Innovation

Digital Transformation: Learn What it is & Why it is Important

5 August, 2019
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"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 is generating some of the most impactful improvements to the customer experience, with two-thirds of global CEOs reporting they will adopt a digital-first focus by the end of 2019. But the trend is transcending beyond the customer experience to also steer the employee experience. A company’s employees—all digital consumers in their personal live—are also expecting to leverage digital experiences to enhance performance and gain professional development.  

The human resources industry—no longer viewed as just a support function for employee services and benefits—has stepped up to the front lines to greet the digital transformation that is disrupting how organizations worldwide operate and thrive. The HR department, in addition to talent management, is now expected to lead a company’s digital transformation journey and deploy effective change management strategies.  

For an organization to succeed in implementing new technology, they must find ways to embed digital transformation—and the innovative mindset it requires—into their company culture or they risk falling behind the competition.  

What is digital transformation? 

Emerging technology is often the main focus of the digital disruption conversation. Through transformation programs, HR teams are helping companies enter the digital age and transition from using legacy technology to embracing new technologies, such as machine 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.  

But digital transformation is actually guided by innovative approaches, people and business processes—not just the technology itself. Digital transformation cannot be defined by a single transformation project nor a single technology. The technology is constantly changing and updating itself. The only fixed element of digital transformation is the innovative mindset that drives it.  

With this mindset in place, HR teams can identify faulty processes and user challenges—and subsequently determine what technologies should be 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?

Adopting a digitally driven business model with next-generation capabilities isn’t just critical to beating competitors—it’s an imperative for surviving in today’s competitive corporate environment. Business leaders are focused on results, innovation and continuous improvement. To this end, they must constantly challenge their organizations to ensure that new technologies and processes are being implemented to push productivity gains and offer significant competitive advantage—all while delivering exceptional user experience for a multitude of stakeholders.  

For HR teams, digital business transformation is the ultimate challenge in change management because it affects all levels of an organization (every process, department and stakeholder) and even extends to its supply chain or network of partners, in some cases. But this omnipresent disruption is what makes digital transformation so critical for organizations.  

Digital transformation is helping companies make transitions to new business models. An external example would be a longstanding retail store that is struggling to attract millennial customers who prefer to shop online. This business can leverage digital technology to optimize its website for e-commerce, set up responsive customer service capabilities online, collect location data and gain insights into customer expectations and behaviors (to drive both online and in-store interactions).   

But more importantly, digitalization is impacting internal operations to help companies deliver 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 deliver the employee experience—anytime and anywhere. They are combining the human element with the power of technology to gain insights and adapt processes that add new value.  

Important elements of successful digital transformation

Although the roadmap for digital transformation varies based on organizations’ specific challenges and demands, there are a few common attributes that a digital strategy should incorporate:  

1.  Integrates digital technology to optimize process efficiency. 

As with any HR change, whether digital or not, there should be a clearly defined objective that makes a process more efficient. Most of the time for the HR department, this goal will be to solve an issue employees encounter or one 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.  

2.  Improves user experience. 

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 the relationship 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. The increasing importance of technology implementation—especially its implications for longevity and productivity—is narrowing the focus of HR departments across all industries on creating end-to-end consumer-grade experiences for employees.  

3.  Modernizes company culture.

Digital leaders focus on vision, management, agility and empathy for the end-user. Digital transformation is therefore more about company culture than it is about installing one particular type of technology or improving a single process. Transformation efforts can only succeed when company culture inspires innovation and creativity in its human capital, inspiring workers to adopt new processes, ways of working and approaches to breaking down silos and relating to stakeholders in more meaningful ways. Company culture also plays a critical role in attracting millennial talent and improving employee engagement in the digital age.  

The dynamic qualities of digital culture are different than, and often in conflict with, analog culture at traditional companies. Where analog culture is defensive, digital culture aims to be proactive. For processes that analog companies choose to complete in-house, the digital company seeks out a network of expertise. Analog companies report on past performance while digital companies gain real-time insights for decision-making.  

