Why HR Needs to Lead the Digital Business Transformation

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CEOs and senior business executives have known for a long time that the goal of any business transformation is to reduce costs, increase efficiency, and increase profits – broadly speaking. There are of course a large number of other variables and priorities that are specific to every organization, but on the whole, most businesses are alike. They also tend to be alike in another area, in that the CHRO has an unenviable position. On one hand they are responsible for the same business priorities as any member of the C-suite, but on the other, they are tasked with leading transformation projects that impact the entire human side of the business.

There are a number of reasons why the task of a digital business transformation falls on the shoulders of the CHRO and the HR leaders. They know the workforce better than anyone else in the company. They are also well versed in setting plans and making strategies, leading change programs, and managing expectations. HR professionals are accustomed to being the human interface between the inner workings of the business, and the employees who support the every-day operations. They also have the business acumen to look at the wider market and societal trends, and make informed decisions about the future people operations of the organization.

Josh Bersin’s High Impact HR Study indicated that when HR teams are at the front of a digital business transformation, they are 2.5 times more likely to be among the highest performing HR organizations. By influencing and executing key strategies within the digital transformation, HR not only reinvents itself as a strategic powerhouse, but reinvents the business too. HR leaders who wish to lead a high performing HR organization and business therefore need to shape and drive change. Through this process, they can build a company that more effectively breaks down silos, creates a healthier work culture, becomes more strategically agile, applies new technologies and analytics appropriately, and develops more meaningful employee experiences.

This sounds great, but why is this task such a challenging one?

It has a lot to do with HR’s dual role. HR as a function, and by the nature of its position in the organization must satiate both the needs of the business, and of the employees. In an ideal world, these two sets of needs would meet – but they quite often don’t – or at least not entirely. Executives want digitization to make inroads into profits and to reduce losses, while at the same time turning their organization into the next Netflix or Uber of their industry. However, employees can often be burdened with a different set of expectations, from how their jobs will be impacted by new technologies, to how they will interface with the organization itself. The CHRO and senior HR leaders must live in both of these worlds at once, satisfying a huge range of stakeholders and delivering value to all.

What should HR leaders tasked with a digital business transformation prioritize?

There’s a seemingly endless number of things that HR leaders need to take into consideration when tasked with a digital business transformation. High on the list is the need to both attract digital talent with the right blends of adaptive and technical skills, and up-skilling the existing workforce on the skills they will need to thrive. HR also needs to understand which parts of the organization and workplace practices require the most immediate technological upgrades. It is also essential that HR has a firm grasp of how to embed people and data analytics practices (in terms of people, tools, and strategies) across the business so that reporting lines become clear, quick, flexible, and concise. To do this, HR must therefore audit the current technological capabilities of the company with the help of a dedicated cross-functional reporting team, and then clearly articulate the subsequent business plan and outcomes to all stakeholders.

“A digital business agenda should communicate the importance of digital work to all employees, be created by a multifunctional team, offer clear and important business outcomes, be tracked regularly, and incorporated into an ever-evolving planning process.”

Dave Ulrich in HR’s Five Actions in Crafting a Digital Business Strategy

As a part of this process, ensuring that the employees in the organization are given an understanding and some ownership of the changes that are taking place is vital. They need to be made aware of what the transformation entails with as much clarity, honesty, and empathy as possible. There will be some concerns about job stability, privacy, changes to employment roles – and potentially much more. To this end, HR leaders need to be cognizant of not only what the desired employee experience will look like, but how to ensure the workforce is a partner to the transformation and not only a passive actor. By giving employees agency, HR can energize the transformation long beyond its delivery date.

Understanding the shifting nature of management

In the era of digital transformations, HR leaders now have the tools and the mandate from business executives to re-evaluate how work gets done. While technologies themselves will not free employees from traditional rigidity and management bulk, combining new technologies with a re-structured workplace will augment the speed at which ideas can move throughout an organization. By creating a much more decentralized management scheme, HR allows for new modes of managing individuals. HR leaders must assess how any potential changes will impact the flow of ideas, and then guide the right people into the right places to energize a culture of experimentation.

The need to constantly up skill, fail fast, iterate, and restructure work around goals and project teams – rather than by job titles and functions, requires a clear lead. HR can energize strategic agility through the digital transformation process, so that continuous transformation becomes the norm. By harnessing the technological advancements available to them, by using data insights to make experimentation and evidence-based decisions a part of normal operations, HR drives the reinvention of work and the experience that employees have every day.

Undertaking a digital business transformation is therefore an enormous task in theory and practice. It requires a unique approach for every organization, of course depending on a range of variables. But the potential rewards are significant. HR must lead this transformation, because they now have the tools, awareness, and the mandate from the business to drive the changes needed to make the organization successful in today’s market.

The 3rd Digital HR Innovation Summit in The Hague, April 27-28, will feature a selection of sessions that will explore the ongoing implications of digital technologies on HR and the business in general. Make sure you follow The HR Congress LinkedIn page to stay posted on all the latest news, updates and content from the world of work!

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