is no longer just an “added value”—it has become a fundamental prerequisite for individual competitiveness and career sustainability. Digital workforce readiness is a fundamental pillar in supporting the growth of the digital economy, fostering social innovation, and promoting sustainable human development. Without this readiness, the workforce will face challenges in competing, adapting, and contributing effectively within the future digital ecosystem. The level of basic digital literacy and advanced digital skills can measure this digital readiness. Basic digital literacy includes the ability of workers to operate digital devices (such as computers and smartphones), navigate the internet, and use standard applications, including email, word processors, and spreadsheets. At the same time, advanced digital skills can be demonstrated by proficiency in specialized digital tools and technologies, such as data analytics, cloud computing, artificial intelligence, cybersecurity, programming, and other software applications. Digital readiness also requires ensuring that employees are prepared to collaborate virtually, understand digital ethics, and possess strong critical thinking and digital problem-solving skills. They can analyze complex digital challenges and devise practical solutions using innovative tools and technologies.

• Digital ethics index and data security

Digital ethics refers to the moral principles that guide the use of digital technologies, including the internet, social media, artificial intelligence, and other online platforms. Data security safeguards personal, organizational, and public data against threats such as theft, manipulation, misuse, or breaches. The Digital Ethics and Data Security Index assess how individuals, organizations, and nations utilize digital technologies ethically while safeguarding privacy and securing personal and collective data. The digital ethics index has become increasingly vital in addressing the growing threats of the digital age. As the digital economy expands, so do the risks, ranging from data breaches and information manipulation to cyberattacks. In response, the call for digital justice becomes more urgent, underscoring the principle that technology should empower, not exploit, humanity. Sustaining digital trust is also critical, as a safe and ethical digital environment is essential for fostering innovation and global collaboration. The creation of a Digital Ethics and Data Security Index is therefore crucial—not only to measure technological progress but also to assess moral integrity, accountability, and the protection of human rights in cyberspace. Societies that score highly on such indices will be better equipped to build a just, secure, and sustainable digital future.

Therefore, this research intent to propose a new concept, the Digital Employee-Human Development Index, as well as to develop a comprehensive measurement of employee development as a whole person. This is with the hope that employees will be viewed as complete human beings, not merely production factors whose resources are to be maximized for the company’s benefit alone. They have the need and obligation to grow and develop continuously. In line with this, practices and policies related to digital transformation efforts should consider the factors that support human or employee growth and well-being.

Digital workplace and human development agenda

Digital transformation has become a disruptive force in transforming work systems, including human resource management (HRM) practices. The concept of Smart Human Resource Management (Smart HRM) refers to the integration of intelligent technologies such as Artificial Intelligence (AI), cloud computing, and big data analytics into HR management processes, to improve efficiency, decision-making accuracy, knowledge management, and employee work experience.^16–18 Within this framework, digitalization is seen not only as an administrative tool to assist routine operational work but also as a strategic infrastructure to boost organizational competitiveness and develop individual capacity.

Smart HRM can create a work environment that requires employees to continually learn, adapt, and develop their digital skills. Several studies emphasize that learning agility and adaptive capacity are key to individuals remaining relevant in the ever-changing digital work ecosystem.^19,20 Even if organizations provide facilities such as Learning Management Systems (LMS), microlearning, or AI-based training, the effectiveness of digital competency development still depends heavily on individuals’ motivation and readiness to learn independently.¹⁷

On the other hand, the acceleration of digitalization also brings psychological consequences.²¹ Studies have shown that intensive technology use in a work context can lead to cognitive and emotional stress, commonly referred to as technostress. While technology undoubtedly supports productivity, without appropriate organizational intervention, the expectation of constant “on” status in a digital environment can undermine digital well-being. Therefore, the concept of digital well-being is becoming increasingly important, specifically as a state of individual well-being achieved through healthy, controlled, and meaningful interactions with technology.