4.  Reduces traditional expenditures.

Cost savings is a primary driver of digital transformation, according to data from the Cloud Industry Forum. But digital transformation demands that companies cut costs with a purpose, namely to drive innovation and enhance competitive capabilities. An example of this would be implementing cloud platforms, which can accelerate digitization for numerous processes within a business. In addition to greater speed and agility, this innovation also offers lower costs in the long term. 

Though digitalization should be imagined as a revenue generator rather than a cost reduction function, companies should be cautioned against using cost savings as the only justification for 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 goals based on evolving tech/digital landscapes.

The digital landscape is constantly in flux and companies need to strategize to adapt. The digital transformation process can be especially painful for well established companies. Some large brands have disappeared or are currently struggling to stay relevant in the digital age.  

It is important for companies to develop a formal organizational digital business strategy that involves research and goal setting. Yet just one-third of companies have this in place. As a working document, the plan should be updated in response to the evolving landscape. Regular analysis of current digital infrastructure can assess current challenges and anticipate future needs.  

A sound digital strategy, based on in-depth analysis, can help a company anticipate possible risks, formulate budgeting needs and better deliver desired results.  

Why companies put off digital transformations

Human life is a constant conflict between progress and inertia. Change is often difficult, whether in our personal or professional lives. For most people, especially managers and leaders, changes within a company can feel like chaos is wreaking havoc on their once predictable workplace. This is part of why it is called the digital disruption.  

In order to transform a company, the points of contention that make companies resist digitalization must be addressed:  

1.  Requires a system-wide overhaul. 

It can be easy to fall into the trap of believing that digitalization needs to be implemented immediately and everywhere throughout business operations. That task can appear quite daunting, with some leaders choosing to put it off altogether. While it is safe to say that digitalization will eventually require a system-wide overhaul in the 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 employees embrace the change while management and leadership are resistant. For this reason, it can again be said that digital transformation isn’t just about technology—it’s also a 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 maintain a strong competitive advantage, enhance productivity on a specific process and push the company 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 with digital transformation: Will digital transformation require new spend that is not currently accounted for? Do I need a specific budget for 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 a capital expense model to an operating expense model. The goal for digital transformation, when implemented strategically, is to yield enough cost savings that it becomes a self-funding mechanism.  

But how much are companies spending? Expenditures for digitalization are growing worldwide at compound annual growth rate of 16.7% and by 2020 it is expected that 30% of G2000 companies will have allocated capital budgets equal 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 industry is being confronted by digital disruption in some capacity. But how it plays out and the degree of impact it has on a company will vary widely depending on the specific sector and the market space in which the company operates. The pace of disruption is chamges by industry.  

Digitalization can be a challenge within certain industries as some companies require highly specific technology or processes for the 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 outlining a digital strategy. The speed of disruption is increasing and disruption is likely to touch businesses in every industry and all sizes. The winners will be companies that combine traditional industry expertise with a deep understanding of how digital innovations could potentially disrupt their business.  

Tips to get your digital transformation strategy started 

Digital technology has the potential to transform HR and talent management as we know it. But it won’t come without backing from leadership and 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 support and understanding of executive leadership is critical for digital strategy. Digitalization, just as it impacts all roles in management and staff, can also impact the C-suite. The new COO must revamp operational processes and align front and back-office staff with the CMO’s strategy for consistent digital engagement. Meanwhile, the new CMO becomes data driven and omnichannel in approach. To fully compete in the digital revolution, some companies are even adopting a holistic model where a new chief digital officer is appointed to serve as a key enabler of transformation. 

2.  Identify pathfinder projects.

In order to build momentum for digital strategy, it can be helpful to identify some pathfinder projects to kickstart a 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 technology within the HR space are augmented writing technology for job postings to better focus the search, chatbots to 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 communications will play a key role in launching a digital strategy and creating the innovative mindset that fuels it. The strategy should have a timeline that incorporates a communication strategy with all team members on the status.    

Before any specific initiatives are outlined and put into action, an ample amount of time and effort should go into talking with executive leadership, management and staff. These critical stakeholders should be active participants in the strategy. Ask each employee about the challenges they face and their experiences with already laid out processes. Sometimes this is done in survey format so that insights and data can be gathered to help guide the strategy.  

