Is it possible to show the Business Value of Employee Experience?

I had the opportunity to meet ING’s CHRO Hein Knaapen, EMEA’s CHRO of the year for ‘Sustainable Workforce’, to discuss Employee Experience (EX) and how best to manage it. 

Hein was interested to understand how employee experience relates to engagement and to McKinsey’s Organizational Health Index, a KPI they used at ING to manage its performance. I explained that we’d spent the last two and a half years working on how to manage EX in large scale companies. Having visibility to common EX pain points we were able to co-create solutions to these, with 30 other companies. Among them were AXA, BASF, Bertelsmann, BMW, Bosch, Capgemini, Cisco, Dolby, E.ON, GE, Grundfos, Haufe, HERE Technologies, ING, Merck, Otto Group, Schenker, S&P Global, and USAA. I walked him through the detailed methodology that resulted in: CxHR - the Customer Experience of HR, with its four key components ‘Design / Share / Measure / Act’ underpinned by an online platform to support CxHR in large organisations. Hein seemed impressed – he’s a kind man. He shared with me, and the members of our Digital HR Program peer meeting that “If there is one thing I learned as a CHRO, it is that everything HR does has to have a clear line of sight to business results.” In other words, what is the business value of EX? So, let me take you through it in a little bit more detail, here goes.  

On the left-hand side, the model shows generic business value levers in a simplified way: Business value is defined as return on invested capital – with the ‘invested capital’ lever greyed out – equals increasing net profit by increasing revenue and decreasing cost.

The right-hand-side the model shows the ‘What’ of EX: CxHR, our Design / Share / Measure / Act methodology, co-created, tested, continuously refined and kept up to date by the members of our ‘Journey Networks’. The most important part of the model is where CxHR connects to the generic business value tree through EX-specific business value levers in the ‘Why’ part of the model. Reading from right to left, CxHR creates two experiences:

1. An engaging experience at ‘Moments of Truth’

2. An effortless experience of HR

Moments of truth are ‘emotionally loaded moments with disproportionate impact on employee engagement’. With engagement defined as ‘discretionary effort and a higher intent to stay with the company’ it increases work productivity (discretionary effort) and retention (intent to stay; in recruiting the same logic applies for attraction). Ultimately, work productivity and retention impact the revenue lever of our generic BV tree.

An effortless experience is something consumers happily get used to, for example, Netflix makes it effortless to find the next movie to watch, with Amazon it’s effortless to buy things. Compared to these effortless experiences in their private lives, consumers’ experiences with HR services in their professional life are, alas, very different. Employees, managers, and HR professionals spend too much time with non-value adding activities. This threatens the engagement of employees, but more importantly, the business value of effortless experiences takes an undesired path.

If HR can create effortless experiences at all of the touch-points of HR customers in HR journeys, the manager time, employee time and HR staff time spent on HR activities will decline. Thus improving work productivity of managers and employees by up to 3%, which in return frees up time to generate revenue. One of the companies we are working with put their EX initiative under the motto: ‘Giving 1 million hours back to employees and managers each year!’

Moreover, effortless experiences decrease HR function costs, as less HR staff are involved in compensating for a lack of effortlessness. Finally, effortless experiences at touch-points that are supported by new, cloud-based HRIT systems will improve the end-user adoption of these systems. A massive impact: 26% of the total investment in new cloud HRIS is at risk due to lower than expected end-user adoption – mainly because the experience with the new system is not as effortless as it could be.

In summary, EX does have a clear line of sight to business outcomes! Hence, it is important not to miss this opportunity for HR to provide value to the business. We better get it right (this time). That’s why we will share more details in a small series of articles on CxHR, our methodology of EX Design / Share / Measure / Act. Stay tuned!

4 Ways Workplace Automation can Help HR Teams Get Work Done Right

A majority of knowledge workers today believe that implementing automated processes will empower them to think beyond their daily task list. Here are four examples of how HR teams can do this well.

“We shouldn’t be worried about robots taking our jobs ... we should be looking forward to cobots coming along and supporting us,” the futurist and author James Wallman once said.

Wallman, whose ideas have graced the pages of the New York Times, Wall Street Journal, the Times of London, GQ and Vice, suggests we need to see bots as future colleagues or “cobots” who will augment human performance.

In this way, Wallman invites us to think about how automation technology can liberate us to do our best work, not liberate us from our jobs.

Workfont’s research with thousands of knowledge workers over the last five yearshas shown that 86% in the United States believe that the rise of automation will help them think of work in new and innovative ways.

But 58% of U.S. workers say they’re so swamped with getting day-to-day work done that they don’t have time to think beyond their daily to-do list. They want and need technology to accelerate work.

Automated work management technology improves both human performance and morale by soaking up mundane-but-necessary tasks and changing workplace practice for the better. 

Here are four examples that will help your HR team.

1. Embrace remote work

It’s not far off a decade since Google’s (now Alphabet’s) chairman Eric Schmidt predicted that the future of enterprise technology was “social, local and mobile.” 

Employees increasingly expect a workplace they can log into rather than walk into. 

That could be as simple as cloud-based systems that mean you can work anywhere without physically carrying paperwork, and the ability to collaborate without colleagues without sitting in the same office space.