Research on roles in work and non-work domains has expanded beyond the traditional work-family domains. In this context, digital skills and adaptive readiness acquired in the workplace have a spillover effect in the broader community. Individual digitalization skills acquired in the workplace contribute to social well-being.^22,23 Thus, there is spillover and workplace contributions that facilitate employee digital learning and improve individual digital capabilities, thereby increasing organizational productivity. This also has a spillover effect beyond the workplace and society, in the form of digital economic participation and broader social welfare. Therefore, digital human resource development not only impacts organizational performance but also contributes to more inclusive and highly competitive human development. The concept of digital human-centric HRM has emerged in contemporary literature in response to the need for HR management that is both efficient and oriented toward human well-being. This approach emphasizes the importance of organizations creating digital work systems that are fair, ethical, and holistically empower individuals.²⁴ Thus, Smart HRM is not only a technology-based control tool, but also an instrument for creating a healthy, adaptive, and empowering digital work experience.

Although the literature demonstrates a link between digitalization and individual competency development, there is still a limited understanding of how Smart HRM concretely fosters digital well-being and contributes to the Digital Human Development Index. Most studies focus on the impact of technology on work productivity,¹⁷ while the dimensions of digital well-being and its indirect impact on society have not been comprehensively explored. Furthermore, there remains a lack of conceptual models that integrate the active role of individuals (agency), organizational systems, and technological support in sustainably shaping employee digital capacity.

Additionally, empirical research in Indonesia or other developing countries that simultaneously links Smart HRM indicators, individual adaptation, and the digital human resource quality is rare. This is despite the socioeconomic context and digital infrastructure readiness significantly influencing the successful implementation of technology in the workplace. Therefore, this study proposes a conceptualization and measurement of the digital employee development index, which could be an outcome of Smart HRM.

Methodology

The primary research objective is to propose a conceptual framework of Digital Employee-Human Development Index (DE-HDI), explicitly targeting the productive-age population. This conceptual framework consists of conceptual definition of DE-HDI and its proposed measurement. Moreover, these kinds of employees are required to work with digital savvy and digital life. The qualitative data were analyzed using a hermeneutic approach grounded in action theory, supported by a systematic coding procedure. The analysis began with open coding, in which raw data from interviews and focus group discussions were examined to identify key concepts and meaningful units related to employee development in the digital workplace.

These initial codes were then grouped through a categorization process, allowing similar concepts to be organized into broader themes. This iterative process enabled the identification of underlying patterns and relationships within the data. The emerging themes were subsequently refined and conceptualized into higher-order dimensions, namely, digital capability, digital well-being, and digital livelihood. In the final stage, each dimension was further operationalized into specific measurement indicators, ensuring that the construct development remained grounded in empirical evidence. To enhance transparency and traceability, each indicator was linked to representative statements from informants, and the categorization process was explicitly documented in the validation table. This multi-stage analytical approach ensures that the development of the DE-HDI construct is both theoretically informed and empirically grounded, providing a robust basis for future measurement and validation.

Hermeneutic method: Research approach

This study adopts a qualitative hermeneutic approach, focusing on understanding the subjective meanings of participants’ experiences through an in-depth interpretive process. Hermeneutics is employed to interpret the context, language, and lived experiences articulated by participants, enabling a holistic understanding of the phenomenon under study. The hermeneutic method is a research approach centered on understanding and interpreting human experiences, relationships, and meanings. It emphasizes concepts such as meaning, language, relationships, interpretation, and implications. Unlike positivist or experimental approaches, hermeneutics prioritizes understanding rather than measurement alone. It explicitly acknowledges the pre-understandings, biases, and assumptions of researchers as part of the interpretive process. Hermeneutics can be classified into:

(1) Methodological Hermeneutics, which focuses on understanding meaning within the human sciences.

(2) Philosophical Hermeneutics, which examines how understanding itself becomes possible, and

(3) Critical Hermeneutics aims to emancipate individuals from domination and emphasizes mutual understanding within society.

This study employs methodological hermeneutics, concentrating on the meaning and measurement of the DE-HDI. In addition, Action Theory was employed as an analytical lens to guide the interpretation of qualitative data. Rather than reiterating its conceptual components, the analysis focused on how employees’ experiences in digital workplaces reflect dynamic patterns of action, adaptation, and response. During the open coding stage, statements related to employee behaviors, decision-making processes, and interactions with digital systems were identified and interpreted through this lens. Subsequently, themes were developed by clustering codes that captured recurring patterns of how individuals engage with, adapt to, and make sense of digital work environments. This approach enabled a deeper understanding of employee development as an ongoing, action-driven process, which ultimately informed the construction of the DE-HDI dimensions.

