HR’s Growing Role In Driving Digital Transformation

The entire C-Suite bears the responsibility in driving digital transformation

Is HR lagging behind in digital transformation? A new study by my organization, the Association of Executive Search and Leadership Consultants, suggests yes. Based on a global survey of more than 600 executive recruiters and leadership advisors from leading executive search firms, the study Leading Transformation: Shaping the C-Suite for Business 4.0 Innovation, ranks Marketing, Technology, and Finance more digitally advanced than HR.
 

Organizations need a clear strategy for how new technologies will transform business, beginning with the customer and examining how artificial intelligence, machine learning, internet of things and more will change how work gets done. This strategic direction begins at the top and involves the entire C-Suite. That said, a lack of the right talent continues to be a major business challenge.

In our study, we wanted to better understand why organizations are still grappling with digital transformation and what are the major hurdles. The top challenges to achieving enterprise-wide change? Legacy approaches continue to be a major inhibitor, closely followed by a lack of talent, the capital to invest in new technologies, resistance to change and a lack of understanding of the direction the organization is moving. The implementation of ideas, the conversion from idea to solution, and the activation of the right leaders who understand and who can foster a transformation is difficult. As a result, many organizations stick to old success models, even if they are no longer working.



HR has two challenges related to digital transformation. Of course, the function itself needs to consider how technology can enhance operational efficiency. With new HR platforms and a multitude of start-up tools and applications, there are tremendous opportunities to transform the HR function being mindful of the balance between high-value human interaction and leadership and technology-enhanced efficiency drivers. A recent IBM study found that two-thirds of CEOs say AI will drive significant value in HR, yet only 11 percent of Chief Human Resource Officers report their organizations have the AI, data science and machine learning skills to transform.

But more important than digital transformation as a function, HR should be playing a key role in the people side of digital transformation. Technology alone doesn’t transform a business—it is the people within the organization that drive digital transformation. HR should be playing a lead in building a culture of innovation and hiring leaders that can inspire innovation.

Serving up the status quo is also a result of talent that is not aligned with a new business environment, accelerated by Industry 4.0 technologies. Finding and attracting C-level talent that can facilitate a culture ripe for digital transformation is a challenge across industries. Leaders across the organization must have the characteristics that spark innovation—being courageous, emotionally intelligent, motivational, adaptable and visionary.

HR should play a critical role in establishing a strong and authentic employer brand that is designed to attract and retain the next generation of leaders—those that are digital savvy, able to drive innovation, and adaptable to a changing business environment. A future-forward talent strategy includes developing a strong employer brand, being open to talent from other industries, providing development opportunities for high potentials and bringing digital talent to the C-Suite and the board.

HR leaders will need to become much more strategic and identify traits and competencies required to transition an organization from a legacy model to an Industry 4.0 approach. CHROs will be key in collaborating with their C-Suite peers to put in place tools, processes, organizational structure, and talent pipelines to support digital transformation. The Chief People Officers of the future will understand how to encourage creativity, foster a culture of collaboration, foster, and diverse and inclusive culture and create a climate of trust—all while having a strong focus on customer-centricity.

Collaboration is key. Today’s C-Suite must be much more interdependent, networked and agile to affect success. The entire C-Suite bears responsibility in driving digital transformation, it’s not just the job of the CEO and certainly not the sole responsibility of the CTO, and the time is right for the CHRO to leapfrog and take a major lead in driving change and transformation across the enterprise. It’s a great time for the HR function to truly become a “people-centered” business—the heart of any organization.