Culture, structure, and talent practices are the next tech frontier

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We can fulfill  or squander the promise of Digital Transformation

In markets and industries around the globe, “techno-optimists” have been heralding the age of Digital Transformation—in which an unprecedented confluence of technology, connectedness, data, and strategy will rapidly reshape human civilization, just as steam engines and automobiles once did.

Yet despite recent advances in areas like the cloud, social networking, and the Internet of things (IoT), companies are slow to capture digital transformation’s potential, lending support to a gradualist or even “techno-pessimist” view.  Digital Transformation: Human Capital, a new research report by The Conference Board, places the spotlight on workforce culture, organization and relationships as critical factors for companies seeking to digitally transform their business.

“Recent empirical evidence has found that digital knowledge is a low priority for the human capital (HC) function and that HC leaders have the weakest digital skills among all functions,” said Mary Young, author of the report and a principal researcher at The Conference Board. “Clearly, human capital needs to rise to the occasion. Leaders need to understand what digital transformation is—and isn’t—so they can lead the effort to redesign the organization, its culture, its talent supply and workforce practices. Today’s report examines phenomena like the rise in contingent workers and the increasing importance of collaboration, partnerships, and networks as central strategies for leveraging digital opportunities and gaining competitive advantage.”

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Till now, most organizations have struggled to turn specific innovations in areas like mobile or the cloud into the steady, transformative gains in profits and productivity that many envisioned. (See May 2016 report, Navigating the Digital Economy.)  “By thinking through the organizational and workforce factors that enable digital innovations, HC leaders can help their companies combine technology, connectedness, and data into an effective digital strategy.”

Digital Transformation: Human Capital breaks down the core business impacts of digital transformation and their direct implications for human capital:

  • Closer customer relationships. As with customers, companies are using technology to build relationships with employees and potentially with external talent. Leaders can monitor employee sentiment to identify emerging issues that need to be addressed or continuously measure employee engagement. They can use social media and digital platforms to understand external talent supply and monitor and manage their employer brand.
  • Customization. Technology, connectedness, and data and analytics can be used to understand the needs and preferences of fine slices of their workforce and external labor pools. Human capital leaders can tailor their talent management strategy and their employer branding to critical segments, and target communications to specific audiences.
  • Collaboration and co-creation. Organizations are now able to engage with partners across digital ecosystems, build their own internal platforms, and crowdsource solutions globally. These digital platforms require new approaches to encouraging, rewarding, and recognizing knowledge sharing and collaboration. Companies need to equip employees to be able to participate in and contribute to innovation. Organizations need to develop leaders and managers who foster that behavior.
  • Disruptive business models. Human capital practitioners should play a leading role in helping to decide the costs and benefits of various talent options and the trade-offs between human, technological (i.e., roboticization), and hybrid approaches. They must advise on the potential for restructuring jobs and reskilling employees, or the need to reshape the workforce. They can also contribute to the change management strategy, which may include culture, organizational design, performance management, training and development, and many other areas.
  • Transparency. Greater transparency changes the game for employer branding and talent acquisition, talent management, compensation and benefits, and employee engagement. Technology and connectedness transform employee communications, requiring an ongoing, two-way exchange in which employees have more information and bargaining power than ever before.
  • Blurring of organizational boundaries. As companies make greater use of contingent workers, networks, crowdsourcing, and partnerships, the distinction between insiders becomes less relevant. Yet many human capital systems focus exclusively on employees, and organizational cultures often treat nonemployees as second-class citizens. If companies are to gain the benefit of external talent, managers and employees will need to develop more inclusive behaviors toward them.
  • Democratization. Digital transformation serves to level the playing field, at least to some extent, by reducing hierarchy, empowering front-line teams, encouraging risk taking in innovation, and providing platforms that enable employees at all levels to be heard and to contribute ideas. Yet cultural barriers may be an obstacle. Employees must believe their ideas will be given a fair hearing. They must also believe they won’t be penalized for offering different perspectives or for making mistakes as part of the innovation process. –  PRNewswire
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