Action theory as a grounded framework

In this research, Action Theory is employed as the primary theoretical framework to understand employee development in digital workplaces. Action Theory emphasizes that human behavior is formed through a continuous cycle of goals, planning, action, and feedback. It originates in multiple disciplines; however, in the social sciences, Talcott Parsons is recognized as its foundational figure.²⁵ While Action Theory is not the original basis of the Human Development Index (HDI), which was developed by the UNDP and inspired by Amartya Sen’s capability approach, it provides a relevant lens for interpreting and complementing human development measurement, particularly in context-specific environments such as workplaces.²⁶

In the context of digital human resource management (HRM), this framework enables a deeper understanding of how employees engage with digital systems, adapt their capabilities, and respond to organizational demands. Digital HRM practices—such as digital training platforms, HR information systems, and performance monitoring tools—can be interpreted as structures that facilitate goal setting, planning, execution, and feedback processes, thereby supporting both individual capability development and well-being.

At its core, Action Theory views individuals as goal-oriented agents whose development results from intentional actions shaped by values, norms, and social systems. Applying this perspective to the Employee Human Development Index allows development to be understood not merely as static outcomes, but as dynamic processes of adaptation and learning within digitally mediated environments. Thus, employees’ capability, health, and living standards can be interpreted as evolving through continuous interactions between individuals and digital work systems. Building on this conceptual foundation, Action Theory is further operationalized as an analytical lens to guide the interpretation of qualitative data, as elaborated in the methodology section.

Procedure

Data collection techniques and participants

Data were collected through in-depth interviews lasting 45–60 min per informant. Each interview was recorded (with consent) and transcribed verbatim for analysis. A total of ten (10) informants were involved, comprising six (6) HR managers and four (4) employee representatives, who were purposively selected based on their relevant experience with digital workplace practices. The HR managers provided insights into the implementation of digital HR initiatives, as well as their impact on employee well-being and organizational performance. Meanwhile, employee representatives shared their experiences regarding the direct effects of digital transformation in the workplace. The participants were drawn from multiple organizations in the manufacturing sector that have implemented digitalization practices, each employing at least 300 employees and operating across several major cities in Indonesia. This multi-organizational context enhances the robustness of the findings by capturing diverse experiences of digital workplace implementation.

Data analysis techniques

The analysis was conducted using hermeneutics (hermeneutic circle), the process of going back and forth between specific sections and the whole text to gain a deeper understanding.²⁷ Analysis was done in a thematic way to group results into themes, which include stages of:

(a) Transcription

All interview results from 10 source persons were recorded and transcribed verbatim. The transcription process was done immediately after the interview to maintain language accuracy and context.

(b) Initial Reading

Researchers repeat the reading process across the entire transcript to gain a general understanding of each source’s views. At this stage, researchers mark keywords, important phrases, and expressions of relevant emotions.

The initial code was developed inductively from terms that were frequently mentioned. For example, “recognition,” “support,” “superiors,” “opportunities growing,” and “work-life balance” emerged repeatedly in various informants.

(d) Categorization and Themes

Initial coding was then grouped into several categories that represent deeper meaning.

(e) Interpretation Meaning

Researchers return to each informant’s quote to interpret its meaning, considering the social context and the informant’s personal experience. This process is guided by the hermeneutic principle: understanding individual pieces of data, informing understanding of the overall narrative, and vice versa.

(f) Validation Findings

To increase validity, member checking is conducted with two sources of informants to confirm that the researchers’ interpretation is in harmony with the meaning.

Interview guidance

The interview guidance with HR Manager and employee representatives as informants is provided in Table 2.

Table 2.

Interview guidance.