A two-year test project with 500 employees run by Stanford professor Nicholas Bloom found that when 250 workers started to telecommute their productivity rose by the equivalent to a full day versus their 250 colleagues who were still working in the office every day. 

Employee attrition among the telecommuting employees decreased by 50% and they lost less time through illness. 

The company taking part in Professor Bloom’s study also saved about $2,000 per employee on office rental.

If you haven’t already done so, you should be looking at ways that automation can give colleagues freedom of movement and a more flexible working life. 

2. Leverage pattern recognition and large data sets

Bots can equip us with business insight that will help make us better decision-makers, leaders, and managers. 

Take a look at professions that no-one could have imagined until recently would be automated. For instance, the knowledge and practical experience of human medics is being augmented by forms of artificial intelligence that can read through thousands of case-histories in an instant and help to give a more accurate diagnosis. And junior lawyers don’t need to spend hours in a library looking for a legal precedent when cobots can find the obscure but relevant reference in seconds. 

There are exabytes of data in every business that would take humans an eternity to fathom. Yet bots can process data, identify patterns, and deliver new insight in a fraction of the time. 

Think that could never apply to HR?

As Professor John Boudreau of the Marshall School of Business at the University of Southern California and Ravin Jesuthasan of Willis Towers Watson wrote in February this year: “HR consultants work with analytical tool kits, change management frameworks, and process design techniques that must be customized to diagnose unique problems and solutions. Such work is generally less amenable to automation, but advances in cognitive automation might automate some analytical tasks, or ‘learn’ from previous client engagements.” Work management automation technology clearly matters to HR teams.

3. Automate repetitive tasks 

Here’s a simple rule: if a task is repeated with regularity, it should be automated. 

Take the example of notifications or reminders: what if you could automate routine chasing emails or calls to remind colleagues of imminent deadlines? Automated project notifications save time and the stress of pushing others to stick to the plan.

One study concluded that 90% of US workers are burdened down with repetitive tasks that swallow up the equivalent of 19 days’ work a year. That’s 19 days that employees could better spend on innovation and imagining more creative approaches to business problems. 

Encouraging managers to identify and automate repetitive tasks in their teams should be high on HR’s agenda to improve performance and productivity. As McKinsey & Co’s Kweilin Ellingrud has argued: “When automation can handle up to 45 percent of repetitive work, it gives workers time for more higher-value tasks such as problem-solving, finding solutions and developing new ideas. This will empower employees, and generate a more engaging and challenging work experience.”

Also Read: How Artificial Intelligence is Humanizing HR

4. Automate time-consuming tasks 

If you repeat a regular task that swallows precious time, that should be automated too. 

For example, how much time does an HR team spend manually sifting and sorting through resumes when a sought-after job becomes available in their business? This task doesn’t need to overwhelm the entire department. As proof, the HR team in one international business has cut the time spent trying to shortlist the best candidates by two-thirds by automated filtering of applications submitted through their website. If key job requirements aren’t apparent on the application form, it is auto-sorted to the “no” pile. 

The HR challenge for all businesses is to find those time-sucking tasks, large or small, that could be automated with the right cobot. 

James Wallman is right in his counsel that we should not fear automation. Automation technology has the potential to liberate teams from mundane work, free time for innovation, and help make us better managers by providing timely data insight to inform decisions.

As I argue in Done Right, what leaders and HR teams need to keep front-of-mind is that creativity and ingenuity are going to be the primary human attributes of the future workplace.
So, when you’re next reviewing or drafting a job description for a role, where are you going to draw the dividing lines between bot and human?

How can you get the best from your workforce by bringing in the cobots?

2019 Trends: FIVE Major Trends in Hearing the Voice of Employees

If you don’t know what this image is... it’s me! 

Actually, it’s a Bitmoji

If you’re confused... I was the first time I saw one as well. 

I was first introduced when my niece sent me one of these via text. Basically, a Bitmoji is a personalized character that looks like you (and that you can change outfits whenever you want, which is why I have my Canada-warm sweater on), that can be sent to others with different messages and emotions. A modern-day emoji! Crazy!

But, I soon realized that this was the only way to communicate with my niece! Gone were the days of phone calls, texts, or even FaceTimes… I had to change.

Long story short, I have a much younger-looking and less gray-haired version of myself as a Bitmoji - it is a part of my life now :)

...I realized that as I typed that smiley-face above, clearly I still date myself with OG-emoticons like that ;)

Why am I telling you this? 

It’s just an example of how the way we communicate and the expectations of others we communicate with is changing. 

This is no different in our personal life, or at work. 

As human beings, we’re the same whether we’re a consumer or an employee (or better Bitmoji versions of ourselves).

It’s time to change

2019 is almost here (can you believe it!), and after working with hundreds of companies to help them hear the voice of their employees in 2018, I wanted to share the main trends that have become prevalent.

First off, change in the workplace is happening in an unprecedented rate - the shift in how companies are understanding the sentiment of their people with the goal of creating a better employee experience is only one of the major shifts that business and HR leaders are facing. It’s clear that the constructs of performance management, communication, learning, talent acquisition and others are shifting with the access to better technologies, insights and approaches.

But more specifically for hearing the voice of employees, it’s quite simple: companies are not seeing value from the current process of an annual employee engagement survey as their only/predominant way to measure and understand the sentiment of employees Why?

