"Implementing new technology requires organizations to find ways to embed digital transformation—and the innovative mindset it requires—into their company culture. "
Digital transformation is here and it is affecting companies in various degrees. Learn what it is and why it is important.
Digital transformation isgeneratingsome of themost impactfulimprovementsto the customer experience, withtwo-thirds of global CEOs reporting theywill adopta digital-first focus by the end of 2019. Butthetrendis transcendingbeyondthe customer experienceto also steer the employee experience. Acompany’s employees—alldigital consumers in their personal live—are also expectingto leverage digital experiences toenhance performance and gain professional development.
The human resources industry—no longer viewed as just a support function for employee servicesand benefits—hasstepped up to thefront linestogreetthedigital transformationthat isdisrupting how organizations worldwide operate and thrive.The HR department, in addition to talent management, is now expected to leada company’sdigital transformation journeyand deployeffectivechange management strategies.
For an organization to succeed inimplementing new technology,they must find ways toembed digital transformation—and the innovative mindset it requires—into their company cultureor theyrisk falling behind the competition.
What is digital transformation?
Emerging technology is often the main focus of the digital disruption conversation.Through transformation programs,HRteams arehelping companiesenter the digital age andtransition fromusinglegacy technology toembracingnew technologies, such asmachine learning, the internet of things (IoT),blockchain,artificial intelligence(AI), big data,data analytics, cloud computing, a multitude of mobile devices, smartphone integration, social media,and more.
Butdigital transformation isactuallyguided by innovativeapproaches, people andbusiness processes—notjustthetechnologyitself.Digital transformationcannot be defined by asingletransformationproject nor a single technology.The technology is constantly changing and updating itself. The only fixed element ofdigital transformation is the innovative mindset that drives it.
With this mindset in place, HR teamscanidentify faulty processes anduser challenges—and subsequentlydetermine what technologies shouldbe infused as solutions. The end goal is to better understand, engage, satisfy and deliver on the user’s expectations for a multi-channel experience.
Why is digital transformation important?
Adoptinga digitally driven business modelwith next-generation capabilitiesisn’t just critical to beatingcompetitors—it’san imperative forsurviving in today’scompetitivecorporate environment.Business leadersarefocusedon results, innovationand continuous improvement.To this end, theymust constantly challenge their organizations to ensurethat new technologies and processes are being implemented to pushproductivity gains andoffersignificant competitive advantage—all while delivering exceptionaluserexperience for a multitude of stakeholders.
For HR teams, digital business transformation is the ultimate challenge in change managementbecause itaffects all levels of an organization (every process, department and stakeholder) and evenextends toitssupply chainor network of partners, in some cases.But this omnipresent disruptionis what makesdigital transformation so critical for organizations.
Digital transformation is helping companies make transitionsto new business models.Anexternalexample would be alongstandingretail store that is struggling to attract millennial customers who prefer to shop online.This business can leverage digital technology tooptimize its website for e-commerce, set up responsive customer service capabilities online, collectlocation dataand gain insights intocustomer expectations and behaviors(to drive both online and in-store interactions).
But more importantly, digitalization is impacting internal operations tohelp companiesdeliver the digital experience from the inside out, starting with employees.For the HR industry, harnessing the digital experience is critical for sustainable talent recruitment, retention and training.
HR professionals are using technology to continuously transform how they design and deliverthe employee experience—anytime and anywhere. They are combining the human element with the power of technologyto gaininsights and adapt processes thatadd newvalue.
Important elements of successful digital transformation
Althoughthe roadmap fordigital transformationvariesbased on organizations’specific challenges and demands, there are a few common attributes that a digital strategy should incorporate:
1.Integratesdigital technology to optimizeprocessefficiency.
As with any HR change, whether digital or not,thereshouldbe aclearlydefinedobjectivethatmakes aprocess more efficient.Most of the timefor the HRdepartment, this goal will be to solve an issue employees encounterorone that the HR department faces in its talent management.
It is recommended that companies start simple and small and consider the areas of the HR process that might benefit from a digital makeover. This could include recruitment, onboarding, learning & development, payroll management, benefits administration, performance reviews, etc.
Digital transformation aims to solve problems and ease pain points for the end user and, when it comes to HR service delivery, the end user is the employee. Business leaders and employees are accustomed to being digital consumers and they—just like customers, clients and partners—expect a digital experience relationship with the company.
Technology plays a critical role in therelationship that millennials have with their employer, including how long they stay at a company, how productive they are and how they contribute to company growth.Theincreasingimportance of technology implementation—especiallyits implications for longevity and productivity—is narrowing the focus of HR departments across all industriesoncreatingend-to-end consumer-grade experiencesfor employees.