4.  Hire people that 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. A widening skills gap is also a residual effect of the digital revolution, posing an 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 likely that many of the technical skills a company’s workforce boasts today will become obsolete within a few short years. Hiring for today’s skills is not enough. Digital companies instead need to focus on upskilling and recruiting lifelong 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 include complex problem solving, active learning and cognitive flexibility. Curiosity, creativity and collaboration are 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 systemic the transition can be, many companies are now deploying digital technologies, like virtual 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 to observe how a candidate handles unfamiliar situations in real-time or how well they absorb new information to troubleshoot problems. 

Conclusion

A company’s transition from analog to digital requires a systemic overhaul of business operations, renewed company ethos and an influx of critical human capital to power it all. After all, technology itself does not drive success. Albeit important, the tool is merely an enabler of the innovative vision. Effectively integrating new digital technology requires the right people in the right positions, which is why the HR department has been appointed to 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.

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"Whole-of-society effort drives technology development in China," Global Times, 25 Jun. 2019, http://www.globaltimes.cn/content/1155732.shtml. 2. Fintech News Hong Kong. "ZhongAn Technology Launches AI-Powered Data Platform for China's Insurance Industry," Fintech News, 14 Aug. 2018, http://fintechnews.hk/6308/insurtech/zhongan-technology-saas-insurance-data/. 3. China Lending Corporation. "China Lending Forges Strategic Partnership with Rui Xin Insurance Technology to Develop Online Financial Services Platform," PR Newswire, 15 Jul. 2019, https://www.prnewswire.com/news-releases/china-lending-forges-strategic-partnership-with-rui-xin-insurance-technology-to-develop-online-financial-services-platform-300884622.html. 4. Greeven, Mark J; Yip, George S. and Wei, Wei. "Understanding China's Next Wave of Innovation," MIT Sloan Management Review, 7 Feb. 2019, https://sloanreview.mit.edu/article/understanding-chinas-next-wave-of-innovation/. 5. Nheu, Christopher. "The Secret Behind How Chinese Startups are Winning," Startup Grind, 1 May 2018, https://medium.com/startup-grind/the-secret-behind-how-chinese-startups-are-winning-44876b196626. 6. Zhu, Hengyuan and Euchner, Jim. "The Evolution of China's Innovation Capability," Research-Technology Management, 10 May 2018, http://china.enrichcentres.eu/sharedResources/users/4807/The%20Evolution%20of%20China%20s%20Innovation%20Capability.pdf. 7. Liao, Rita. "China's startup ecosystem is hitting back at demand-working hours," TechCrunch, Apr. 2019, https://techcrunch.com/2019/04/12/china-996/.

Nancy Mann Jackson | 30 Jan 2020

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In an industry like agriculture, blockchain will have to reshape a decades-old framework, and that won't happen overnight. It's up to leaders everywhere to understand the value of this technology and get their teams on board with implementing it to achieve that value — even if it means starting small. Sources: 1. "Coffee Board Activates Blockchain Based Marketplace in India." Press Information Bureau, 28 Mar. 2019, http://pib.nic.in/newsite/PrintRelease.aspx?relid=189586. 2. Peters, Adele. "In China, You Can Track Your Chicken On–You Guessed It–The Blockchain." Fast Company, 12 Jan. 2018, https://www.fastcompany.com/40515999/in-china-you-can-track-your-chicken-on-you-guessed-it-the-blockchain. 3. "Global Blockchain Technology Market in the Agriculture Sector 2018-2022." Global Banking & Finance Review, 26 Sep. 2018, https://www.globalbankingandfinance.com/global-blockchain-technology-market-in-the-agriculture-sector-2018-2022-market-to-grow-at-a-cagr-of-56-4-with-agriledger-full-profile-ibm-microsoft-ripe-technology-te-food-dominating-rese/.