Part	HR manager	Employee representatives
Part A	Perceptions of HRM Digitalization	Meaning of HRM Digitalization
	• What is your role in HR management within the company?	• How is your experience working in a digital environment?
	• To what extent is the company already applying digitalization in HR functions? (recruitment, training, assessment) performance, payroll, etc.)	• To what extent is the company applying digitalization within the HR function?
Part B	Perception about the Human Development Index (HDI) in the Workplace	Perception about the Human Development Index (HDI) in the Workplace
	• How do you define human development or employee welfare?	• How is your experience participating in training or learning related to digital technology?
	• What are the indicators of employee welfare in the digital age? (e.g., health, competence, income, work-life balance, etc.)	• How far do you feel that your digital skills have progressed since working in the company?
		• What are some specific challenges in using digital applications for work?
		• Does your organization provide enough support for digital upskilling?
Part C	Impact of HR Digitalization towards Employee welfare	Impact of HR Digitalization towards Employee Health & Well-being, Standard of Living & Career Sustainability
	• How does HR digitalization affect employees’ health? (access to health service, health monitoring, work flexibility, etc.)	• How does working in a digital environment impact your physical health (e.g., eyes, posture, fatigue)?
	• How does the digitalization of HR affect the education & competence development of employees? (access online training, upskilling, opportunities career)	• How does the HR digitalization influence your mental and emotional health?
	• How digitalization of HR impact living standard, financial well-being, salary, allowances, remote allowance, life expenses)	• To what extent is the work life balance maintained in your company?
		• Do you feel that the opportunities for career growth and promotion are more open or strictly limited in this system?
Part D	Impact Digitalization of HR towards Employee Development
	• Who in your company executes programs in increasing employees’ development within the digital era?
	• How does the company measure the success of the program?
Part E	Challenges & Expectations	Hopes and Suggestions
	• What challenges do you face in improving employee HDI?	• What can be improved in the implementation of a digital workplace in your company?
	• What strategic steps ensure HR digitalization support the increase of employee HDI?	• Is there any experience or personal story that is important to this related topic?

Findings and discussion

The first key finding of this study relates to the conceptualization of the Digital Employee Human Development Index (DE-HDI). Drawing on a focus group discussion with six HR managers and four employee representatives from 10 different organizations, the summarized insights are presented in Table 3. The complete interview excerpts and discussion results are available in Appendix 1.

Table 3.

Summary of informants’ responses.

	HR manager (I1–I6)	Employee representatives (I7–I10)
Theme 1	• Automation of administrative processes (payroll, attendance, recruitment) which reduces burden manual work.	• Work Flexibility (remote, hybrid, work hour arrangements) that affect quality life.
Meaning of HR Digitalization	• Improvement accessibility information employee through the self-service HRIS portal.	• Access online training that expands opportunity development career.
Meaning of HR Digitalization	• Ability analytic for monitor indicator well-being, such as work-life balance and engagement, in real time.	• Transparency information related rights, benefits, and policies company.
Theme 2: Meaning and Understanding about the Human Development Index (HDI) in the Workplace	• Competence and learning sustainable considered the core of development humans in organizations.	• Benefits in financial aspects
	• Health viewed not only limited to physical, but also mental health and work-life balance which often influenced by flexibility digital work.	• Career divided with opportunity promotion more open, while other worry promotion precisely limited to those who are literate technology.
	• Financial welfare still become classic indicator, but with addition transparency facilitated by digital systems (e.g., online payroll, benefit systems).	• Work flexibility support welfare
Theme 3: Impact Digitalization of HR towards Employee Welfare	• Employee Health	• Fatigue eyes and disorders posture body
	• Financial Welfare	• Digital flexibility supports mental health because reduce stress travel and give freedom time.
	• Standard of Living & Stability	• Burden work that seems “always online.”
	• Work-Life Balance
	• Career certainty
Theme 4. HR Digitalization and Employee Development	• Education and development competence	• Provides convenience in increase digital skills.
	• Health and Wellbeing	• More independent in arrange time study.
	• Decent living standard	• Digital capabilities develop significant
	• Digital challenges and inequalities	• Challenges for senior employees highly dependent on ability adapt to change technology.
Suggestions		As a suggestion, employees emphasize:
		• The importance of the program upskilling which are more inclusive, clear policy work regarding online hours, as well as provision facility proactive health.
		• Digitalization is not only influencing work method, but also shape repeat perception about employee welfare and future career.

Narrative analysis

Definition of DE-HDI

The majority of HR managers define human development or welfare employee as a combination of competencies, health, and financial well-being. Competence and learning in sustainable development are considered the core of human development in organizations, especially as digitalization opens access to online training platforms. Health services by means not limited to physical, mental, and work-life balance, which is often influenced by flexible digital work. Additionally, financial welfare will remain an indicator of choice, but with greater transparency enabled by digital systems (e.g., online payroll, benefits systems).

