Canadian HR Reporter
Sep 1, 2019

Employers lack formal digital strategy: report

Someone holding an iPad in front of a machine
Many need ‘breakthrough in leadership development’
By Sarah Dobson

While the drive for automation continues to creep into workplaces, many employers don’t have a digital transformation strategy in place.

And many say they need a “breakthrough in leadership development” to address the challenges accompanying this trend, according to a report released by Willis Towers Watson.

“Workplace automation has been growing in leaps and bounds, and all signs point toward continued expansion,” says Tracey Malcolm, global leader, future of work, at Willis Towers Watson in Toronto. “With such widespread change, companies must address how they’ll get work done. Those companies that understand the impact of automation and digitalization on their workforces and organizations will be best positioned to gain [a] competitive advantage.”

Digital transformation has many levers related to it, she says.

“A lot of questions relate to leadership and digital strategy and capability and technology, but it also includes ensuring that organizations advance from a culture perspective, from a structural perspective, from a human capital management perspective as they transform.”

This wave of digital transformation is fundamentally different than what’s occurred over the last couple of decades, says Ryan Androsoff, director of the digital leadership program at the Institute on Governance in Ottawa.

“People can get lulled into complacency a bit, where they say, ‘Well, we’ve got a website and online services, and we’re digital.’ They’re not thinking about [how] this is actually more than just a service delivery channel, it’s about how technology at a really fundamental level is changing the economy, is changing the workforce and, by virtue of that, is going to be changing organizations.”

“If your organization isn’t having some pretty deep conversations right now about its organizational structure, and about actually changing how it does business from the bottom to the top, then you’re probably not taking this next wave of digital transformation seriously,” he says.

“The sooner that organizations can put in place a strategy for developing the leadership and the training and the competency they need, the better.”

Digital maturity

Only 14 per cent of the 1,014 companies surveyed worldwide have developed an integrated digital and business strategy and road map. Instead, just over half have rudimentary digital capabilities or a digital strategy that’s not aligned with their business strategy.

Employers fall into four categories of digital maturity based on their approach to digital strategy and key digital enablement levers, such as culture, leadership or human capital management, found Willis Towers Watson.

Thirty-one per cent are “emerging,” with a very basic, reactive digital strategy, while 14 per cent are “advancing,” meaning they’re in the early stages of developing a formal digital strategy.

Thirty-five per cent of organizations are “leading,” so they’re making substantial progress with strategies, while 20 per cent are “transformative” and have an aligned or fully-integrated digital and business strategy. The latter are more than two-and-a-half times as likely as emerging organizations to report being high-performing relative to their peers, found the survey.

It’s more than just taking existing processes and making them digital, says Androsoff.

“The big change that’s starting to happen now is people are exploring the question of ‘How do we take advantage of these new technologies to actually transform how our organizations work at a much deeper level?’ So, it’s about reengineering processes from the bottom up, not simply putting a layer of digital paint on top of existing processes or services.”

It’s a challenge for a lot of legacy organization, he says.

“If you think about companies or organizations that have been around for many decades, those organizational structures, those cultural norms, the types of skill sets that they recruited for traditionally, those become very solidified in terms of how they approach things. And, as we know, the rate of change is getting faster and faster.”

There are several pre-requirements before an employer looks at technology adoption, and one is at the C-suite level, says Harry Sharma, director of innovation and technology at the Conference Board of Canada.

“There has to be a clear alignment with current medium-term and long-term business objectives of adopting these technologies. If those alignments are not there, then it’s just a haphazard installation of a technology that’s not going to lead to any useful or fruitful outcome. So, the executive team and… the board of a company, they must clearly understand what the impact of adopting certain technologies will be on the core business,” he says.

Change management is critical, says Sharma.

“Once you have alignment to your business objectives, you want to make sure that the executive team puts in a very robust change management plan, which would be C-suite downward. So, it includes all the training that’s required, both the soft and the hard training… it means you have to put in very clear goals and objectives. In knowing the organizational processes, you have to ensure that there are teams created… that are looking at interdisciplinary, collaborative ways of adopting or incorporating those technologies to achieve the business objectives.”

Leadership challenges

Leadership is essential and 75 per cent of transformative organizations say they hold leaders accountable for the outcome of the digital efforts, compared to 40 per cent of employers overall, found Willis Towers Watson.

Two-thirds of employers cite leadership development as the top area requiring breakthroughs to adequately address the challenges of automation and digitalization (followed by performance management and organization structure in the top three).

Leaders’ bigger challenges will include spearheading the development of new digital capabilities, integration contingent labour with work teams, and merging human talent with automation, says the report.

“Leaders need to address all of those levers empowering all the capabilities they require. Not just the organization’s digital ambitions, but also around the needs for competencies and mindsets that’s required as part of the digital transformation,” says Malcolm.

And there are a few ways leaders are held accountable, she says, citing engagement and retention levels.

Essentially, leaders need skills for a diverse ecosystem, says Malcolm.

“[It’s about] skills to orchestrate this new level of diversity of work options, [so] becoming more comfortable and savvy around opportunities that technology such as AI [artificial intelligence], robotics can bring to the organization, but also alliances for the different options for talent, so that they can actually access this range of resourcing to get work done.”

Communication is critical, not just in terms of relating the vision to employees, but being clear for talent, says Malcolm, so “what their organization stands for, what talent experience they’re trying to create in their organization so that individuals — whether it’s employees or an AI vendor or freelancer — really understand the mission and purpose of the organization.”

It’s all part of change management, says Sharma, and the executive team has a huge role to play in conveying to staff that these technologies are basically in service of achieving business objectives, which are about making businesses more sustainable and ensuring a decent rate of growth.

As a result, executives require a huge transformation in terms of how they view the role of technologies and how they incorporate those digital technologies to achieve their business objectives, he says.

“Just the alignment of business objectives to digital technologies, that’s the hardest part… it’s easier said than done, you really need to build a very strong business case around ‘How are you going to be able to incorporate these digital technologies and improve your bottom line?’”

It’s especially hard because it’s about looking into the future, says Sharma.

“There is no kind of precedent within the company to have done this. So I think, at the leadership level, it is going to require a change in mindset, a change in planning and then really developing very strong attributes where you can actually make the case that adopting some type of digital technologies will improve your bottom line and help you achieve your business objectives in a more timely and effective manner.”

It’s not about having a director or vice-president who is a computer coder or data scientist, but rather having a baseline understanding of how the digital world works, says Androsoff, “so that you can have an appreciation of what the limits and the possibilities of technology are.”

“To be frank, it’s so that you can call B.S. on something when you need to around the management table,” he says. “Part of some of the big failures we’ve seen in technology implementation — both in government and in the private sector — has been because, in many cases, you have leaders who aren’t well-versed enough or confident enough to be able to ask the right questions when it comes to digitally-involved projects. And so that traditional kind of leadership and oversight function that executives provide becomes compromised when digital becomes so foundational.”


SIDEBAR

Breakthroughs needed

Top areas requiring breakthroughs to address the challenges of automation and digitization:

• leadership development 66%

• performance management 64%

• organization structure 59%

• career management 56%

• yalent acquisition 54%

• HR’s role 52%

• pay programs 51%

• cybersecurity 45%

• benefit programs 41%

• employment brand 30%

Source: 2019 Pathways to Digital Enablement Survey Findings, Willis Towers Watson

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