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The Fourth Industrial Revolution is transforming employee satisfaction and career management through customized digital experiences and modern employer branding strategies. As technological advances continue to reshape workforces, and the need for digitally savvy workers grows, individual employees are taking a more proactive role in their own professional development. This is especially true in Brazil, where people view jobs as opportunities to grow both personally and professionally. In fact, according to Mercer's Global Talent Trends 2019 report, Brazilians seek greater control over their careers and rank being recognized for their contributions, having access to learn new skills and technologies, and being empowered to make their own decisions as their top three workplace concerns. Employers in Brazil must internalize the evolving needs of their Brazilian workers and implement processes and strategies that encourage professional development and harness the power of individualized career paths. The Power of Employer Branding   To attract top talent in their respective industries, Brazilian businesses must focus on building strong internal brands. Employer brands are built on a system of values that should permeate every aspect of workplace culture — from onboarding practices and everyday meetings to telecommuting policies and, especially, career development opportunities and digital experiences. Employers that cultivate a reputation for investing resources into an employee's career journey entice the best job candidates and will have employees who are more productive, successful and engaged with their responsibilities. According to Mercer's HR 2025: Talent, Technology and Transformation Magazine, "Thriving employees are three times more likely to work for a company that understands their unique skills and interests. And 80% of thriving employees say their company has a strong sense of purpose." Creating a clear and powerful mission statement that defines a company's purpose and how employee growth is a key element of that purpose will result in a more aligned and dynamic workforce. Employer brands must communicate and deliver career advancement opportunities to employees in ways that suit their personalities and individual sensibilities. Bespoke Career Management   In Brazil, employees are not only playing a key role in their own professional development, they are also pressing employers to offer more streamlined digital experiences and customized learning opportunities utilizing a variety of resources. Mercer's Global Talent Trends 2019 report explains, "In an environment where knowledge is widely and freely accessible, the corporate learning function must shift its focus to continue adding value. Curated learning is not new; what's changing is how it is being used to shape content relevant to a particular ambition, close a known skills gap, or build connections among peers who can share expertise." Employers can leverage digital experiences to address the uniqueness of each employee's goals, talents and learning styles. Online web portals, smartphone apps and other digital training materials can be customized according to the user's preferences, skill sets, learning ability and career goals. These digital experiences offer employees the chance to learn at their desired pace and develop skills that will lead to greater responsibilities and opportunities to advance their careers and income. The same Mercer reports explains that, "When curated learning works well, people stay and progress through the organization because their learning helps them accelerate their career." The Digital Transformation of Human Resources   Robust benefits portals, personalized training and educational digital experiences are only a few hallmarks of how digital transformation is revolutionizing human resources in Brazil. By creating digital tools that map and guide an employee's developmental journey, businesses can also better understand the overall health and value of their workforces. Cloud-based systems that use Software as a Service (SaaS) models are creating unprecedented transparency within the employer-employee relationship. However, for large multinational companies in Brazil, implementing these resources can be exceedingly difficult. Legacy systems, aging applications, technical incompatibilities and unintuitive interfaces pose serious challenges to effective implementation. Finding ways to navigate these technical obstacles is critical to future success. Digital transformation is redefining the roles and capabilities of HR departments and revolutionizing workplace cultures. Skilled, upwardly mobile workforces are not only more productive and add value to the bottom line, but also provide businesses with effective ways of differentiating their brand, services or products from competitors — a key advantage in competitive marketplaces. Employees who feel engaged, listened to and valued make their employers more competitive. Mercer's HR 2025: Talent, Technology, and Transformation Magazine elaborates, "Organizations typically pore over compensation and benefits numbers. Yet it is often the actions beyond salary — such as promotions, transfers and healthcare spend — that have a greater impact on business outcomes. Understanding which elements make a company competitive, and which are differentiators, can go a long way in delivering an employee value proposition that resonates." By investing in the futures of employees and their careers, employers in Brazil are also investing in their own long-term success.

