HR departments are feeling the pain of digital disruption

eConsultancy article by Seán Donnelly
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Just as digital has allowed marketing and ecommerce teams to become more customer centric, digital is also helping HR departments to become more employee centric. We wanted to find out how the industry is measuring and improving digital skills and what impact is digital having on organisational structures and procedures? Here’s what we learned.

Recruiting staff with the right mix of digital skills is difficult. While this might not be a new problem, it would seem that this issue is particularly pronounced for companies that aren’t based in or near large urban centres. As the requirement to capture and make use of data continues to grow, so too does the need to develop the right infrastructure and talent. 

Companies are responding to the challenge in a number of ways:

Hire for behaviour and attitude, not qualifications
There was some discussion about hiring graduates, whose expectations may be too high both in terms of what they wish to earn and how quickly they expect to progress.
Because it can be difficult to attract these graduates, some companies are hiring people for behaviour and attitude and equipping them with the right skills through training.
Developing apprenticeships and school leaver programmes
Several participants noted that this approach was effective as more and more young people are developing technology skills either at school or independently.

Companies that based far from large urban centres are finding it hard to recruit digital skills.
If recruiting is an issue, retention is just as challenging. Several participants spoke of what they called the “18 month itch”. So called “millennials”, particularly those working in technology and marketing related roles, may choose to move on after 18 months.
This was particularly prominent in cases where companies are using new technology tools that require training to use them effectively. Once staff become experts at using new and complex technologies, they can become more attractive to other employers so can earn more lucrative salaries elsewhere. This raises a number of issues for HR professionals:

Should companies try to retain 'itchy' staff?
Or, should companies develop a pipeline of talent to allow staff in other departments the opportunity to upskill and move laterally within the company?
Several attendees said that their companies are actively developing procedures to identify staff who traditionally worked in more traditional junior operational roles and giving them the opportunity to upskill into new roles. 

How should companies manage the leaving process?
One HR Manager in attendance said that companies should develop a “positive leaving strategy”. This just means parting ways in the best way possible. The HR Manager that suggested this noted that her company runs “alumni drinks” twice per year. This is useful for a number of reasons:

• Staff may move to potential clients. Maintaining a positive relationship with an ex member of staff can be useful for strengthening client relationships and in some cases new client acquisition.
• A positive leaving strategy can leave the door open to staff coming back to the company in the future when they have acquired new skills. Admittedly, there were different points of view among attendees regarding whether this should be encouraged or not.

The 'itch' is felt quicker than ever.
Addressing digital literacy remains an issueWhen it comes to digital maturity, addressing digital skills, from the most junior employee right up to senior management remains an issue.

According to our recent research into organisational structures and digital leadership titled Effective Leadership in the Digital Age, more than a third (40%) of businesses believe that recruiting staff with suitable skills is a significant barrier to digital progress, making it a bigger problem than 'legacy systems and processes' (35%).

This is where things got tricky. Having moderated a number of roundtables on different digital topics, I have come to observe that these sessions can often raise more questions than they answer. One such question was whether digital skills should be a requirement for every position or whether digital skills should be centralised?

While digital literacy is recognised as an issue that needs to be addressed, HR Managers are unclear of what digital literacy is, how to teach it and of course how to measure it. With that in mind, there was some discussion about measuring employee performance.
Attendees did agree that what we traditionally call “appraisals” should be reframed. The following insights represent a summary of the different ideas and approaches that were discussed with regard to appraisals:

People first
Attendees noted that while there is a plethora of technologies available for managing and administering reviews, it is important to put people and not technology first.

Process driven
Performance reviews should be considered as a process and not an event that takes place once or twice per year. One HR Manager pointed out that there should never be any surprises at an appraisal.

Two way
In fact, one company now calls appraisals “quality conversations”. Appraisals should be approached as a two way conversation rather than one way feedback from a manager to an employee.

Legacy systems and functional silos
Finally, I wondered if we’d hear the words “legacy system” and “silo” and sure enough they popped up. There was discussion among the HR Managers present that the word “digital” too often seems to be considered part of “marketing”. One attendee noted that for organisatons to get to grips with digital, they need to develop a “digital family” by joining up IT, Marketing and HR. At Econsultancy, we are certainly of the view that a digitally mature organisation will have digital integrated throughout the company. 

Dispersed structure
To begin with digital expertise is normally spread thinly across the organisation.
This digital expertise develops organically as employees with digital skills start to make the case for digital. These employees may sit within different departments and so may only have influence within their own team or department.

Digital centre of excellence
As digital skills mature, many organisations centralise them into what we called a centre of excellence. This centre of excellence is responsible for driving the digital agenda throughout the company. 

Hub and spoke
The next stage in this evolution is what we call “hub and spoke”. At this stage, there is still a central digital hub but digital starts to mature throughout the organisation.
This is effectively a combination of centralised and decentralised capability / resourcing / expertise whereby some key functions or capability remain centralised but local functions (think HR) or divisions can develop their own capability that links to the centre.

Multiple hub and spoke
This moves to a multiple hub and spoke model as digital gets adopted across multiple divisions or business units. Organisations that pass through this stage may have a number of divisions with discrete audiences for example and so while there may still be a central digital hub, each division may also have their own hubs.

Fully integraged 'honeycomb' structure
The final stage in this model is where digital and digital skills become fully integrated within the fabric of the company. A company at this stage within the model could reasonably be expected to have both the analysts and technology to be able to surface usable insights both from customers and also staff.

We’ve already mentioned that only 37% of companies have the analysts to make sense of their data. Based on the same research, only 41% of companies report that they have good infrastructure to collect the data that they need. If digital is to be used for operational efficiency by HR, then clearly the term “digital” needs to be understood more broadly than as something led by marketing. For that reason, when we discuss digital transformation, we are thinking about something that encompasses the entire organisation, not simply the marketing department.

Leading the charge
Many organisations need to start somewhere and so perhaps it makes sense that until recently digital transformation has been led by either the CTO, CMO and in some cases the CDO. Is there scope for HR professionals to lead the charge? Certainly they have a key contribution to make.

Digital transformation after all needs to be successfully accompanied by cultural transformation. Digital is changing faster and more profoundly than anyone could have predicted. Doing what you've always done is no longer an option.