Digital Transformation through HR & Employee Experience
Updated: Mar 5, 2020
Disrupt, or be disrupted. The clear message investors and boards are sending corporate leaders. The question is, how can HR play a role in helping businesses become digital and agile? Patrick Doyle, CEO of Domino’s, went out and claimed: “We are as much a tech company as we are a Pizza company” during a CEO Summit in Detroit back in 2016, and rightly so. That mindset clearly paid off. Since 2010, when Doyle took over Domino’s, stock prices increased by more than 2,400%. That’s more than both Apple and Amazon’s increase during the same period, combined.
What is a digital company?
The question is, what does it mean to be a digital company. Yes, technology is part of the equation. That’s a given. What’s generally not being emphasized on is all the “soft” parts such as culture, values, purpose, organizational structure and way of working. How the leaders lead their people and how competitors can be your partners in some aspects and vendors becoming an integrated part of your business. There’s already a great amount of focus on customer experience, but to create a great customer experience, employee experience must follow suit.
Corporates must take other aspects of the business like the way they are organized, culture, info-sharing and much more to become truly digital
Many companies implement digital tools and then force outdated policies and procedures over them. That doesn’t work. Technology should be implemented to help companies become faster to respond to customer needs, employee experience and for efficiency purposes and cost cutting. You never go digital for the sake of going digital and continuing the old ways of working. Generally speaking, digital transformation is necessary to become customer centric and to win the customers over. The enablers are technology, people and the way of working.
Digital Company Benchmarks
While we all know of digital companies like AirBnB, Google, and Uber, we tend to forget that they are digital born. If your company already has an established culture and succeeded before the digital age, it’ll be very difficult to suddenly become the next Uber or even learn from their experiences. Corporates established before the digital age would benefit more by learning from established companies that underwent the transition from Industry 3.0 to Industry 4.0 such as GE, Maxis and DBS.
The digital transformation will include new organizational structures, change in policies, processes, facilities, ways of working, culture and of course, a significant increase of digital tools. Furthermore, established corporates will also have to develop a new corporate mindset, which is underpinned by new ways of learning and related capabilities.
Digital-born companies didn’t have to go through the hassle of unlearning non-digital ways of working and learning digital ways of working. Therefore, my best advice would be, learn from companies that made the transition from a non-digital to a digital company; learn from both their success and failures.…
But our employees are not ready!
The reality is that everything is now in place for a great digital lifestyle, in and outside of work. We have high speed internet wherever we go. Smartphones are now affordable for anyone. There’s an app for more or less everything you are interested in and almost everything is in the cloud. So, if that’s the case, why aren’t people willing to go digital at work?
The big question you have to ask yourself as a corporate leader is whether it’s the employees who are delaying the digital journey or the leadership.
Why is HR not taking the lead in going digital?
HR can and should play a big role in the digital transformation by stepping up and taking ownership of the people and organizational side of the transformation. But why aren’t they doing so?
First of all, it’s a new and unknown area to many. Very few have made the transition to a digital company, which means there are very few case studies and benchmarks. Many in HR simply just don’t know where to start and what the end looks like.
The skills, behavior and mindset needed are often missing in HR. HR must understand the digital shift corporates need to undergo. HR professionals should have a digital mindset as naturally as it’s expected from the UX and digital marketers. They should be able to discuss and add value during digital strategy meetings. Generally speaking, HR professionals who’ve been in HR their entire career have difficulties shifting to such a mindset and acquiring the needed capabilities because it wasn’t expected from them in the past.
Finally, all the excuses of being too busy with business as usual work and that it isn’t HR’s responsibility to digitalise the company. Passing the responsibility away from HR is definitely not the way forward. Digital is here to stay. Digital is everyone’s responsibility, especially HR.
So, how do we get there?
Strategy, not technology, drives the digital transformation. Unfortunately, research carried out by MIT Sloan School of Management & Deloitte showed that most corporates still lack a clear digital strategy. Many companies are creating technology strategies without including the human element. People and ways of working should be part of the bigger digital strategy puzzle. Digital mindset, skills and behaviors have to be part of the strategy and not just an afterthought. The CEO must lead and own the overall digital strategy, while HR HR should take part in the discussions and add value on people and organizational matters.
