What HR Needs to Do More for Digital Transformation

Author(s): Karen Mann

Originally posted in HR Technologist on March 4, 2020.

Fascinating feedback from professionals reveals that proficiency in digital transformation competencies is bleak, so how should HR tackle developing new critical skills, and what, exactly, are the competencies to focus on, shares Karen Mann, Associate Vice President, HR Research, Learning Solutions, and Advisory Services at McLean & Company.

There is no doubt we’re in the midst of the fourth industrial revolution, where technology is impacting every organization, in every industry, in ways we never imagined were possible. This seismic shift has increased workplace volatility and complexity.

Digital transformation is about technology, but it is also largely about people and how they adapt, work with, and augment technology to support organizational goals. The HR function is in a unique position to help organizations not only navigate this turbulence but also to help position any organization’s most valuable asset, people, to succeed in a digital world. At McLean & Company, an HR research & advisory firm, we partner with HR leaders to provide practical solutions to their complex HR problems. Digital transformation has been an increasingly popular topic with our members. So when we put together our annual survey of HR professionals, as well as professionals outside of HR, to get their take on the talent landscape, we included HR and digital disruption as a key theme. What we found was fascinating.

A focus on employee development and change management leads to the broadest positive organizational outcomes

While there has been a lot of buzz in HR circles about digital disruption, a full 30% of respondents indicated their HR teams were not yet taking action to support digital transformation in their organizations. HR functions that fail to act, risk negative outcomes in innovation, productivity, and overall organizational performance.

On the flip side, organizations that focus on change management, equipping leaders to lead in agile environments, and updating and developing employees on new core competencies and specific new skills had positive results across the most key outcomes:

Source: McLean & Company, 2020 HR Trends Survey, n=419

If enhancing or developing new skills and competencies are critical to get the most out of digital transformation, how should HR tackle this and what competencies should they focus on?

Workforce proficiency in digital transformation competencies is bleak

In our research and conversations with members, we found that six key competencies came up over and over. So we set out to assess how proficient organizations are in these competencies – and the results were disheartening: only digital literacy and resilience scored more than 6/10 in average proficiency…and fewer than 30% of organizations had high proficiency in either competency. What’s more, the results showed smaller organizations had much higher proficiency across all the digital transformation competencies than did their larger counterparts, suggesting there may be an innate nimbleness in smaller organizations which allows them to transition more quickly. Regardless of organizational size, there is definitely an opportunity for HR to focus on helping their workforce increase their digital transformation competence.

Source: McLean & Company, 2020 HR Trends Survey, n=429

Continuous learning is key… and doesn’t have to cost a ton

It is clear that learning & development will play a huge role in digital transformation success. Our survey showed that organizations with highly effective learning & development functions also have increased innovation; a greater employee experience; and an increased ability to support change (McLean & Company, 2020 HR Trends Survey, n=838).

Despite these benefits, while enabling learning & development is in the top three of talent-related priorities for that outside of HR, only 41% of HR departments are highly effective in this area. (McLean & Company, 2020 HR Trends Survey, n=365 / n = 827).

The good news is that throwing money at learning & development isn’t required to make learning effective. Those who take the following actions to promote a culture of continuous learning are outperforming on the following key outcomes related to digital transformation: ability to quickly change; enabling innovation; workforce productivity; and supporting change (McLean & Company, 2020 HR Trends Survey, n=456). And none of these actions are directly related to spending large amounts of money!

Source: McLean & Company, 2020 HR Trends Survey, n=456

If organizations look at digital transformation as a technology-driven exercise, they will fail to capture the benefits that they’re seeking. The impact of the workforce, not only in providing the deep technology skills required but in learning to work with new technology and adapting to the changes, is pivotal to success.

What the 2020 HR Trends Report ultimately shows us is empowering employees through a combination of Learning & Development, and effective Talent Management can not only help with the adoption of digital transformation efforts but will also help with sustaining and expanding those efforts in years to come. After all, technologies will continue to evolve and change but an engaged and talented workforce powered by digital transformation will remain as the real competitive differentiator.

As the department that acquires and equips talent to achieve the organization’s goals, HR has a huge role to play in enabling digital transformation.

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