Are Your People Ready for Digital Disruption?
Organizations face a radically shifting context for the workplace that includes cognitive technology, intelligent automation and machine learning. These technologies are disrupting and threatening many companies across many industries. As a result, organization designs and business models are being updated to defend existing market position and proactively seek the new opportunities that “digital” can offer.
Mercer’s 2017 Talent Trends study found that 97 percent of executives say that becoming a digital organization is important to their future, with 77 percent stating that their company is on a digital journey already. However, as few as 8 percent of CEOs believe their organizations are as digital (or even anywhere near as digital) as they must be to ward off emerging competitors.
This same study also uncovered striking discord between the digital strategy and people strategy. While most CEOs are focused on designing a more digital and agile organization to compete for the future, only 15 percent of human resource departments have organization and job design as key elements of their people strategy. Only 37 percent of HR respondents have change management on their radar screen. The risks created by this disconnect are significant. Without a culture open to change and a workforce willing and able to adopt new technologies, digital change efforts will rarely be as impactful as they need to be.
The Board’s Role in Elevating the Digital and People Agenda
Boards are custodians of organization strategy. They also play a key role in overseeing the talent strategies required to execute and deliver on business objectives. By reviewing the organization’s talent strategy through the lens of digital disruption, directors can help uncover risks and ensure better alignment between their companies’ digital and people agendas that will be necessary for future success.
Here are five questions to get started.
1. Does the executive team possess digital competence and diversity? Digital strategy should be born from the vision of the CEO and executive team. In combination, does the executive team have the digital competence to appropriately prioritize and drive development of transformational digital strategy? Will they think beyond technology to people’s capabilities and a culture of agility? And, beyond digital capabilities, is there enough diversity to help foresee the range of potential future business scenarios and support the creativity and agility that will be needed to adapt to changing business circumstances?
2. Do our succession planning and leadership development goals emphasize the capabilities needed in a more digital world? Organizations need to revisit their leadership development programs because the competencies that have reliably predicted leadership potential and success in the past, even just yesterday, are not the same as those needed for tomorrow. Are leaders self-aware such that they are not blindsided by emerging risks? Are leaders sufficiently curious to sense more than the obvious trends that will impact business success? Are leaders creative and entrepreneurial enough to create advantage from new technologies and business design possibilities?
Digital change efforts require a culture open to change and a workforce willing and able to adopt new technologies.
3. Is there a balance between the company’s strategy to build talent and buy? Many organizations have a bias to build talent from within, particularly as they plan their succession pipeline for the executive team. However, buying digital experience (within or outside the organization’s industry) is a much quicker way of building digital competence and diversity of thought. Is there a discipline of building executive “succession slates” that includes curating external candidates who offer capabilities different from those gained through internal experience?
4. Has the workforce plan considered the impact of digital disruption on jobs? In The Future of Jobs report, the World Economic Forum projected that 35 percent of core skills will change between 2015 and 2020. Current jobs will require a different skillset in a few years; skills instability will be high in all industries regardless of employment outlook; and, if current roles are already difficult to recruit for, it certainly won’t get easier as demand for new skills emerges. Does the organization have a workforce plan that forecasts which skills will be needed in the future and which will be less in demand? Is there a talent plan that aligns with this changing pattern of skill demand? And is there transparency with the workforce, so that those whose jobs are most at risk of disruption are able to take proactive steps to build a skillset that will be relevant tomorrow?
5. What thought has been given to employer brand and the company’s role in society? Digital disruption goes hand in hand with job disruption. It is likely that tomorrow’s business models will require a smaller core workforce and that digital technology will destroy more jobs than it creates. It is likely that unemployment and underemployment will rise. How will the organization maintain an attractive employer brand and contribute to the health and welfare of broader society? What plans, tools, and programs does the organization have in place to manage the transition of all members of its workforce (executive and non-executive) who will not be able to adjust to the workforce of the future?
Without a robust people agenda, an organization’s transformation efforts to address the challenge of digital disruption will struggle. By applying a digital mindset to the talent strategy and asking questions like those above, directors can play an important role in ensuring the alignment between people and digital strategy and better position the organization for success.
This piece first appeared on the NACD Board Leaders blog.