How HR can lead digital transformation
Long talked about as a trend, digitalisation is now a strategic imperative. No matter what your sector or function, the way you work is changing, whether it’s automating customer service processes or putting human capital management (HCM) into the cloud, as businesses strive to meet the needs of enlightened customers (and employees).
According to McKinsey, 49% of leading companies are investing in digital more than their counterparts do, versus 5% of non-leaders. The message is clear – go digital or risk going out of business.
Owning digital – a job for IT?
To drive digitalisation requires buy-in from the business; it also needs a functional owner.
As it relates to technology, the easiest assumption would be to put IT in charge. Yet in many organisations IT is still seen as a cost centre, rather than a strategic partner.
IT should be part of the shift to digital, but businesses must be clear that digitalisation is not only about installing and integrating new technology. It is also a cultural shift, not often within IT’s remit.
Leading the cultural change
Perhaps the answer lies in another so-called support function. Looked at purely from an application perspective, HR often sits at the cross-roads of the organisation – every department will have their own systems no one else uses, yet HR’s HCM applications, whether for employee engagement, talent management, recruitment or training, will be used by all teams.
It is also common to find HR departments acting as custodians of a company’s culture, from inducting new starters in a company’s values, to supporting leaders in identifying and demonstrating the right behaviours, or coordinating engagement sessions.
Why would HR want to lead digital transformation?
HR is therefore primed to be the drivers of digitalisation. But would it want to be? The strategic value of digitalisation is clear, but that doesn’t immediately explain why HR directors should want to be drivers.
It is at this point that it is worth being slightly selfish – by helping the business undergo a significant strategic transformation, those that are integral to its success will in turn benefit.
This can be the tipping point to help move HR from cost to value-add, building on the significant work it already does.
Overcoming resistance – five scenarios to consider
It would be a mistake to assume every part of the organisation is going to accept it willingly. In many sectors, going digital has meant restructuring significant portions of the workforce, not something that fills employees with confidence.
Elsewhere, management may buy into the concept without wholly understanding what’s required to deliver it. These situations all need to be carefully managed. The below outlines how HR directors might do this to deliver successful digitalisation.
1. Showing success today, not tomorrow
Success is often measured in quarters, not years, and that thinking is not just restricted to growing revenues and increasing profits. Internal changes need to show results fast.
However, the nature of digitalisation is that it can be modular. Processes can be shifted in stages to become digital, with pilots and test projects which can be planned, implemented and reviewed in weeks and months, not years.
This means that demonstrating ROI, that holy grail, can be done quickly, securing buy-in for the next phase and spreading confidence throughout the business and with stakeholders.
2. Helping risk-adverse stakeholders embrace the benefits of digitalisation
There is no denying that digitalisation means change. Many people fear change, an attitude which could halt, or even thwart, progress.
The root of this fear is the perceived loss of control – by moving to something new, people will feel less in control. Processes which took no time at all, or they were comfortable with, will now take a bit longer, with new ways of working to be learnt. This can be disheartening, particularly during any transition period.
The best advice is to take small steps. Take on one project (for instance, look at your own HR services – could you digitalise part of your HCM by moving it into the cloud, removing a legacy system and potentially reducing cost?).
Identify your roadmap, what success looks like and then take the plunge from the low diving board. The high diving board will still be there when you, and your organisation, are confident enough to climb.
3. Keeping the board happy: delivering ROI whilst improving employee morale
It’s a conundrum which predates digitalisation, and probably stretches back to the dawn of the HR function – the board understands the role of high employee morale, but needs to balance that with return on investment and, ultimately, a positive impact on the bottom line. So how can HR deliver both?
Improving workers’ experiences can be measured through the usage of and time spent on applications provided to support their business activities.
The higher this is the greater the adoption rate within the organisation. The higher the adoption rate the higher the probability for self-service based adoption.
An increase in self-service adoption means resource once tied up in hand-holding can be directed elsewhere, leaving employees empowered to solve simple problems quickly and focus on their primary roles.
4. The right number of steps to transform your HR
Part of the process involves leading by example. So how many steps will be needed to transform your own department? Too many and outside stakeholders will lose interest. Too few (or moving too quickly), and you risk disengaging your own team.
That said, the benefits of a rapid approach – low risk, low cost, offering immediate wins – can help mitigate any short-term pain and allows you to build out from this early success. As highlighted above, quick wins can help win or maintain stakeholder interest and support in further investment and sponsorship.
Digital HCM is one area that HR can use to demonstrate its leadership. Bringing core HR, talent management and employee engagement platforms together and running them as cloud-based software applications can introduce all levels of the wider business to the benefits of digitalisation, providing clear examples to build confidence.
Ultimately, the key is that whatever you go for must demonstrate an improvement to the business. Anything less risks losing stakeholder support.
5. Defining success to stakeholders
To define success, you need to start with your business goals: do you, for example, need to understand the productivity of your workforce? Do you need to offer a new booking system for customers, or build in a way for them to return goods bought online to a physical location?
The crucial ingredient for success is in getting your stakeholders aligned from the offset. They may not fully understand the process, but they need to understand what success looks like and agree to it. Trying to retrofit success measures rarely works – one person’s progress is another’s failure.
The steps to becoming truly digital involve significant upheaval. But the rewards justify this – not just survival, but success.
HR directors have a choice – they can choose to be part of the journey and risk not having control of their own destiny, or they can take a leading role in shaping it, cementing their role in being an integral part of the organisation and capable of delivering real business value.