Moreover, from an HR manager’s perspective, HDI in the digital workplace need not be measured by traditional parameters (education, health, income), but should be defined in terms of digital literacy, mental health, work-life balance, and career sustainability. Hence, digitalization of HR must be positioned not just as process automation, but as a mechanism to push development more holistically human and sustainable. Hence, from a hermeneutic perspective, the Digitalization of HR is not just about technology; rather, it must be interpreted as a mechanism to balance digital efficiency with human values. Table 4 provides thematic coding from the discussion round. A more detailed summary of the thematic interview analysis is provided in Appendix 2.

Table 4.

Thematic coding of DE-HDI definition^a.

Informant	Definition of HDI	Main indicators	Interpretation
I1	Human development is combination between digital competence & work ethics.	Digital literacy, mandatory training, mental health, digital-based Key Performance Indicators (KPI).	HDI is viewed as harmony between digital skills and mental well-being.
I2	Well-being means personal closeness & loyalty employees, not just system.	Connection supervisor-subordinates, security work, manual experience.	HDI in digitalization still need human touch so that the meaning welfare is not lost.
I3	HDI is preparedness adapt with system new while guard culture company.	Technology access (barcode, digital payroll), senior adaptation, well-being family.	HDI viewed as ability adaptation and sustainability career in context digitalization.
I4	Human development means mastery knowledge & skills based on digital system.	Knowledge management portal, internal Enterprise Resource Planning (ERP), digital training.	HDI is interpreted as knowledge empowerment through internal digital platforms.
I5	Well-being is speed work & skills in digitally ready employees.	Real-time system, efficiency, high turnover, needs of skilled workers.	HDI connected with employability & job stability in the digital era.
I6	Human development means as welfare financial & sustainability career in the digital era.	Work monitoring, external upskilling, compensation.	HDI is interpreted as combination of living standards and career sustainability.

^aKeyword interpretation of meaning.

Impact of HR digitalization on employee welfare

From the discussion round results, most HR managers stated that digitalization becomes an important factor that influences employees’ welfare directly or indirectly in some aspects:

(a) Employee Health

Several HR managers assess that digitalization provides access to health programs, both physical and mental, through monitoring and work flexibility (remote/hybrid). However, there are also notes that digitalization can cause digital fatigue or burnout, particularly when an organization does not set clear boundaries between working and personal hours.

(b) Financial Welfare

The HR manager revealed that digital systems improve transparency across compensation, from salaries and allowances to incentive-based performance. Digital payroll is considered to reduce delays and errors, thereby increasing financial security. However, two informants emphasize the phenomenon of brain drain—skilled employees in digital system selection leave because other companies offer higher wages.

Digitalization provides profit in lower cost of living, for example, with reduced need for transportation in the system. Work distance is far. In addition, the clarity of the allowance data and simulation wages gives employees more control over their financial planning. Despite this, some managers highlight the existence gap, especially among senior employees, who feel left behind and lack access to the benefits of the digital system. In general, interviews show that HR digitalization has a positive impact on employee welfare, including wider access to healthcare, greater financial transparency, improved work efficiency, and lower life costs. However, it also has negative effects, such as digital stress, low retention of skilled employees, and a lack of adaptation to the senior generation. Hence, employee welfare in the digital era is not only about technology implementation, but also how the HR department ensures the digitalization process is inclusive, fair and balanced between efficiency and humanity.

Member checking validation

The member-checking process with two informants during an FGD session shows that most interpretations align with respondents’ experiences. The informants not only confirm but also provide additional emphasis, for example, on risk burnout in the digital work system and the importance of mentoring for senior employees. These results enhance credibility analysis and the study of enrichment findings. Table 5 provides validation results and categorization of proposed dimensions.

Table 5.

Validation results.

Main theme	Researcher interpretation	Validator’s responses	Validation status	Categorization
Challenge digital literacy in senior employees	Difference digital capabilities give rise to gap adaptation	Needs more intensive mentoring	Confirmed & expanded	Digital competencies
Support organization for digital upskilling	The program is already run with low intensity	Agreed and ask more session for hands-on training	Confirmed	Digital competencies
Impact flexibility work towards work-life balance	Flexibility give freedom, but work-personal boundaries blurry	Agreed and emphasized risk burnout due to “always being online”	Confirmed & affirmed	Digital wellbeing
Physical health consequence digitalization	Increasing complaint eye tired and posture body	Agreed and need to add y ergonomics policy	Confirmed & expanded	Digital wellbeing
Sustainability career in the digital era	Career depends on ability of digital adaptation	Approved completely and need to add the importance of mentoring for young generation	Confirmed & expanded	Digital livelihood
Standard of living & stability HR	HR department ensures the digitalization process is inclusive, fair and balanced between efficiency and humanity	Agreed completely	Confirmed & expanded