Once the overall strategy is clear, HR should step up to enable the business achieve its strategic goals by laying the foundation by facilitating the creation of values and a culture aligned to the digital strategy. The values should be the guiding principles of all frameworks and initiatives HR rolls out, not just some beautiful words on the walls.
As part of the foundation of the digital HR strategy, it’s essential to decide on the needed digital mindset traits. I wrote an article about what I believe the digital mindset traits are here. It’s not so important to get the traits 100% accurate. What’s important is that you make some clear thoughts about what mindset is the most important to adopt in your organization to become truly digital. Those traits should lay the foundation of your people initiatives moving forward.
While employees in most instances use far more apps and digital tools in their daily life than at work, the same doesn’t go for other aspects of digital. Humans are generally habitual, which means they have a natural fear of change. Unfortunately, most organisations pay much more attention to execution while people’s feelings are secondary. The resistance to change within people is real and can be hard for organisations to handle. Research by Mckinsey shows that people make the difference between a successful or failed transformation; especially when feelings are passive and subconscious. What I realized is that, even though people know their job is at risk due to AI, and advanced robots, they still aren’t eager enough to pick up skills needed to be relevant in the future. Repeating the message of “AI taking over your job” seems to be useless.
What seems to be working better is a three step model where you start by disrupting the employees, and then move on to inspiring and elevating them.
Make sure people understand why they must change. Disrupt them in a way that they understand that the world is changing and they must follow suit. We are doing our people a great disservice by not letting them realise their job and future is in danger if they don’t keep up with Industry 4.0. Self-realisation is the first step to be able to jump on the digital bandwagon. Secondly, other than the self-realisation, you must inspire through purpose. You don’t want your employees to look outside your organisation after realising the importance of change. While financial and operational goals are important for boards and investors, employees are driven by purpose. They want to be part of building something big.
Let your people see other people like themselves who succeeded with their personal transition. The inspiration should come from people your employees can relate to. It should be someone who had a conventional mindset and capabilities and now having the mindset and skills needed in the digital economy. Don’t talk about some genious in Silicon Valley or Jack Ma. Let them be inspired by people like themselves. Let them find out how realistic it is for them to change.
The final step is to help the employees make the shift. Help them get on board the digital bandwagon by creating the right environment, through Education, Exposure & Experience (3Es). If you’ve already Disrupted & Inspired them, they will be forward leaning towards change. It’ll then just be a question of creating the right environment for them to get where they need to be.
Don’t just do two of the 3 steps and think it’ll work. If you Disrupt and Inspire your employees they’ll have the urge to change, but not know how to reach their end goal. If you Disrupt and Elevate, they will probably not have confidence in making the change, because they haven’t been exposed to relatable people who have already made the shift. Lastly, by inspiring and elevating only, the result will be like watching a video on FB sharing how to get that awesome six pack. We probably all want it, but very few of us feel the urge and need of a six pack. Knowledge alone won’t make people change.
Elevate through Employee Experience
Helping elevate the employees to have a digital mindset is where HR can play a significant role. To elevate your employees you must focus on the leaders, rewards and experiences within the organisation.
Leaders at all levels must be purpose-driven and be able to communicate the why and how in regards to the digital transformation. Their expectations should be clear; to drive the digitalisation agenda. A disconnect between the senior leadership and mid-level management will have severe effect on the strategy and might very well make the good intentions from the senior leadership go to waste.
Employees, even the resistant ones, tend to follow their leaders and would do their best not to be the odd ones out. Leaders at all levels impact their employees which is why the change must begin with them; from the way they think and feel to the way they communicate and act.
Leaders at all levels must be familiar with the digital strategy and be empowered enough to drive the agenda within their responsibility areas. They must understand and gain new digital capabilities whilst also carrying the responsibility of communicating the purpose, vision and developing their people towards digital. Growth and development of leaders to handle the digital transformation as change agents is critical for the success of the digital transformation.
