In this context, organisations face a radically shifting environment for the workforce, the workplace, and the world of work. These shifts have changed the rules for nearly every organisational people practice. As such, a successful organisation requires business and HR leaders to operate according to altered paradigms and a new set of digital business and working skills are required.
At Deloitte, we have dubbed 2017 as “The Year of Digital” with 3 key focuses: digital mindset, digital HR, and digital leadership1. Our recently published Human Capital Trends 20172 also found these 3 areas to be amongst the top 10 concerns of organisations today. We discuss some of the findings below.
Organisation of the future
As organisations become more digital, they face a growing imperative to redesign themselves to move faster, adapt quicker, facilitate rapid learning, and embrace the dynamic career demands of their employees. 90 percent of executives surveyed believe that building the organisation of the future is an important or very important issue. However, only 11 percent of them believe they understand how to build the organisation of the future.
In the past, organisations were designed for efficiency and effectiveness based on predictable commercial patterns and relatively stable business strategies. In the era of unpredictability and disruption, such business models are no longer sufficient to ensure success. Organisations of the future need to build themselves for speed, agility, and adaptability.
The Power of Teams
94 percent of companies surveyed this year reported that “agility and collaboration” are critical to their organisation’s success. However, only 6 percent believe that they are “highly agile today” whilst 19 percent describe themselves as “not agile”. Nonetheless, leading organisations are increasingly (32 percent) pushing toward a more flexible, team-centric model.
Top organisations are built around systems that encourage teams and individuals to meet, share information, and move from team to team. For an organisation to remain agile, “SWAT” teams that can be formed and disbanded quickly are needed to achieve organisational objectives. For example, an organisation may build a “digital customer experience” group, select individuals for the team, have them to design and build a new product or service. Afterward, the team disbands and members move on to new projects. This ability to move between teams without risk, and having the agility/flexibility and digital tools to enable the deployment to happen are critical attributes of today’s high-performing organisations.
The Contingent Workforce
Businesses have dramatically increased their use of contingent workers over the past decade as they struggle with rising labor costs and the need for a workforce that can quickly adapt to market conditions. As some of the best talents in the market do not want to conform to the traditional model of work, organisations today need to embrace this workforce and tap on the many skills made available in this talent pool.
Top organisations today are not only able to tap on this group to fill identified skill-gaps, they are also able to effectively manage the associated challenges (i.e. compensation and benefits; performance management) while utilising this group of workers. This results in an agile workforce which adapts to the needs of the workers and puts the right people at the heart of the organisation’s most complex problems.
Attracting the Right Talent
Talent sourcing continues to be a major challenge today. Our research shows that managers consider at least 39% of hires do not fit requirements. As such, organisations need to improve on their ability to source for the right talent at the right time (e.g. crowdsourcing to solve tasks; using cognitive recruiting).
Adopting a data-driven approach allows organisations to improve the overall quality of hires. By collecting data on potential candidates in each step of the hiring process, organisations can use multiple data sources to build applicant profiles and match them more effectively to the position.
For example, global consumer products giant Unilever combined gamification and video interviewing to create an all-digital graduate recruiting process in four easy steps3. First, candidates complete a short online form tied to their LinkedIn profiles – no resumes needed. Second, candidates go through a series of 12 games designed to capture data on their capabilities such as problem solving, personality, and communication style. Upon completion, candidates will receive gameplay feedback based on their performance. Candidates who successfully progress to the next step will be required to record a video interview which will be digitally assessed and ranked to determine candidate fit. The final step sees candidates invited to a Discovery Centre to work through real-life business challenges and see for themselves what it’s like to work day to day at Unilever.
Our conversations with businesses in the region show that while digital practices and agile organisation design become central to business thinking, HR is often left out of the conversation. With the impact this has on people, work, and the workplace, we believe that it is imperative for HR to be in the “driving seat” in building the organisation of the future. We see HR taking lead in three ways:
With the disruption brought about by artificial intelligence (AI) and robots in the workplace, HR departments today are under pressure to rewrite rules by redesigning talent practices, from recruiting to leadership to performance management; by experimenting with digital apps, and by building compelling employee experiences.