Digital leaders focus onvision, management, agility and empathy for the end-user.Digital transformation is therefore more about company culturethan it is aboutinstallingone particular type of technology orimproving a singleprocess. Transformation efforts can only succeedwhencompany cultureinspires innovation and creativity in its human capital, inspiring workers toadopt newprocesses, ways of workingand approachesto breakingdown silosand relatingto stakeholders in more meaningful ways.Company culture also plays a critical role inattracting millennial talentand improving employee engagementin the digital age.
Thedynamicqualities of digital culture are different than, and often in conflict with, analog culture at traditional companies. Where analog culture is defensive,digital culture aims tobe proactive. For processes that analog companies choose to complete in-house, the digital companyseeks out a network of expertise. Analog companiesreporton past performancewhiledigital companiesgainreal-time insights for decision-making.
Cost savings is aprimary driver of digital transformation, according to data from the Cloud Industry Forum. Butdigital transformationdemands that companies cut costs with a purpose,namely to drive innovation and enhance competitive capabilities. An example of thiswouldbe implementing cloud platforms, which can accelerate digitization for numerous processes within a business.In addition to greater speed and agility, this innovation also offerslower costsin the long term.
Though digitalizationshould be imagined as arevenue generator rather than a cost reduction function,companies should be cautioned against using cost savings as the onlyjustificationfor transformation initiatives. This narrow focus can end up limiting the scope and impact of process improvements and present long term ramifications.
5.Researches, strategizes& sets goalsbased onevolvingtech/digital landscapes.
The digital landscape is constantly in flux and companies needto strategize to adapt.The digital transformation process can be especially painful for well established companies. Some largebrands have disappeared or are currently struggling to stay relevant in the digital age.
Itis important for companies to develop a formalorganizationaldigitalbusinessstrategy that involves research and goal setting.Yet justone-third of companieshave this in place.As a working document, the plan should be updated in responseto the evolving landscape. Regular analysisof current digital infrastructure can assess currentchallengesandanticipatefuture needs.
Asounddigital strategy, based on in-depth analysis,can helpa company anticipatepossible risks,formulate budgeting needsandbetter deliverdesired results.
Why companies put off digital transformations
Human life is a constant conflictbetween progress and inertia.Change is often difficult, whether in our personal or professional lives.For most people,especially managers and leaders, changes within acompany can feel like chaosiswreaking havoc ontheir once predictable workplace.This ispart ofwhyit is calledthe digital disruption.
In order to transform a company, the points of contention that make companies resist digitalization must be addressed:
1.Requiresa system-wide overhaul.
It can beeasy to fall into thetrap of believing that digitalization needs to be implemented immediately and everywhere throughoutbusiness operations.Thattaskcan appearquite daunting, with some leaders choosing to put it off altogether. While it is safe to say that digitalizationwill eventually require a system-wide overhaulinthe way most companies operate, processes and projects can be digitalized and changed incrementally. The main point is that companies overhaul their long term vision for how they plan to adapt and innovate in the digital age.
2.CIO/CEO need to believe in it.
As a company prepares to digitalize, it is often the case that employeesembrace the change while management and leadership are resistant. For this reason, it can again be said thatdigital transformation isn’t just about technology—it’salsoa leadership issue.
Change-agile leaders have a clear purpose and can readily answer the question of “why” a technology is being adopted. They know they’re not just adding technology to add technology. It’s being implemented to maintaina strongcompetitive advantage, enhance productivityon a specific processand pushthecompany toward innovation. These leaders are also willing to fix what’s broken and, in the process, take risks that may require some experimentation.Another key leadership trait, especially in the context of digitalization, is the ability to forge positive partnerships that help streamline the transition and avoid common pitfalls.
3.Upfront costs are high.
Very often, leadership poses two questions when confronted withdigital transformation:Will digital transformation require new spendthat isnot currentlyaccounted for?Do I need a specific budgetfor it?The answer to both of these questions is a resounding “Yes.” However, as previously stated, this can be implemented incrementally across the organization.
Many companies are finding benefit transitioning digitalization from acapital expensemodel to an operating expense model. Thegoalfor digital transformation,when implementedstrategically,istoyield enough cost savings that it becomes a self-funding mechanism.
But how much are companies spending? Expenditures for digitalization are growing worldwide atcompound annual growth rate of16.7% and by 2020 it is expected that 30% of G2000 companieswill have allocated capital budgetsequal to at least 10% of revenue to fuel their digital strategies.
4.The company needs specific technology for their industry or feels comfortable with the status quo.
Every industryis being confronted by digital disruptionin some capacity.But how it plays out and the degree of impact it has ona companywill vary widely depending on the specific sectorand the market space in which the company operates.Thepace of disruptionischamgesby industry.