Rewards & Recognition
It’s important to get everyone onboard and recognize people who go the extra mile to help make the digital agenda happen. A research conducted by Prof. Jose Galan et al. showed how incentives linked to cultural, social and psychological aspects that goes beyond the usual KPI’s can drive both exploration and exploitation all according to how you design your rewards programs. What’s equally important is to stop obstacles to succeed with the digital transformation. As cliché as it might sound, but this is when “All for One and One for All” comes into play. Transforming into a digital company while battling disruptive Start Ups and other competitors eating in on your market share is challenging enough. The last thing you want is to be fighting your own people as well.
If you want to compete against digital disrupters you must become digital inside-out. Competing against digital born companies is no joke. They are agile, respond and adapt fast to changes and most importantly, move as one. The better you are at managing your organisation from within, the better you’ll respond to any kind of threats from the outside.
A truly digital company works as a network rather than in an hierarchical manner. Employees work with team members across departments and divisions on the same projects. The organisational silos drawn along functional areas kill collaboration, performance and effeciency. Digital companies need to move and adapt fast as well as collaborate across functions to develop solutions, share information, expertise and even talents. While Scrum, Design Thinking and agile in general are on everyone’s lips, making the change to organisation-wide scrum teams isn’t the solution; it’s at least not what you should start with. Transitioning from a traditional hierarchical setup to a fully agile organisation takes time and lots of patience. The end goal may be fully agile and networked teams that dissolves when one project is done and new teams appear when another project appears, but in the short and medium run, focus should be on breaking the silos, increase cross functional collaboration and remove the extra management layers. Digital companies shouldn’t be run by small kings and queens having their own small empires. The fewer the layers, the faster decisions are made.
Many organisations today have career levels and grades in the dozens while employees expect to be promoted along the ladder every 2nd-3rd year. This is so they can earn more, get that cool title and bigger office. A truly digital company does not motivate its employees in such ways. The motivation is that big hairy, audacious goal all employees can relate to and feel they can help their organisation achieve. Growth should constantly happen in the form of new learnings and experiences. Promotions should be based on performance & potential only. Yes, tenure is appreciated, but don’t punish the talented employees by making them report to less qualified managers just because of age, tenure or seniority. That’s the best recipe for disengaged employees and high attrition among your top talents.
Offices should be open, colourful and a place people connect. So get those high cubicals away, get the senior managers out of their fancy offices and let people connect with each other anytime, anywhere. It’s very telling the type of culture that is created and driven by managers who wish to sit alone in their ivory towers. To such leaders, an agile, adaptive and engaging environment is probably secondary to power and prestige.
You’ll never be able to have 100% of your workforce supporting the digital agenda fully, but as long as you have a critical mass including your leaders and critical talents onboard, the journey will go on.
Agile ways of working
PMP, prince2 and other traditional project management methodologies are definitely not outdated, but if you think you can run all your projects with these methodologies in the digital age you better think again.
We see a significant increase in organisations adopting agile ways of working by introducing design thinking, scrum, kanban or their own unique agile ways of working. Those who succeed with the agile transition made one significantly different move that most others didn’t. They got sponsorship and support from the top leadership, which ensured agile wasn’t just another big bang initiative. Many organisations have been rolling out their own Hackathons, which ended up being a fun activity with no sustainability. Don’t get me wrong, hackathons are great, but a few stand-alone hackathons won’t make your organization agile.
A company worth learning from is DBS in Singapore. David Beath wrote an excellent article about how DBS managed to get 250 of their most senior leaders to run through hackathons together with people from the Start-Up communities. Long story short, design thinking which includes lots of experimentation and prototyping is now part and parcel of their culture. Letting employees' experience agile ways of working is a far better way than than talking about agile. Lastly, don’t forget to let your people experience what digital looks like by arranging events and talks where digital evangelists can showcase the products most people normally only have the chance to see on Linkedin and Facebook.
HR is probably the department employees have the most exposure to. Whether we are talking about the brand perception, candidate experience or employee experience; HR is playing a key role. As part of the digital transformation, employees must experience digital inside out. HR has to create that great digital experience that we expect the business to