Companies Are Ill Prepared for Digital Transformation

The accelerating rate of change in business, the economy and society challenges both business and HR to adopt new rules for leading, organizing, motivating, managing and engaging the 21st-century workforce. Let’s take a closer look.

June 6, 2017 – Driven by the ongoing digital revolution as well as demographic, political and social forces, almost 90 percent of HR and business leaders rate building the organization of the future as their top priority. In its 2017 Global Human Capital Trends report, ‘Rewriting the Rules for the Digital Age,’ Deloitte issues a call-to-action for companies to reconsider their organizational structure, talent and HR strategies to keep pace with digital disruption.

“Technology is advancing at an unprecedented rate and these innovations have completely transformed the way we live, work and communicate,” said Josh Bersin, principal and founder, Bersin by Deloitte, Deloitte Consulting LLP. “Ultimately, the digital world of work has changed the rules of business. Organizations should shift their entire mindset and behaviors to ensure they can lead, organize, motivate, manage and engage the 21st century workforce, or risk being left behind.”

With more than 10,000 HR and business leaders in 140 countries weighing in, the study revealed that leaders are turning to new organization models, which highlight the networked nature of today’s world of work. Because business productivity often fails to keep pace with technological progress, however, Deloitte found that HR is struggling to keep up: Only 35 percent of HR professionals rated their capabilities as ‘good’ or ‘excellent.’

“As technology, artificial intelligence, and robotics transform business models and work, companies should start to rethink their management practices and organizational models,” said Brett Walsh, global human capital leader, Deloitte Global. “The future of work is driving the development of a set of ‘new rules’ that organizations should follow if they want to remain competitive.”

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Building the Organization of the Future

As the workforce evolves, organizations are focusing on networks of teams, and recruiting and developing the right people is more consequential than ever. Survey respondents said talent acquisition is one of the biggest issues organizations face, with 81 percent of companies citing it as ‘very important’ or ‘important.’

While Deloitte found that cognitive technologies have helped leaders bring talent acquisition into the digital world, only 22 percent of survey respondents describe their companies as ‘excellent’ at building a differentiated employee experience once talent is acquired. The gap between talent acquisition’s importance and the ability to meet the need, in fact, increased by 14 percentage points over the last year.

It is critical to take an integrated approach to building the employee experience. A large part of it centers on ‘careers and learning,’ which rose to second place on HRs’ and business leaders’ priority lists. Eighty-three percent of those surveyed ranked it as ‘important’ or ‘very important.’ Deloitte found that as organizations shed legacy systems and dismantle yesterday’s hierarchies, it is important to place a higher premium on implementing immersive learning experiences to develop leaders who can thrive in today’s digital world and appeal to diverse workforce needs.

The importance of leadership as a driver of the employee experience remains strong, as the percentage of companies with experiential programs for leaders rose nearly 20 percentage points from 47 percent previously to 64 percent this past year. Deloitte said a crucial need remains, however, for stronger and different types of leaders, particularly as today’s business world seeks those who demonstrate more agile and digital capabilities.

Capitalizing On Digital HR for a 21st Century Workforce

As organizations become more digital, leaders should consider disruptive technologies for every aspect of their human capital needs. Deloitte found that 56 percent of companies are redesigning their HR programs to leverage digital and mobile tools, and 33 percent are already using some form of artificial intelligence applications to deliver HR solutions.

“HR and other business leaders tell us that they are being asked to create a digital workplace in order to become an ‘organization of the future,'” said Erica Volini, principal, Deloitte Consulting, and national managing director of the U.S. human capital practice. “To rewrite the rules on a broad scale, HR should play a leading role in helping the company redesign the organization by bringing digital technologies to both the workforce and to the HR organization itself.”

Deloitte found that the HR function is in the midst of a wide-ranging identity shift. To effectively position itself as a key business advisor to the organization, HR must focus on service delivery efficiency and excellence in talent programs, as well as on the entire design of work using a digital lens.

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Jobs Being Reinvented

The trends in this year’s report showed signs of reinvention on all fronts, including jobs themselves. Organizations should approach external talent, robotics, cognitive tools and AI systems as the “new, augmented workforce,” the report said. This year, 41 percent of respondents reported having fully implemented or having made significant progress in adopting cognitive and AI technologies within their workforce. But only 17 percent of global executives said they are ready to manage a workforce with people, robots and AI working side by side — the lowest readiness level for a trend in the five years of the Global Human Capital Trends survey.

While many jobs are being reinvented through technology and some tasks are being automated, Deloitte’s research showed that the essentially human aspects of work – such as empathy, communication, and problem solving – are becoming more important than ever.

This shift is not only driving an increased focus on reskilling, but also on the importance of people analytics to help organizations gain even greater insights into the capabilities of their workforce on a global scale. Organizations continue to fall short in this area, however, with only eight percent reporting they have usable data, and only nine percent believing they have a good understanding of the talent factors that drive performance in this new world of work.

“This represents one of the biggest opportunities for the HR organization,” said Volini. “To be able to rewrite the rules, HR needs to prove it has the insights and capabilities to successfully play outside the lines.”

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Chase Barbe, Managing Editor – Hunt Scanlon Media

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