Digitalizationcan be a challenge within certain industries as some companies requirehighly specific technologyor processesforthe work they do.Many times, this specialized technology is too expensive or hasn’t even been commercialized yet.
Another case of resistance to digitalization comes from businesses who feel comfortable with the status quo. If a brick-and-mortar shop feels it is doing well, it won’t likely seek an online platform to conduct e-commerce.
There may be a tendency for companies with specific industry challenges or comfort in the status quo to put off digitalization efforts. But it can be argued that these companies especially need to be outliningadigital strategy. Thespeed of disruption is increasing anddisruption is likely totouchbusinesses inevery industryandall sizes. Thewinners will be companies thatcombinetraditional industry expertise with a deep understandingofhow digitalinnovationscould potentially disrupt their business.
Tips toget your digital transformation strategy started
Digitaltechnologyhasthe potentialto transform HRand talent managementas we know it.But it won’t come without backingfromleadershipand staff. Before a concrete strategy can be developed and executed, there are a few first steps an organization and its HR department can take to prepare:
1.Get buy-in from C-level leaders.
Having the supportand understandingof executive leadership is critical for digital strategy.Digitalization, just as it impacts all roles in management and staff, can also impact the C-suite. ThenewCOOmustrevampoperational processes andalign front and back-office staff with the CMO’s strategy for consistent digital engagement. Meanwhile,the new CMO becomes data driven andomnichannelin approach. To fully compete in the digital revolution, some companies are even adopting aholistic model wherea new chief digital officeris appointed to serve as akey enabler of transformation.
2.Identify pathfinder projects.
In order to build momentum for digital strategy, it can be helpful to identify some pathfinder projectstokickstarta company’s digital transformation journey and help pioneer the transition.What HR processes are currently presenting challenges for the department? Or more importantly, what processes can be improved for candidates, employees and leadership?
Some applied examples of digital transformation technologywithin the HR spaceare augmented writing technology for job postings to better focus the search,chatbotsto handle commonly asked questions from employees, AI-driven insights to guide the sales team on demographic trends, machine learning training customized for a team member or nudge-based technology for managers to complete performance reviews by deadline.
3.Communicate early and often with everyone in the organization.
Effective communicationswill play a key role in launching a digital strategy and creating the innovative mindset that fuels it.The strategy should have a timelinethat incorporates a communication strategy with all team members on the status.
Before any specific initiatives are outlined and put into action, an ampleamount of time and effort should go into talking with executive leadership, management and staff. These critical stakeholders shouldbe active participants in the strategy.Ask each employee about the challenges they faceand their experiences with already laid out processes.Sometimes this is done in survey format so that insights and data can be gatheredtohelpguide the strategy.
4.Hire peoplethat embrace new technology and processes.
As a result of the digital age, the workforce is shifting from fixed job titles and detailed job descriptions to ever-revolving roles.Awidening skills gapis also a residual effect of the digital revolution, posingan imminent threat to organizations that don’t hire people open to learning new technology and processes.
At the current pace of technology growth,it is likelythat many of thetechnical skillsa company’s workforce boasts todaywill becomeobsolete within a few short years. Hiring for today’s skills is not enough.Digital companiesinsteadneed to focus onupskillingandrecruitinglifelong learners who have the ability to constantly learn new skills and navigate technology that might not even yet exist.
Rather than seeking industry-specific skills, organizations are shifting toward“technology application within the industry”skills. Other core work-related skills includecomplex problem solving, active learning and cognitive flexibility.Curiosity, creativity and collaborationare key soft skills that are becoming increasingly valued by companies as they look to foster a high-commitment culture with strong employee engagement.
To show how systemicthe transitioncan be, manycompanies arenowdeployingdigital technologies, likevirtual reality (VR) simulations or gaming tools,in the interview process to help gauge skills that can’t always be verified on a resume or in a traditional interview setting. This allows recruiters toobserve how a candidatehandles unfamiliar situations in real-time orhowwellthey absorb new information to troubleshoot problems.
A company’stransition from analogto digitalrequires a systemic overhaul of business operations, renewed company ethos and an influx ofcritical human capital to power it all.After all, technology itself does not drive success.Albeit important, the toolis merely an enablerof the innovative vision.Effectively integrating new digital technology requires the right people in the right positions, which iswhy the HR department has beenappointedto lead digital transformation strategy for many companies.
As the voice for human capital amid an evolving workforce, HR can lay the foundation for digital strategy by cultivating the necessary elements for digital transformation. Customer experience has received much of the attention in the digital revolution. However, HR galvanizes the transition by empowering employees so a company can offer a digital experience from the inside out. This lights a company’s path toward becoming an intelligent enterprise— one that is continuously innovating, delivering, superior user experiences, creating new business models and reimagining processes to drive even more value.