Digital Economy Dispatch #005

14th October 2020

Why HR is Critical to Your Digital Transformation

Just about every article you see these days starts with the comment that digital transformation is about people, not technology. Rather than a fixation on the latest high tech wizardry, we are urged to work with our people to bring change to their practices, skills, and mindset. However, very few of these discussions give any focus to the key role of Human Resources (HR) team in making this happen. I believe this is a fundamental omission.Given today's digitally-fuelled changes it can reasonably be argued that HR should be a driving force in digital transformation. However, the perception in most organisations is rather the opposite. In Gartner’s 2019 HR Trends and Priorities Review only 29% of employees agreed that “HR really understands what people […] need and want.” Among surveyed HR leaders, 40% admitted that their organisation struggles to bring the employee value proposition to life in employees’ day-to-day work. Instead of being at the head of this important change, HR is frequently seen as a disconnected and unwilling passenger on this journey. Rather than an accelerator and enabler for digital transformation, they are the choke point restricting progress. Why?

Buffeted by the Winds of Change

The current “Digital Revolution” is throwing many of the fundamental tenets of business into the air and creating substantial disruption, volatility, and stress across every organization. The HR team holds a core position of influence at the centre of this uncertainty, and brings the necessary supporting services, structures, and stability to what often feels to individuals as a chaotic and rudderless process. Working with a wide set of stakeholders at very different situations in their digital transformation journey, HR is pivotal in ensuring that individual needs in the workplace are balanced with appropriate accountability at broader corporate levels of the organisation.The dynamics of digital business transformation have another important consequence for HR. Speed, agility, and experimentation are highly prized during rapid change. Unfortunately, in these times of digital turbulence many of the business support functions considered central to HR such as personnel management, project management, policy management, and performance management too often get short-changed in the scramble for investment to digitise core business capabilities and to accelerate release of new digitally-enhanced customer-facing products and services. The integrating operational capabilities essential to HR are often the ones left behind, then seen as the blockers instead of key enablers in the on-going digital transformation. HR finds itself caught in a catch-22 cycle of being seen as not doing their job if they allow too much freedom to stakeholders who view agility as an excuse to “ignore the rules”, and seen as irrelevant and inefficient by the “innovation-at-all costs” vanguard if they do.To learn more about how to address these concerns, during the final quarter of 2019 and into 2020 I have been delivering a series of workshops across several sites in Europe in partnership with Headspring (the custom executive development funded by the Financial Times and IE Business School) and attended by over 120 leaders in HR, Organizational Change, and Learning and Development. All were deeply involved in supporting their organisations to address the challenges of digitising working practices and transforming HR to support the digital workplace.In these open-ended workshops, a wide cross-section of ideas was discussed highlighting a variety of opinions on where and how HR can gain greater impact in digital transformation. Assessing the diverse conversations that took place, it became clear that participants offered three distinct perspectives on HR’s role in digital transformation. Recognising these viewpoints emerged as an essential framework for the discussions to enhance understanding of the current challenges, and to offer a structure to measure future progress:Digital Transformation is happening  IN HRIntroducing digital tools and ways of working within HR activities is critical. HR is too often buried in the administrative burden of managing, tracking, and auditing compliance to policies rather than performing the value-add functions for which they were hired. Digital transformation in HR is bringing new kinds of speed and transparency to their operation. However, investment in these changes to HR infrastructure is often insufficient and lack of confidence in the delivery in IT-driven projects creates uncertainty. Furthermore, the level of core technology skills within the HR community is low. Consequently, the struggle is to operate day-to-day activities while digitally transforming how HR functions.Digital Transformation is happening TO HRAll stakeholders and agents of HR are in the process of digital transformation. For many, this increases agility, experimentation, and innovation in everything they do and particularly in how they want to hire, direct, incentivise, manage, and support their staff. However, different groups across the organisation and within the partner ecosystem are at very different points in their digitally-driven evolution. The central, networked nature of HR means that it is required to support the changes happening to all its clients, regardless of their current digital maturity. While one stakeholder group is operating using traditional hierarchical management processes with progress measured in terms of effort exerted and outputs produced, others may be forming self-managed teams dynamically reconfiguring around emerging solution areas with success based on strong client impact metrics. The varied nature and diversity of these interactions forces HR staff to be competent in a growing range of techniques and styles of organizational approach, and requires a maturity and sophistication in digital technologies and processes that HR seldom possesses.Digital Transformation is happening THROUGH HRMany organisations are actively engaged in defining broad, sweeping strategies to ensure relevance and growth in an increasingly digital economy. Everyone agrees that people and skills issues are a fundamental Achilles’ Heel in these plans. Recent surveys and questionnaires highlight that digital skills shortages are holding back digital transformation with up to 70% of employees believing they have not yet mastered the digital skills necessary for their jobs today. Furthermore, massive change in jobs and skills will continue with predictions of the impact of new digital technologies such as Artificial Intelligence and Machine Learning indicating that more than half the tasks currently carried out by workers will be automated within the next few years. Consequently, it is essential that HR plays a leading role in the organisation's digital transformation narrative and journey. The experience and insights from HR are central to all strategies and plans for digital transformation bringing depth and rigor to conversations about job role redesign, flexible hiring practices, employee career development, workplace well-being, and many more essential themes. Unfortunately, HR is not always well positioned to have the influence and impact that is needed in these debates. When asked to step up to the plate, lack of digital competence and experience too often places HR in a defensive position.

Onward and Upward...

All three of these perspectives are essential for HR to flourish in a digital economy. Yet it is the enabling role of HR that must prevail. Lessons from the agile software delivery domain have taught us that it is fatal for an organisation to become overly obsessed with mechanics of digital technology’s new capabilities, or to be carried away by the excitement of experimental practices and innovation in the organisation’s delivery methods.Speed and agility without appropriate discipline leads to chaos. Success requires a disciplined approach to the changes underlying digital transformation with strong focus on the human elements of that journey. Significant attention directed at innovation management practices are yielding results, however not without significant cost in employee well-being, disengagement, and burn out.To succeed, HR must be at the heart of your digital transformation effort. Time spent encouraging, supporting, and enabling them will be time well spent.

Digital Economy Tidbits

Big Regulation Coming For Big Tech. Link.With increasing pressure from te US government to break up Big Tech, here is a great commentary piece from Dave Birch…don’t break up Big Tech…open them up! "I monitor my staff with software that takes screenshots". Link.Increasing remote working and online collaboration is raising important questions about how to monitor and manage a distributed workforce. Where is the line between valid verification of an individual's contribution and performance, and invasion of personal privacy?