In general, the validation process confirms that the interpretation researchers have aligned with the informant’s opinion. At the same time, it is an enriching analysis that emphasizes burnout, digital literacy gaps, and the need for mentoring for sustainable careers. Integration of these findings ensures that the definition of Digital Employee HDI truly reflects employees’ perceptions and experiences as well as HR Managers’ perspectives. The subsequent validation results also showed that key informants confirmed the suitability of the interpretation for researchers with field experience.

Proposed conceptual framework

Based on the analysis of HDI development, as discussed in the previous section, we combine digital HDI with the nature of the workplace at the employee level in a digital environment. Table 6 presents the transformation from Digital HDI to Digital Employee HDI.

Table 6.

Comparison of HDI (macro) and DE-HDI (micro-digital environment).

Dimension	HDI (macro level)	DE-HDI (micro-digital workplace level)
Objective	Assessing national human development	Assessing employee well-being & digital capacity
Level of analysis	Country/population	Organization/employee
Education	Average length of schooling, school expectations	Access to digital training, technology skills
Health	Life expectancy, health services	Mental-physical health due to digital work
Liveability	GDP per capita	Digital job stability, social protection of digital workers
Output	National development report	HR evaluation, company digital well-being

Hence, from a hermeneutic perspective, the Digital Employee Human Development Index (DE-HDI) should not be understood merely as an outcome of individual employee development, but as a reflection of organizational responsibility in translating digital transformation into human-centered development. In this view, technological advancement is expected to enhance—rather than undermine—employees’ capabilities, well-being, and livelihood. Accordingly, this study positions digital employee development not as an individual responsibility, but as an outcome of organizationally enabled digital transformation. Building on this perspective, DE-HDI is defined as an organizationally embedded human development construct that captures how digital HR systems and workplace practices enable employees to develop capabilities, sustain well-being, and achieve sustainable livelihoods, while maintaining a balance between technological efficiency and human values. Moreover, based on the thematic analysis of interview data, the Digital Employee Human Development Index (DE-HDI) is conceptualized as a multidimensional construct comprising three interrelated dimensions: digital capability, digital employee well-being, and digital livelihood. These dimensions emerged from the interpretive synthesis of informants’ perspectives and reflect how digital transformation shapes employee development in a holistic manner.

(a) Digital Capability

The first dimension is digital capability, which refers to employees’ ability to effectively and adaptively use digital technologies in their work. This dimension encompasses not only technical proficiency, but also the capacity to learn, adopt, and continuously adapt to new digital systems. This dimension emerged prominently from the accounts of informants (I1, I3, and I4), who emphasized that human development in digital workplaces is closely associated with digital literacy, access to training, and the ability to master technology-based systems. For instance, digital capability is reflected in employees’ access to digital training platforms, their level of digital literacy, their self-efficacy in using technology, and their adaptability to new systems and tools. From a hermeneutic perspective, digital capability is not merely a technical skill set, but a dynamic capability that enables employees to engage meaningfully with digital work environments. It represents the foundational condition for employee development, as it allows individuals to participate fully in digitally mediated organizational processes.

(b) Digital Employee Well-Being

The second dimension is digital employee well-being, which refers to employees’ physical, psychological, and social well-being within digitally mediated work environments. This dimension reflects how digital work affects not only efficiency, but also employees’ lived experiences, including their mental health, work–life balance, and relational dynamics. This dimension emerged particularly from the narratives of informants (I1 and I2), who highlighted that well-being in digital workplaces extends beyond system efficiency and must include human connection, emotional balance, and a sense of personal closeness within the organization. Digital employee well-being is therefore reflected in indicators such as mental health conditions, work–life balance, perceived workload, and the quality of relationships between supervisors and subordinates. Importantly, the findings suggest that digitalization can both enhance and challenge well-being. While flexible work arrangements may improve work–life balance, excessive digital demands may lead to fatigue and blurred boundaries. Thus, digital employee well-being represents a critical dimension of DE-HDI, ensuring that technological advancement does not come at the expense of human welfare.