  1. It’s too infrequent - our companies move way too fast to understand the sentiment of employees once a year. 
  2. It’s cumbersome… for everyone - with the consumerization of the workplace and HR, employees won’t tolerate filling out a 100-question survey, and the current process doesn’t support HR making real behavioural changes 
  3. It takes too long to get insight - HR, leaders and employees aren’t tolerating getting insights from employee surveys in three months, and only to wait another few months to get it into the hands of leaders that can make an impact.
  4. Very limited ROI (if any) - when you combine the first three, companies are spending a lot of time and effort, and not seeing value from that investment in time and money.

The consumerization of HR

I’ve been writing about this concept for a while, but this is more real than ever. Think about how we can order a coffee on our app and pick it up on the way to work. Or we can order something from Amazon and not only get it next day, but with Prime Now get it in two-hours. Or get vehicles on demand with Lyft… and this list goes on (and quite embarrassingly, yes, I even make coffee in house via an app).

Now think about how in the workplace it’s like pulling teeth to find out how many vacation days an employee has left. 

The expectations of employees are changing, and the workforce is starting to follow suit. But when it comes to hearing the voice of employees, an annual engagement survey isn’t going to cut it to understand the sentiment or our workforce and more importantly, do something about it that has real impact.

I love how this was articulated by Raconteur in a Future of HR 2018 article: “No marketing executive worth their salt would poll their customers once a year, provide zero feedback and then act on the information many months later. Yet, with annual work surveys, this is what HR teams are doing all the time.”

Several organizations have already adjusted their approach so I wanted to share the top five trends I’m seeing in this evolution of hearing the voice of employees.

FIVE Trends in 2019 for hearing the Voice of Employees

I know what you’re thinking… not another TOP 5 TRENDS LIST!!?!?!

I personally like them, actually!! So here it goes.

1. Infrequent Surveys shifting to Active Listening… and it’s more than Engagement

The evolution of hearing the voice of employees has shifted from an annual engagement survey to ‘pulses’ in the last decade. Typically, pulsing employees at a specific cadence (i.e. quarterly) has been conducted with consistent questions each time.

When you look at these questions historically, pulsing traditionally is about ‘employee engagement drivers.’ The Active Listening approach supports supplementing engagement questions with what’s happening in the business in more real-time.

For example, as illustrated above, many companies may still have an infrequent engagement survey, but will start asking similar rotating questions from an engagement survey to trend sentiment more frequently. They’ll also use that cadence to understand what’s on the mind of employees for any other current happenings at the company or to understand the impact of organizational change. The illustration is simply an example. I work with companies Actively Listening every quarter or as frequent as every week with less than five questions - and everything inbetween.

And why are companies shifting?

  1. There is more accountability when insight is more frequent
  2. Companies can dig into issues and see trends more frequently to deal with smoke befor fire and recognize what's working
  3. Employees are seeing an impact and building confidence in offering their feedback
  4. Also, it isn’t 1985 anymore - we have the technology to leverage this insight in a more real-time way and remove the manual intervention of reporting.

2.    It’s all about the Experience

Three ways companies are moving towards improving the EMPLOYEEexperience:

  1. Simplicity - let’s be realistic, no employee wants to spend an hour going through 100+ questions asking them to remember specific details from the previous year. Active Listening makes it simple to provide feedback more frequently, on any device. Also, they are thinking of ways to remove barriers for employees to provide feedback. For example, not requiring employess to download an app or log into an account to ensure feedback can be offered in the 'flow of work.' Also, asking questions about an employee’s demographics (i.e. department) are being eliminated to increase simplicity and improve perceptions around anonymity.
  2. Specific and relevant (and fun) - when questions are more relevant to what’s happening at the moment, employees will tune-in. Companies are also adding custom icons and experiences to make offering feedback less boring.
  3. Responding Anonymously to Employee Comments - many employees are asked open-ended comments in surveys, and most feel as if they go into a black hole and no one is listening. Companies are starting to acknowledge comments or respond to them anonymously. The moment that happens to an employee, the likelihood of them offering feedback in the future increases.

When it comes to LEADERS, well, they’re employees too, so companies are starting to focus on a better experience on how they can leverage feedback. Companies are trending towards getting leaders insights in real-time for their teams/departments as opposed to waiting for reports or information to be sent by HR. This is a game changer and I’ve been enamoured with this. It has been common to see companies offer hundreds or thousands of leaders access to a platform to see insights in real-time. Why? It supports the next trend: a focus on action.

3.   Shift from Measurement to Action by Enabling Leaders *nudge* *wink*

First off… I’m REALLY dating myself with the “*nudge*” and “*wink*” above. Even before there were emoticons, or the interesting ways to depict them using symbols like ;), we used to use *wink* or other words in asterisks to elicit emotions. Sounds far fetched for some, but many of you know what I'm talking about!

Anyways… in order for there to be a true impact on listening initiatives, there has to be action. It’s quite simple: if companies don’t embrace a more frequent listening model, then there is less accountability to act. The accountability or motivation to change behaviours gets lost when there isn’t a check-in on employee sentiment for another 364 days.