Kate Bravery | 26 Mar 2020

As with all unforeseen threats, COVID-19 is prompting individuals, small- and medium-sized enterprises, and large corporations to reevaluate habits that have long gone unchallenged. The outbreak is stress-testing our resolve and our resilience. Those that will emerge fighting fit will balance tough economic decisions with empathy. For, while the pandemic remains foremost a human tragedy that requires constant vigilance and swift action, thoughts about the way we work are also coming to the fore. Who can work remotely? Do we really need that conference? How can we make virtual meetings more engaging, inclusive and productive? How ready are we to embrace digital working? Even before the crisis, one in three employees said they were anxious about job security, data from Mercer’s forthcoming 2020 Global Talent Trends Study reveal. The novel coronavirus will do little to calm those fears. And so, while organizations prepare to ensure business continuity in response to different scenarios, we find ourselves needing to experiment with new work patterns. Companies ahead of the curve will be those that place empathy at the heart of their mandate. It is the balance of empathy and economics that will win in an evolving and unpredictable world — in other words, companies that care enough to put people and productivity metrics side by side, both while confronting COVID-19 and its economic fallout, and further ahead as they build better, brighter futures. This year’s forthcoming Talent Trends Study points to how companies can respond to the pandemic and focus on what matters by applying the new decade’s empathetic imperative. Commit to stakeholders   With the vast majority of business leaders (85%) agreeing that an organization’s purpose goes beyond shareholder primacy, now is the time to match actions with words and make decisions with empathy and equity for all stakeholders. This includes supporting supply chains and the economies that rely on the company. For example, Microsoft has committed to paying normal hourly wages to non-employees (such as bus drivers and cafeteria workers) whose pay might be interrupted by the many Microsoft employees working from home. Another imperative is to provide a sense of security and trust. Indeed, trust is a significant factor in employees’ sense of thriving. The 2020 study found that thriving employees are seven times more likely to work for a company they trust to prepare them for the future of work and twice as likely to work for an organization that is transparent about which jobs will change. Building a strong community around a common purpose and sharing the vision is vital to communicating that the company cares and has a plan for different scenarios. How employers respond to well-being issues like stress, burnout, and uncertainty will be a hallmark of their attitude towards responsibility and sustainability And as people worry about their health, this is the time to confirm the organization’s commitment to well-being. Calm messaging, employee assistance, and mental health apps all have their place day-to-day. It also may be prudent to reexamine the relevance of company benefits: virtual yoga sessions or discounts for online shopping might become highly valued. The good news is that 68% of employers are likely to invest in digital health in the next five years. And if the pandemic lasts for a long time, fundamental issues of well-being will be at stake. Epidemics are historically associated with a rise in depression and anxiety. And this year a clear majority of employees said they feel at risk of burnout before 2020 even got started. Are employees’ partners covered by income protection? Do benefits extend to family members? What financial advice is on offer? For instance, outdoor retailer REI has modified its paid leave policy to guarantee the income and benefits of employees who miss work or have to care for family members. All these need to be communicated clearly. How employers respond to well-being issues like stress, burnout, and uncertainty will be a hallmark of their attitude towards responsibility and sustainability — a critical attitude given that 61% of employees trust their employer to look after their health and well-being. Kick start skills   Executives are swiftly adopting future of work strategies to compete in response to a possible economic downturn. If macroeconomic conditions continue to be unfavorable, companies see this as an opportunity to double down on new ways of working such as strategic partnerships (40%), using more variable talent pools (39%) and investing in automation (34%). Front of mind is modelling supply and demand under various scenarios and interventions, such as how to manage variable and fixed costs.  With the quickened pace of automation, it’s no surprise that executives and employees are reflecting on how this will impact careers. The Mercer study reveals that business leaders rank reskilling as the top talent activity capable of delivering ROI this year, while employees say the #1 factor in thriving is the opportunity to learn new skills and technologies. Yet, for employees the biggest hindrance to learning is lack of time, according to our study. In this respect, the current crisis may offer the opportunity to kick start reskilling. Providers such as General Assembly and edX offer on-point courses and, with potentially more time to spare, employees can take advantage of online learning to explore new directions. But to realize learning’s full benefit, organizations will have to be transparent with employees about the new roles reskilling could lead to. Take the time to have clear career conversations with employees about the skills required to move along a pay range and/or qualify for other jobs within or across departments. People who feel well-informed about their future career path are more likely than others to take up reskilling opportunities (83% versus 76%) and are more likely to stay with the company (54% versus 