The third dimension is digital livelihood, which refers to employees’ ability to sustain their economic well-being and career continuity in digital work environments. This dimension captures the extent to which digital transformation supports or threatens employees’ long-term employability, income stability, and career development. This dimension emerged strongly from informants (I3, I5, and I6), who emphasized the importance of career sustainability, job security, and financial well-being in the digital era. Digital livelihood is reflected in employees’ perceived job stability, access to career development opportunities, employability in a digitalized labor market, and transparency of compensation systems enabled by digital technologies. From an interpretive standpoint, digital livelihood extends the traditional notion of income within the Human Development Index into a more dynamic and future-oriented concept. It incorporates not only current financial conditions but also the sustainability of employees’ careers in the face of rapid technological change.

Together, these three dimensions illustrate that DE-HDI is not a static measure of employee outcomes, but a dynamic and integrative construct that reflects how organizations enable human development in digital contexts. Digital capability provides the foundation for participation in digital work, digital well-being ensures the sustainability of employees’ lived experiences, and digital livelihood secures long-term career and economic stability.

Figure 1 describes the conceptual framework of DE-HDI containing conceptual definition, dimensions and indicators.

Conclusion

Employees in the workplace have two needs that must be met: as workers and as human beings. If these needs are met correctly and appropriately, they will achieve work and life satisfaction. As humans, throughout their lives, they naturally need to grow and develop into better, more useful individuals in response to the demands of their time. In conditions where digital transformation has permeated all aspects of life, the concept of human development must be adapted to meet the needs of digital life and digital society. This study has attempted to identify the meaning of human development in a micro context, namely, when they are workers, by compiling dimensions and indicators to measure the digital employee-human development index.

Therefore, the digital aspect is ideal when it serves the digital workplace dimension, and digital perfection means that the employee, as a natural human, achieves their innate life and becomes a symbol of digital citizenship. According to the principles and assumptions of the micro-digital workplace approach, development is defined as a process in which work life changes based on pure employee and human thought, fundamental to meeting values and growth needs across all aspects of work life. Also, human development from the viewpoint of the digital workplace is the process of extending human capacities through the justification of the intersection between human and technology in meeting material and spiritual needs, aiming at overcoming the internal and external contradictions of the benefits of using technology at work. The purpose of this process is to foster growth in faith and promote well-being by balancing capacity, well-being, and livelihood.

Hence, according to the principles of human development in the digital workplace, indices are used to measure human development at the employee level, as most of the population is guided by prevailing approaches to workplace human development. In a digital workplace approach, human development occurs when their capacities increase, enabling them to manage internal and external contradictions and conflicts, and to step forward on the path of balance between technostress and life stress, in the context of widespread livelihood in the digital era. One of the primary aspects of human development in the digital workplace is human-technology interaction, which helps meet employee needs and resolve internal and external conflicts to achieve optimal digital satisfaction. To determine the basic indices of this aspect, we applied the theory of mutual action and the development principles of the digital workplace, as extracted from the hermeneutics of the economic action under the conditions of realized human development. These indices consider and measure the most vital dimensions of the human development aspect of the digital workplace, which include digital capability, digital well-being, and digital livelihood.

Future research is encouraged to further extend this study by empirically validating the proposed dimensions and measurement items of the Digital Employee Human Development Index (DE-HDI) across different organizational contexts and industries. In particular, subsequent studies should focus on rigorous scale development and validation procedures, including reliability, construct validity, and cross-context applicability. Moreover, there is a need to develop a robust and standardized formula for calculating the DE-HDI at the employee level, enabling the index to be operationalized as a composite measure comparable across organizations and sectors. Such efforts would not only strengthen the measurement precision of DE-HDI but also enhance its practical applicability as a strategic tool for assessing and benchmarking human development in digital workplaces.

Footnotes

ORCID iDs

Nurhidayati Nurhidayati

Olivia Fachrunnisa

Ardian Adhiatma

Cici Dea Permata Exsti

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research is funded by Direktorat Penelitian dan Pengabdian Masyarakat Kemdiktisaintek (Directorate of Research and Community Service, The Ministry of Higher Education, Science and Technology) Indonesia, Fundamental Research Grant, 2025

Declaration of conflicting interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Data Availability Statement

The data is available upon request to the Authors.*

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