I keep hearing people talk about survey fatigue. I work with companies that are actively listening to their employees every two weeks and there’s no issue at all. It’s in fact a ‘lack of action’ fatigue that is the real problem.

This year I saw, more than ever, companies really embrace the idea that it isn’t about measuring a score, it was about changing behaviours. Companies are moving to action in a few ways:

  1. HR no longer being a filter - this involves giving leaders access to insights in real-time. This is becoming one of the biggest and most exciting trends I’m seeing. The reality: engaging employees and building an experience where they can thrive isn’t an HR strategy, it’s a People Strategy. When leaders get access, combined with increased frequency, it breeds accountability.
  2. Leveraging Nudges - with machine learning and A.I., it’s now easier to help enable leaders in more impactful ways. Companies are leveraging this technology to help *nudge* leaders with key content and recommended actions all relative to the feedback from their particular teams and hierarchies.

At the end of the day enabling leaders is critical to get value from your employee engagement or employee voice strategy. Leaders arguably have the biggest influence in engaging employees and impacting performance.

4.  Increased Investment in People Analytics 

Hearing the voice of employees through surveys is just one data point. Companies are starting to do more with these valuable employee insights:

  1. Predictive Analytics - companies are leveraging data to understand and predict what actions will have the biggest impact on improving outcomes. For example, predicting which engagement drivers will statistically have a more positive impact on an eNPS score.
  2. Beyond Feedback - Understanding the Impact to Employee and Business Metrics - unlike the previous point which is looking at a data set from only survey feedback, companies are coupling it with employee data (such as retention) or customer insights (such as NPS) and understanding the level of correlation to external data sets or outcomes.
  3. Natural Language Processing (NLP) on Employee Comments - It’s tough to read hundreds or thousands of employee comments and get out an unbiased view of what the overall sentiment looks and feels like. Companies today are using NLP to get overall sentiment, or derive themes from an unwieldy number of comments to help get more focused and easier insight.
  4. Combining Employee Voice to understand Organizational Networks - Companies are starting to adopt Organizational Network Analysis (ONA) to understand relationships, communication flows, and influence between employees and teams. Layering employee sentiment over this opens up a whole new level of insight that is starting to take form.

With the technology available today, one of the more rapidly growing HR trends is investing more in People Analytics, whether that be internally with Data Scientists, or externally with vendors. It is easier, now more than ever, to integrate technologies and data to help produce actionable insights to help make better people decisions. Companies are starting to invest heavily and will continue to next year.

5. It’s about RIGHT practices, not only BEST practices

For decades, companies would interact with a survey vendor, forced to use the vendor’s questions, and are left with limited, to no ability to adjust the questions and approach to match their specific culture.

A one-size-fits-all approach is starting to leave the workplace. Companies have different visions, language they use, and objectives that adjust with the current needs of the business. I’m seeing a big shift in companies starting to get feedback for things that matter to them, and really focusing feedback on specific internal goals.

For example, I’ve worked with organizations to start with a baseline of recommended questions to understand sentiment around employee engagement, but recently helped a company customize their original baseline to add more focus and insight into three specific components of their 2019 People Strategy (upskilling leaders, improving understanding around mission/vision, and recognition). 

It’s all about customization/personalization. In our personal lives, I have the same iPhone that everyone else has, but the apps I have and the way I leverage it is completely customized to me.

Benchmarking Tradeoffs

What I find fascinating (and quite frankly, relieving) is that companies are starting to accept this level of customization and the tradeoffs that come with benchmarking insights. What I expect to continue more in 2019 is that when companies weigh the ability to benchmark (locked into vendor-driven questions) compared to getting specific about what feedback they want from employees, the customized approach will win.

In my opinion, even if you provide all the benchmarks to me for other companies, it’s definitely interesting, but it shouldn't impact action. The reality is that every company is different, and no vendor has a complete data set available to them. If I’m a 49% and everyone on my benchmark is a 48% I’m not patting myself on the back and packing it up for the year. Companies are putting more focus on continuous improvement based on what they can actually control.

Now what?

It’s been promising seeing the HR and business community starting to shift their approaches from the annual engagement surveys they’ve been leaning on for a long time.

The more I speak to HR and business leaders, for them it becomes more of a mindset shift more than a huge change management initiative. Many leaders are so scarred by the antiquated processes still used today, because it takes a lot of effort, time and money, but not much of a return. They fail to see that reasonable changes are in reach that can yield a lot of impact. When I sit with companies implementing this change, they realize that it’s much easier than anticipated. And if you don’t believe me, just ask me to speak to companies that have gone through it.

I’ve also focused many of these trends on what’s happening the most out there today. There are definitely other things happening in this space. For example, companies are dabbling with listening to the voice of employees in other ways such as scraping content from email and communication channels (i.e. Slack), or recording audio using speech to text to offer insights, all the way to using wearables to monitor abnormal levels of stress. There are many examples like this that are happening, but have very limited adoption. I hope the trends I've shared are within reach for you, as I’ve seen many companies go through this journey in 2018.

Designing the Organization for Digital

Digital is everywhere, it seems, threatening traditional ways of operating and presenting new business opportunities for those able to seize them. With so much at stake, companies are feeling the pressure to determine how digital fits into their business model and the right way to organize to leverage the possibilities. All too often, however, discussions about digital devolve into overly simplistic debates about whether to hire a chief digital officer, recruit a digitally savvy director or create a separate digital team.