46%). Share what you know   In the last five years, HR has moved data up the value chain and seen a significant jump in its use of predictive analytics. This is a major development in the growth and value of workforce analytics. Finally armed with insights, organizations are shifting their focus toward gaining measurable value from analytics and honing their market-sensing and analytics capabilities to enhance talent management practices. But as companies weigh the impact of the disease, are organizations measuring the right things? This year, the study shows 53% of companies are tracking the drivers of engagement, yet insights on training (down 6%) and burnout risk (down 25%) declined in prevalence. Digital ways of working bring more data sets we can mine, but also challenge our models of workplace success. Exploring what metrics are most relevant and sharing them with employees provides insight into productivity inputs in a new remote working and distracted climate. Many employees would be happy to receive meaningful findings and advice on how they are working or on their well-being indicators. Finally, as the workforce science discipline gathers force, it can supply vital forecasting insights to build future business resilience. Key to workforce forecasting is an enterprise-wide culture of experimentation. HR can work closely with executives, finance leaders and data scientists to explore how to mitigate the productivity and well-being fallout of such scenarios. Promote the remote   For many organizations, the novel coronavirus has been a wakeup call to the possibilities of remote working and its impact on the employee experience. JPMorgan Chase, Twitter and Sony’s European offices are just some of the many companies asking employees to work from home. The challenge has been that only 44% of companies assess every job for its ability to be done flexibly. So what helps? Thriving employees say the most important factors for successful flexible working are: colleagues that are supportive of people with flexible work arrangements, a company culture that encourages flexibility, and managing performance on results not hours worked. Design thinking with pilot teams working remotely are critical to seeing what needs to change to better suit these times. Still, if not done well, remote working can exacerbate challenges with inclusion, accessibility and emotional support. Some simple tips for staying connected in times of social distancing can help: Inclusive teaming when working remotely requires effort. To make sure every team member’s voice is heard, communicate expectations and agendas in advance, encourage people to be visible on the call, ask people to come with comments/questions, and set up discussions by hangouts and chats in between calls. Pre-brief senior people in your team to be vocal and embracing. Create an informal climate up front with small talk. Remote calls require a redesign of the meeting. As a rule of thumb, halve the time you would allocate for a face-to-face meeting for a call where people are dialing in. Leverage pre-reading to ensure those who are more introverted or reflective feel ready to contribute. Small group preparation and post group actions are vital to building team spirit. Establish new rituals.   Take time to address the emotional, not just the practical. Take a few minutes at the start and end of a call to find out how everyone is feeling. Pulse-checking questions people can type responses to in a chat function (e.g. “Use one word on how you feel about what we’ve just shared”) can be a great way to take a temperature check. Communicate that managers are still accessible by phone, even if not in person. Use old and new technology (phones as well as video conferencing services) to stay personal, especially with workers not used to working remotely. Don’t let email (and even chat) be the only way you communicate. The volume can become deafening if not managed. Leverage community sites and project boards to train people in how best to stay connected. In our study, 22% of employees believe that some necessary human interactions have been lost, so finding ways to inject warmth and a bit fun into exchanges is a good idea.   The social distancing required in response to COVID-19 has, rightly, got many companies reexamining their digital work experience. Forty-seven percent of executives are concerned about employees’ digital experience — or the energy-sapping nature of not having it. Nearly half of employees believe there is room to improve on digital transformation: 20% of employees today say HR processes are complex, and a further 29% say they have been simplified but still have a long way to go. In the longer term, it will be valuable to revisit the company’s EVP and interrogate how technology-enabled HR processes are today and how capable working tools are with coping with mass remote services. Intermediaries such as ServiceNow, Mercer’s Mobility Management Platform and digital outplacement solutions can help. How we care is how we win   Employees are understandably concerned about the health of their families and communities and organizations are quite rightly putting the health of their people first (their #1 workforce concern this year). But financial market volatility, and the impact on individuals’ jobs is a mounting concern that is weighing on people’s minds. Meanwhile, businesses are examining whether their practices are agile enough to withstand unpredictable events such as COVID-19, if they are resilient enough to sustain themselves through this period of hardship, and innovative enough to stimulate demand afterwards. We’re being challenged to do things differently — in companies big and small, on new platforms and with new technology, and we see emerging new ways of caring for one another. And in their wake we will not go back to how we operated before. Necessity breeds innovation. We are on the cusp of new ways of working and living that, if executed well, will build a bright future.

