Digital Economy Dispatch #029 -- The Human Dimension of Digital Transformation

Digital Economy Dispatch #02928th March 2021

The Human Dimension of Digital Transformation

Ask any organization what is their most important asset, and the most common answer will be “our people”. All companies seek to develop motivated individuals and organize them into teams with inspiring leaders who set directions to achieve the overall aims of the business. Despite this however, employees often feel that their needs and aspirations are poorly understood and inadequately addressed.

Is the digital transformation being experienced in many organizations making the situation for workers in the digital economy better or worse? The data is not encouraging. Ask workers and they most often respond that their situation is not improving, as figures from a number of studies reveal.

Just a few years ago, according to Hay Group’s “What’s My Motivation?” report from 2015, just 15% of UK workers consider themselves ‘highly motivated’, with almost 24% admitting to ‘coasting’ and a further 8% being ‘completely demotivated’. More worrying is that poor staff motivation has been reducing productivity by close to 50%, with just 21% of British workers considering themselves ‘very effective’ in their current job role. These figures are similar to those from the USA, where a 2017 Gallup report on the state of the American workplace found that over 51% of the US workforce was not engaged with their work, and only 22% believed that their company has leadership with a clear direction.

Given this data, it is more important than ever that we consider the human dimensions of the digital transformation taking place in organizations and the important implications for their individuals, teams, and the organization itself. This is particularly so because digital technologies are frequently viewed as de-humanize the workplace through additional automation of tasks, replacement of face-to-face activities with online alternatives, and eradication of human judgement in favour of data-driven algorithmic decision-making. Although intended to support human creativity and value, unchecked, the pressures from these changes may further diminish employee engagement and job satisfaction.

Uncovering more about the human dimension of digital transformation requires a deeper understanding of what motivates employees in a digital age. I find that Dan Pink has raised some of the most interesting insights into motivation from his research exploring how incentives influence workers.

Pink examined the role of money in motivating workers to work harder and improve their performance in cognitive tasks. He found that motivation is not driven by rewards or punishment. Rather, once workers are paid enough to live comfortably, they look for other kinds of outcomes. Pink observed three factors that motivated workers to go beyond basic tasks and increase performance and satisfaction:

• Autonomy. Our desire to be self-directed. Individuals value the opportunity to manage their time and effort, and to be active participants in planning future steps. In this way workers feel supported in increasing engagement rather than overwhelmed by the need to comply.

• Mastery. As individuals we seek to improve our capabilities, learn new skills, and hone those skills by applying them to complex tasks. Workers look to new challenges as a chance to augment their skills and to share them with colleagues.

• Purpose. Increasingly, workers want to be inspired. As humans we have a need to do something that we believe has meaning and is important as it contributes toward a defined outcome. Businesses that only focus on financial motives without valuing the broader business and social impact often find they face poor customer service and unsatisfied employees.

These observations are especially relevant to digital transformation contexts where an organization’s flexibility in the face of significant uncertainty is critical to success. In such circumstances it is essential to focus on the broader motivational needs of workers beyond monetary incentives and to provide the context in which today’s digitally-inspired individuals can flourish.

Digital transformation provides an opportunity to engage employees by addressing the three areas Dan Pink has highlighted. However, we must recognize that the acceleration of digital transformation experiences in 2020 and beyond is adding to the pressures on individuals and teams. We are seeing further indications of the challenges of maintaining employee engagement, motivation, and productivity in two recent surveys.

In the first survey, Microsoft considered the evolving working environment in a post-pandemic world where employees engage in a hybrid set of practices involving remote, local, and blended work styles. Microsoft’s 2021 Work Trend Index outlines findings from a study of more than 30,000 people in 31 countries and an analysis of trillions of productivity and labour signals across Microsoft 365 and LinkedIn. Amongst the key result, the data reveals that employers face many challenges:

• Worker dissatisfaction is high with over 40 percent of the global workforce considering leaving their employer this year.

• Hybrid working styles are here to stay with over 70 percent of workers want flexible remote work options to continue, while over 65 percent are craving more in-person time with their teams.

• Business leaders are increasingly out of touch with their employees as 61 percent of leaders say they are “thriving” right now while only 37 percent of their employees feel the same.

• The digital intensity of workers’ days has increased substantially with the average number of meetings and chats steadily increasing over the last year.

• Isolation of employees working remotely through the pandemic is increasing with the data showing more interaction within local teams and less occurring outside of those teams.

In the second survey, McKinsey examined the long-term changes that COVID‑19 may impose on work in the years ahead. A particular focus for the study was the importance of employees working collaboratively across roles and locations. The key conclusion of the report was that many of the jobs requiring higher levels of physical proximity will see significant transformation after the pandemic, driving a range of effects in many aspects of the workplace.

Not surprisingly, the disruption created by these shifts in work patterns is significant. Many daily tasks are redefined to ensure they can adapt to the new working conditions. Consequently, employees must undergo retraining, operating procedures require redesign, and businesses need to reshape their business models to adapt to the new conditions. All of these have the short-term impact of increasing the stress on individuals.

As we accelerate digital transformation initiatives, these surveys remind us that we will only succeed if we foster a talented workforce that uses digital technology effectively and feels supported in a working environment where change and uncertainty may be the norm. The challenge, then, is to create a future workforce that can adapt itself to the world as it evolves and where digital transformation recognizes the critical role of the human dimension as companies and markets form and reform in a world of constant change. Creating a resilient workforce is perhaps the most important step for any organization to succeed in a digital economy.

Digital Economy Tidbits

The future of work after covid-19 — a McKinsey Review. Link.

Here is a very detailed review and analysis of the future of work after covid. Many interesting areas discussed here such as the impact that maintaining distance and reducing physical contact between people may have over a number of years.

Here, we examine the long-term changes that COVID‑19 may impose on work in the years ahead. One factor the pandemic has highlighted is the importance of physical proximity and level of human interactions across different occupations and workplaces; those with the highest levels have seen the most change. This report attempts to identify the lasting impact of the pandemic on labor demand, the mix of occupations, and workforce skills required, as well as the implications for business leaders, policy makers, and workers.

Microsoft 2021 Work Trend Index. Link.

An excellent review of the changes in working habits over the past year from Microsoft. There have been many such surveys and reports recently, but this seems to offer the sharpest insights and data. Worth a read. I am already using this in my presentations!

“Over the past year, no area has undergone more rapid transformation than the way we work. Employee expectations are changing, and we will need to define productivity much more broadly — inclusive of collaboration, learning, and wellbeing to drive career advancement for every worker, including frontline and knowledge workers, as well as for new graduates and those who are in the workforce today. All this needs to be done with flexibility in when, where, and how people work.”

Satya Nadella, CEO at Microsoft