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In our view, many executives are debating the wrong questions, and we see three main reasons for this:

  • When people from different parts of the business talk about “digital,” they are referring to a disparate set of forces — the growth of e-commerce, the influence of social media, the promise of big data, the proliferation of mobile devices, the new reality of cyber security, the potential of cloud computing and storage — each of which has different implications for the business. Lack of a shared vocabulary among the key players in an organization is often an obstacle to finding solutions and defining a strategy: If half of the senior team thinks of digital as social media, and the other half thinks of digital as mobile or big data, it will be difficult to find agreement on priorities and plans. 
  • Organizations often are discussing digital without identifying which specific digital technologies or platforms are affecting their businesses and industries — and how. For some, the impact of digital may be focused narrowly, for example, on digital marketing. For others, the digital forces impacting the company may represent a significant business model disruption. Meanwhile, for other businesses, digital may represent a tremendous opportunity to gain efficiencies and cost savings from the automation of formerly manual processes. Most companies will face opportunities and threats from multiple digital platforms and in a variety of ways. 
  • When implementing digital plans, companies often overlook the importance of a broad range of other issues that impact the success of digital initiatives, such as the organization’s current degree of technology sophistication, cultural dynamics, the speed and transparency of decision-making and the availability of talent. 

The consequence of a simplistic approach to “solving digital” is that the organizational and talent decisions made in the absence of a clear, guiding framework will influence the direction of a digital strategy, which may not align with the real threats or opportunities facing the business. Companies that will be successful in an increasingly digital world will invest time upfront and in a regular, frequent cycle to define what digital means for them in their market and for their assets. From this analysis, a clear digital strategy and strategic priorities can be developed, which may potentially spark the need for new advisers, partners, board members, executives and organizational approaches.

Defining a digital agenda

The strategic, leadership, cultural and organizational decisions a business must make related to digital require a sound understanding of the digital forces that are buffeting the business and the specific effects they are having. These could include price and performance transparency, changing customer expectations, new competitive threats from market-disrupting or emerging global competitors, channel expansion or the threat of disintermediation. To avoid missing important opportunities, business leaders should evaluate the impact of digital from the following lenses:

  • Business: The threats and opportunities at the core, such as changing demand for existing products or services and the opportunity to innovate new products and services 
  • Channel: The potential impact on marketing, sales and service channels, such as the opportunity to use data to deepen customer relationships or the threat of increased price transparency 
  • Organization: The implications for the speed of decision-making,risk assessment, automation, security and collaboration, for example, using analytic tools to drive process improvements or to automate certain operational decisions 
  • Ecosystem: The potential to integrate customers and partners into the organization, for example, engaging customers through social media to share ideas for new products or product enhancements 

We frequently see organizations focus the digital conversation mostly on channel questions, when the real opportunity may be bringing products to market faster or introducing a new operating model enabled by digital technologies. Does the growth of mobile devices, for example, represent a new tool for customer acquisition or more efficient customer service or a threat to the very way the company does business? In many cases, a specific digital technology or platform is likely to impact the business in multiple ways.

Data and analytics, for example, will have broad implications for most businesses. Certainly, the use of analytic tools is transforming the practice of marketing and customer acquisition, as digital platforms allow businesses to know much more about their customers and move marketers closer to a time when they can provide personalized offers and experiences in real time. As one media executive explained, “One of the things we will be doing differently than in the past is to engage with the people formerly known as “the audience.” This means we will be much more cognizant of who you are and what your relationship is with us throughout the day and the week and as you move from one digital device to another. We know who you are. We will know what your usage patterns are and then we will start to tailor our services around you and bring you the best of what we have available across TV, radio and online. That means we can be much more user-centric.”

But data and analytics have the potential to affect every part of the business. One consumer products company executive told us that his organization will incorporate new and external sources of data, such as weather data, into supply chain and order planning systems to improve forecasting in a notoriously fragmented retail market. Cable television companies, meanwhile, are monitoring the stream of data from cable set-top boxes about customers’ use — what they watch, search for and download — to inform marketing decisions and to alert them about service outages. Similarly, the so-called Internet of things — which leverages mobile connectivity, Internet-connected devices, analytics and software to enable remote monitoring, automation and control — is expected to generate business-altering applications for a wide range of activities. For example, cable and phone operators are selling services allowing customers to unlock doors and control temperature settings from a smart phone; and the healthcare industry is abuzz with the possibilities of new services that will allow doctors to monitor patients’ vital signs or adherence to a medication plan remotely so that potential problems can be flagged before they lead to expensive trips to the hospital.

Mobile is another digital platform with the potential for broad impact. As customers increasingly connect with businesses using mobile devices, companies must reorient their sales and customer service organizations for these channels. Already, more than half of same-day hotel reservations and 30 percent of all hotel reservations on one travel site are made via mobile smart phone or tablet, compared to just 5 percent two years ago. At the same time, this has changed the ability of guests to book en route and use novel platforms such as TripAdvisor and Airbnb to influence their choices. Other mobile technologies, including mobile payments, may be even more transformative. Retailers and others are preparing for a future when more financial transactions are completed via the phone; technology systems will recognize customers as they walk in the door, allow customers to scan an item by themselves and walk out of the store with the merchandise — without ever opening a purse or wallet.