Dr. Sebastian Fuchs | 26 Mar 2020

Everyone’s job has, in some form or another, a job title. Be it a Brick-layer, Accountant or CEO. The common understanding is that the job title depicts the respective job and its roles and responsibilities. Our work with different clients of different sizes, with different structures, maturity levels, and in different economic and cultural environments, however, suggests that there is much more heterogeneity in job titles than one would suspect. In one organization, for example, an Accountant is called ‘Financial Advisor’ whereas in another organization, s/he is called ‘Finance Officer’. In Mercer’s 2019 Global Total Remuneration Survey, on a sample of 182 organizations based in the United Arab Emirates, as an example, the Mercer Job Library position ‘Accountant–Experienced Professional’ is tagged against more than 180 different job titles. This suggest that more than 99% of organizations included in the data set label this type of job in a unique, idiosyncratic manner. In a similar vein, Mercer’s 2019 data from Australia shows more than 360 different job titles across 313 organizations. A similar report for India from 2019 shows over 520 different job titles across 360 organizations for this type of job. In Brazil, Russia and the UK, the same analyses produced very similar results. This means, to be specific, that similar jobs even in the same organization are often labeled in a heterogeneous, unconcerted way. Problems associated with purposeless job titling   While the Accountant example provides some insight into the actual responsibilities of the role, we often see organizations labelling jobs in less meaningful, purposeless ways. For instance, we find job titles such as ‘Senior Supervisor Financial Accountant’, ‘Business Analyst’, ‘Finance Executive’ or, more recently, creative titles such as ‘Accounting Guru’, ‘Accounting Ninja’ or ‘Accounting Rockstar’ in this area of organizational life. In our view, this creates five key issues: 1.   In markets that are suffering from employee disengagement, the rise of passive job seekers and a growing appeal of self-employment and entrepreneurship[1], a job opening with an inaccurate job title faces two key problems. Firstly, the job applicants may be over or under qualified for the position at hand and, secondly, potentially suitable applicants may not apply as they believe the job is not a good match. 2.   Breaches of the psychological contract between employees and their employer may occur. To be precise, “the psychological contract encompasses the actions employees believe are 1.      expected of them and what response they expect in return from the employer”[1]. To this end, a purposeless job title may provide an inaccurate view on the actual roles and responsibilities to be performed by the new joiner. For instance, a ‘Financial Advisor’ may execute on the classical accounting tasks, such as processing accounts receivable and payable, but the job title, however, indicates that the job holder would spend some time interacting with stakeholders and provide advice on financial matters. The lack of defined possibilities to engage in such activities may constitute a psychological contract breach, leading to cynicism towards the organization, turnover, job dissatisfaction, reduced commitment and an overall decrease in performance. 3.   Another important issue to consider is an employees’ propensity to boost their current job title. This is linked to two mechanisms. Firstly, boosting one’s job title ultimately serves to enhance one’s status and self-identity[1]. Secondly, an enhanced job title is likely to attract attention on the external job market. 4.   Perceptions of fairness may decrease due to inconsistently labelled jobs. For instance, a job may be called ‘Finance Lead’ that is, in terms of roles and responsibilities as well as qualifications required, very similar to a ‘Head of Finance’. For most people, a ‘Head of Finance’ is classified as a higher ranked job despite both jobs being very similar in nature and potentially having the same job grade. This can create perceptions of injustice leading to employee turnover, lower levels of extra-role behavior and greater levels of withdrawal, deviant and retaliatory behaviors[2]. 5.   Purposeless job titles may also be detrimental for internal and external communications. Internally, there might be a certain degree of ambiguity to what the hierarchy level of a an incumbent is and consequently how messages should be phrased. Externally, purposeless job titles may further lead to misunderstandings in terms of authority levels and responsibilities an employee holds. Reasons for purposeless job titling   The reasons for these five issues are manifold. First and foremost, only few organizations seem to have adhered to a coherent, up-to-date and intuitive job titling framework. In fact, in many organizations job titling is either left to the line manager or, in some cases, left to the job incumbent. This, by definition, is likely to create a certain degree of heterogeneity