All of this must be done with a focus on redesigning the organisation around teams, implementing and understanding how to use people analytics and organisational network analysis, and driving a global focus on diversity, culture, learning and careers.
Today’s HR professionals need to enable a flexible working environment that facilitates productivity; uses modern communications (e.g. Slack, Workplace by Facebook, Microsoft Teams); and promotes engagement, wellness, common shared values and a sense of purpose for employees.
Finally, with the advance of digitisation, new approaches are needed in almost every HR domain. Digital HR requires digital technology expertise. HR teams need to rethink their approaches and use digital tools and apps to deliver solutions. They must be built on the principles of innovation and experimentation. High-performing organisations are now successfully using hackathons, rapid design groups, and both prototypes and “minimally viable products” to roll out successful HR programs.
Leadership development continues to be a significant challenge to organisations, as the transition to the new digital organisation creates even larger leadership gaps. 42 percent of companies cited “leadership development” as very important. As businesses continues to redesign their organisations, a different type of leadership is required to mobilise and execute these models. Organisations need people who can understand how to build and lead teams; keep people connected and engaged; and drive a culture of innovation, learning and continuous improvement. They must also be able to effectively lead a diverse workforce that now includes the contingent workforce, crowdsourced talent and “traditional” employees.
The most critical need for organisations today is for leaders to develop digital capabilities. While 72 percent of companies are developing or starting to develop new leadership programs focused on digital management, only 5 percent of companies feel they have strong digital leaders in place. Leadership is critical in making the transformation from an organisation “doing” digital things to one that is “becoming” digital. It involves three different types of transformation: cognitive, behavioural, and emotional transformation. Digital leaders need to make sense of external trends, help the organisation imagine the digital future, blur the internal and external boundaries in ways that assist the transformation, educate others, repurpose technical expertise, and use design thinking methods to foster innovation.
We have identified three different types of digital leaders, and most organisations will need a combination of all three in order to succeed:
Senior executives who embrace the VC mindset, uncover opportunities, invest in talent and ideas, forge partnerships, and build and ecosystem for innovation to thrive. The principle task is to educate the board and other senior leaders who may not fully understand the nature of the shift. Digital investors must determine how to balance the current business model with digital transformation and then integrate it into the newer digital models.
Business and function leaders who can reimagine the future, shape new and different business models, and lead a winning digital strategy. They are in essence, the heart of innovation. They set the vision for the organisation, “future-proof” the business, define the roadmap for the near future, and drive the pace of change and the organisation’s new digital capabilities. They ensure a consistent vision and plan for digital throughout the organisation.
Leaders who can manage people through radical change and transform the business. They are the fulcrum point of leading radical change. Businesses face a particular challenge in finding leaders who can carry on “business as usual” while moving the digital agenda forward.
High-performing organisations today operate in a radically different way from how they operated from 10 years ago. To make further progress, organisations need to focus on building a new leadership mindset that rewards innovation, experimentation, learning and customer-centric design thinking. High-performing leaders today need different skills and expertise than in generations past. Organisations need to keep pace and develop digital leaders, promote young leaders, and build new leadership models. More importantly, HR needs to be in the driver’s seat to deliver an integrated, digital experience at work – one designed around teams, productivity and empowerment.
1. Pushp Gupta, We declare 2017 – The Year of Digital for Human Capital, February 20, 2017, https://www.linkedin.com/pulse/we-declare-2017-year-digital-human-capital-pushpdeep-gupta
2. Brett Walsh et al., Rewriting the rules for the digital age: 2017 Deloitte Global Human Capital Trends, Deloitte University Press, 2017, https://www2.deloitte.com/sg/en/pages/human-capital/articles/2017-human-capital-trends.html
3. Unilever, Game on! Our graduate recruitment drive’s gone digital, September 14, 2016, https://www.unilever.com/news/news-and-features/2016/game-on-our-graduate-recruitment-drives-gone-digital.html?criteria=monthFrom%3d1%26yearFrom%3d2010%26monthTo%3d12%26yearTo%3d2017%26page%3d3