The marketing uses of social media are well-documented, but many companies are beginning to adopt social media applications for internal communications, such as private social networks like Yammer, to improve collaboration and engagement. For other companies, media businesses, in particular, the growth of YouTube and other video-sharing sites have created a new ecosystem of people who are interested in creating their own content and sharing it with their community, creating both new competitors for viewers’ time and new opportunities for engaging.

By defining which of these forces are affecting the business and the ways in which they are — whether it is marketing, customer service, productivity and efficiency improvements or the very business model itself — business leaders will be able to develop a comprehensive digital strategy that supports the core strategic drivers of the business, positioning the organization to identify and prioritize new business opportunities and build the teams to respond.

Evaluating organizational needs

A solid digital strategy is just part of the equation. Businesses must take into account a wide range of other considerations when evaluating the right organizational approach, among these: the urgency for change; the technical and digital sophistication of the organization; the current level of investment in technology and tools; the knowledge base and capabilities that are available for digital efforts; the readiness of business processes and systems to support digital; and the facets of the culture that are likely to hinder or support change or the ability to attract and retain top talent.

Ultimately, the way companies organize for digital should be viewed as a function of the strategy and the analysis of these issues. Some organizations will choose to establish separate digital units to jump-start an initiative. In order to quickly develop a capability in analytics, for example, some companies are building dedicated analytics teams in a completely separate location where the expertise can be found. Other companies will create “virtual business units” that draw in cross-functional resources and provide both structure and creative freedom to pursue digital opportunities. The BBC iPlayer, for example, was developed by establishing a special project team segregated from the rest of the organization, which effectively became a cross-functional virtual company within the larger organization with access to the necessary resources and the freedom to explore game-changing delivery models. A centralized digital team also may enable an organization to attract and retain more experienced leaders and ensure a coordinated and strategic approach to digital initiatives.

By contrast, when digital needs to be part of everyday business operations or when it has matured sufficiently, companies are more likely to integrate digital capabilities into existing functions and business units. To succeed in a multichannel environment where it has to deliver both print and online content, the Financial Times' FT.com decided fairly early on to build teams combining people with traditional print and digital skills. By establishing cross-functional teams, FT.com set out to tackle the critical cultural challenge of integrating “digital natives” with people who worked in established media businesses their entire careers, with the goal of creating a collaborative environment.

And as consumer demand for a seamless omnichannel experience has grown, many retailers that originally established separate e-commerce units with distinct leadership and resources are now reconsidering whether to integrate digital into the overall business. “When e-commerce was really small, you almost had to separate it from the rest of the business so it didn’t get swallowed up and you could really focus on getting things right for e-commerce. That meant it was essentially a separate silo that eventually built its own functional groups,” observed the North American e-commerce leader of a luxury retailer. “E-commerce has become so big and influential in driving the company’s performance, it now makes sense, particularly for the consumer, to integrate it into a more seamless shopping experience.” Such integration has encouraged the broader use of digital marketing techniques to drive customers to the stores, experimentation with geo-targeting and SMS messaging for store events, and the creation of apps for in-store associates to place orders for online inventory in stores.

But, there are risks of integrating digital, especially if it spreads digital expertise too thinly across the organization or knowledge isn’t shared across teams. One U.S.-based drug store company recently brought together the digital experts formerly housed in individual business units and consolidated them into single enterprise digital team. “Each business unit essentially had an underdeveloped digital capability. They weren’t sharing best practices, and they were creating very different experiences for the consumer depending on the business unit,” said the executive. By bringing the team together under a new leader, the company has been able to quickly leverage good ideas from different parts of the business.

For many companies, organizing around digital is initially less about whether or not to establish a separate digital business unit or even whether to add specific digital capabilities than about building a culture that thinks and behaves differently — one that is flexible enough to take advantage of the digital forces that matter to the business over time. As a global consumer products company executive explained, “We could spend a lot of time chasing the latest shiny object and miss something much more fundamental, and that is the need to develop a set of behaviors that makes digital part of our culture. The number-one priority around digital technology is actually being digital — moving quickly, adapting and integrating; innovating; becoming competent with the collection and analysis of data — making digital part of the culture.” Organizations can begin to shift the culture by seeding teams with digital evangelists who can model and teach these attributes or by encouraging senior leaders to participate in “boot camps” that help them understand digital trends and the impact on the business. The most successful digital enterprises embed disruptive ideation into regular business planning.

Finally, it is important to recognize that this process of reviewing the digital forces that are meaningful for the business, refining the strategy and evaluating the organizational challenges is an ongoing process. Organizational approaches cannot be static, and must evolve as strategic priorities change. “Every organizational structure is temporary because we have to constantly match our organization against what we believe tomorrow’s opportunity will be, and tomorrow’s opportunity changes as we learn,” argued one consumer products company CMO.

The questions you should be asking

How is digital affecting the business?

  • What are the different digital forces affecting my organization? 
  • In what ways are they likely to affect the business and how we do what we do? 
  • Is my business vulnerable to new competitors or an erosion of revenues and profits from new customer behavior? 
  • Do my customers want to engage with the business in different ways than in the past?