among job titles. In addition to that, even in leading organization, there is often no clear, well-defined organizational process in place to govern this element of organizational life. We advocate, and outline in greater detail below, that there should be a process in place including clear roles and responsibilities in terms of who sets and ultimately approves the titles of jobs. We also see that organizations often seek to develop job titles that adhere to the specific cultural contexts in which they operate. This, as a consequence, also adds to a certain degree of incoherence in job titling. Lastly, the high degree of change to which many organizations across the globe are exposed to, also contributes to incoherent job titles. To be specific, when organizations adopt new structures and amend roles and responsibilities of their jobs, job titling should also be considered. However, for many organizations this is an issue of limited importance of the time of restructuring so this tends to get neglected. As a consequence, especially with numerous rounds of re-structuring, a heterogeneous, incoherent landscape of job titles is likely to emerge. Conducting purposeful job titling   The above-mentioned observations raise the question of how organizations can move forward to actually create purposeful job titles. Meaningful or purposeful job titles usually consists of two key elements. Firstly, purposeful job titling should indicate the actual function and with this associated roles and responsibilities the job incumbent is tasked with. If an employee in Finance is responsible for maintaining the Finance IT systems, then the job title should indicate that this employee looks after IT for Finance, as opposed to more generic IT activities. Secondly, a purposeful job title also indicates the hierarchical level, or, to be more specific, should hold reference to the actual job grade the job has been mapped onto. In our work across the globe, we see a certain degree of inconsistency and incoherence in this respect. Frequently, strict hierarchical levels are used to create job titles, even though the job evaluation may not indicate such job titling. For instance, the responsible job incumbent for managing financials in a country managing set-up of a small to medium sized enterprise owned by a multinational corporation may be called ‘Chief Finance Officer’. This job title indicates a fairly senior position. In reality, however, such a job more closely resembles the activities of a ‘Financial Accountant’ or a ‘Finance Manager’. Such discrepancies between the actual roles and responsibilities of a job and its titling typically become clear when job evaluations are performed. As such, we advocate a certain adherence to job grades when it comes to job titling in order to derive purposeful job titles. In Figure 1, we outline how an approach to purposeful job titling could look like. It indicates the main components of a job title, i.e. (a) what the job’s hierarchical level in the organization is, (b) its function or area of expertise, (c) to what organizational unit the job belongs, and (d) what the actual scope of responsibility of the job is. For instance, a ‘Senior Vice President Finance EMEIA’ uses the elements A, B and D of the framework. Element C, the organizational unit, in this case is not required. For professional jobs, as another example, an ‘Advisor Finance Downstream Abu Dhabi’ would have all elements in her or his job title. This way, the same protocol and nomenclature for different job titles is applied universally across the organization, and thereby meets the requirements of purposeful job titling set out above.                           Figure 1: Mercer’s Purposeful Job Titling Framework In addition to adopting such a framework, organizations should consider who owns and governs job titling. The governing department should make sure that there are employees who have ownership of this process, and that no job requisition and its related activities as well as any internal re-structuring fails to comply with the framework. This way, purposeful job titling gets embedded and institutionalized in the organization. Sources: 1. 2017, ‘The talent delusion: why data, not intuition, is the key to unlocking human potential’, Tomas Chamorro-Premuzic, Piatkus. 2. 1994, ‘Human resource practices: administrative contract makers’, Denise M. Rousseau and Martin M. Greller, Human Resource Management, 33-3, page 386. 3. 2005, ‘Understanding psychological contracts at work: a critical evaluation of theory and research, Neil Conway and Rob B. Briner, Oxford University Press. 4. Ibid. 5. For an interesting review see: 2019, ‘The five pillars of self-enhancement and self-protection’, in the Oxford handbook of human motivation, Constantine Sedikides and Mark D. Alicke. 6. For a good overview please refer to: 2001, ‘The role of justice in organizations: a meta-analysis’, Yochi Cohen-Charash and Paul E. Spector, Organizational Behavior and Human Decision Processes, 86-2.

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