Do we have the right strategy?

  • Do we have the analysis we need to shape strategy? 
  • What’s the level of urgency? What’s the time frame we’reworking in? 
  • Does the degree of urgency and required transformation suggest a need for a board director with experience in certain facet of digital or in business transformation? 
  • Which functions are most impacted by business model shifts? 
  • Do existing functions and business units have a game plan for the digital impact we have identified?

Do we have the right resources?

  • Are the people in key leadership roles prepared and able to develop strategy and make the necessary operational changes? 
  • Are we able to shift the focus of existing people, investments and agendas, or do we need new capabilities, higher levels of investment? 
  • Based on the nature of the changes and the urgency, to what extent can we make the necessary changes with internal resources (versus external resources, such as management consultant)? Do we have the expertise to identify the strategic and operational changes that need to be made? 
  • Do we know how to assess for the capabilities we need? 
  • Do we know how to find the talent we need? 
  • What leadership development and training do we need? 
  • If digital capability is dispersed, does it have the depth and resources to be effective? Do they work across functions and business units to share best practices and ideas?

What are our legacy challenges?

  • Are our business processes and systems getting in the way of the changes we need to make? 
  • What facets of our culture need to be evolved? 
  • Are information, functional or business silos likely to be hurdles as we strive to become more digital? 
  • Do we have an incentive structure that promotes collaboration? 
  • Are our information processes and systems compatible with each other and the technologies enabling digital? 
  • Do we have a culture, benefits, etc. to attract and retain top talent?

Too many companies assume that once they hire a chief digital officer, add a digitally savvy director to the board or set up a digital team, they are prepared to tackle digital. In fact, the desire for easy answers amid so much complexity is understandable, especially for companies that are behind the curve. As one executive told us, “These things go through phases. The first phase is, “Oh my gosh, digital is big, and the board is asking about digital, I better do a big buy on Google or sign a partnership with YouTube.’ Then you realize it’s a tactic looking for a strategy. You then take a step back and say, ‘How is digital going to impact my business?’” We encourage businesses to resist the temptation to act first and then reflect on this question.

There is no one single right answer for how to organize for digital: The right approach will be highly specific to a business’ industry, which digital platforms it is prioritizing and its digital strategy and readiness for change. Organizational structure is determined by the broader commercial strategy and business model, competition, objectives for digital investment, nature of the product or service being offered, the intended market, physical footprint of the business, dominance of other channels, and how advanced the current digital effort and capabilities are. By making leadership and talent decisions within this complete context, companies are more likely to unlock their full potential in a digital world.

Leadership for the 21st century: The intersection of the traditional and the new

Leaders today face new challenges due to the speed of technological, social, and economic change. Do these new challenges call for a new breed of leaders?

In a world of disruptive digital business models, augmented workforces, flattened organizations, and an ongoing shift to team-based work practices, organizations are challenging their leaders to step up and show the way forward. CEOs are being pressured to take a position on social issues; C-suite executives are being asked to work more collaboratively across functions; line leaders must learn to operate in networks of teams. But our research shows that while organizations expect new leadership capabilities, they are still largely promoting traditional models and mindsets—when they should be developing skills and measuring leadership in ways that help leaders effectively navigate greater ambiguity, take charge of rapid change, and engage with external and internal stakeholders.

YEAR after year, organizations tell us they struggle to find and develop future-ready leaders. In this year’s Global Human Capital Trends survey, 80 percent of respondents rated leadership a high priority for their organizations, but only 41 percent told us they think their organizations are ready or very ready to meet their leadership requirements.

We see leadership pipelines and development at a crossroads at which organizations must focus on both the traditional and the new. Organizations know that they must develop leaders for perennial leadership skills such as the ability to manage operations, supervise teams, make decisions, prioritize investments, and manage the bottom line. And they know that they must also develop leaders for the capabilities needed for the demands of the rapidly evolving, technology-driven business environment—capabilities such as leading through ambiguity, managing increasing complexity, being tech-savvy, managing changing customer and talent demographics, and handling national and cultural differences.



Leadership in a new context

It’s clear that many people believe that organizations have new leadership needs (figure 1). Eighty percent of the respondents to this year’s global survey told us they think that 21st-century leadership has unique and new requirements that are important or very important to their organization’s success. Topics such as inclusion, fairness, social responsibility, understanding the role of automation, and leading in a network were not part of the leadership manifesto a decade ago. And in the midst of these changes, many organizations are not satisfied with their leadership programs. Only 25 percent of our respondents say they are effectively building digital leaders, and only 30 percent say they are effectively developing leaders to meet evolving challenges.

Many respondents believe that organizations have new leadership needs

Yet even though many organizations have built digital leadership models, updated their frameworks, and invested in new leadership programs, we believe the greater need may lie in the combination of developing new competencies and putting them in a new context (figure 2). That new context is the changing set of social and organizational expectations for how leaders should act and what outcomes they should aim for. In the era of the social enterprise, people no longer believe that financial results are the only or primary measure on which a business’s success should be judged; they also judge organizations for the impact they have on the social and physical environment, as well as on their customers and the people who work for and with them. As a result, leaders that focus only on running a tight ship and competing relentlessly in the marketplace can be viewed as too narrow and not fully engaged with the challenges of the broader business and social environment.

The 21st century creates a new context for leadership

New competencies, new context

Traditional leadership expectations and outcomes still have a place in today’s new world of work, but they should be combined with a set of new competencies and recognition of a new context to round out how leadership is defined for the 21st century (figure 3).

Leadership today involves a combination of traditional expectations and new competencies

Where are the biggest gaps?

Developing leaders with new competencies requires more than an evolution in the competencies themselves. Equally paramount is for the organization to have the culture, the structure, and the management processes to cultivate these leaders. In our survey, we found three areas where significant gaps exist within many organizations.

Transparency. In today’s world of the social enterprise, transparency is the most valuable organizational currency. It helps engender trust and respect in a world where many may question an organization’s true intent. Yet as important as transparency is, only 18 percent of our survey respondents believed they have a transparent and open model; 37 percent were worried about their ability to create trust, 60 percent were worried about their employees’ perception of transparency, and 27 percent believed that a lack of transparency was creating a competitive disadvantage.

Internal collaboration. As organizations move into service-center business models, they’re able to benefit when C-suite leaders shift their focus beyond their narrow towers of responsibility and work more closely with one another. As we discussed in last year’s report, the C-suite’s roles and work are becoming much more complex and more integrated. Yet eighty-three percent of respondents told us their C-suite executives rarely collaborate or do so only on an ad hoc basis; only 17 percent said C-suite executives at their organization regularly collaborate.

Performance management. How individuals’ success is measured remains a powerful way to shape behavior. However, despite organizations’ strong desire to elicit different, more 21st-century behavior from their leaders, respondents described a very traditional approach to how they evaluate top leaders. The top three criteria organizations used to measure leadership success were driving strategy (63 percent), delivering financial results (58 percent), and managing operations well (44 percent).

Putting different performance measures in place for leaders can go a long way toward establishing a culture that supports competencies such as the ability to manage uncertainty and lead through change. Sasol, an integrated chemicals and energy company with operations in 32 countries, is one company that has made progress in establishing a culture of development through the way it measures its leaders. The company evaluates leaders based on employee engagement feedback, leadership capability assessments, and the ways in which leaders align themselves with the company’s leadership principles. These practices contribute to reinforcing a culture where leaders are encouraged to embrace change and recognize opportunities to innovate and pursue excellence.2

If organizations want leadership that is ready for the 21st century, they should first look at their own attributes to create the type of environment that will give rise to leaders’ success. Transparency, internal collaboration, and performance management are good places to start that process.

Refreshing leadership from within

Setting a new context, identifying new leadership competencies, and putting the right culture in place are all vital parts of an effective leadership strategy. The final step is to find and develop the individuals who will serve as the leaders themselves. But where can organizations find them?

Today, the idea that organizations can simply go out and “hire” new leaders is being called into question. Rather than searching to find and hire great leaders from the outside who may or may not succeed in the organization’s corporate culture, most organizations would do well to explore new approaches and to invest more in developing the potential leaders they have. In today’s fast-paced environment, people learn by doing—and trying. To cultivate needed leadership competencies, organizations can give people more diverse, developmental assignments; promote people into leadership roles both earlier and later in their careers; give leaders with less traditional experience the opportunity to run businesses and initiatives; and honor the ability of their workers and leaders at every level, from early to late in their careers, to rethink, challenge, and develop the business they’re in.

Many organizations continue to struggle to put leaders in place with the experience, capabilities, and motivation to take on both old and new business challenges. We suggest starting by taking a fresh look at the context in which leaders need to operate today, as it offers a key to cultivating the leaders of tomorrow.

The CMO of People

This post is submitted by Joyce Maroney, Executive Director of the Workforce Institute.

I recently had the pleasure of interviewing David Creelman and Peter Navin, authors of the new book The CMO of PeopleManage Employees Like Customers with an Immersive Predictable Experience that Drives Productivity and Performance. David is a longtime Workforce Institute board member, speaker and author focused on leadership and HR. Peter is Chief Human Resources Officer at Grand Rounds, a leading provider of employer-based technology that connects members and their families to high-quality healthcare. Peter joined me for a podcast in 2017 to talk about why more executives should consider the role of CHRO as a career path.

In this book David and Peter propose a new model for HR leaders to consider that borrows heavily from marketing disciplines and urges them to think about talent management in terms of maximizing the lifetime value of employees. Just as the CMO thinks in terms of the acquisition and lifetime value of customers, Peter Navin’s Talent Funnel “cocktail napkin” chart here summarizes the analogous concepts for how CHROs can think about talent. 

Talent Funnel Model
Peter Navin’s Talent Funnel Model

In our wide ranging conversation, we talked about:

  1. How HR leaders can use this model to up their brand from Personnel Department to strategic partner.
  2. Why HR should approach curating the employee experience the way a Chief Marketing Officer does the customer experience.
  3. Why the “predictable and immersive employee experience” is so important and what tools an HR leader can use to achieve this.
  4. The need to find unconventional people to staff this unconventional model.

You’ll learn a lot more by listening to the podcast below, and even better, by reading the book. And please consider adding your own thoughts by commenting on this post.