HR Digital Transformation - A Business State of a Mind - Part 5
Estimated reading time: 14 min
HR Digital Transformation - A Business State of Mind (Part 5 of 6)
Getting Business Support for HR Digital Transformation
How to reach the goal when the goal posts keep moving
At the speed of Digital Technology advancement, this is how most of us feel, and it is frustrating. However, if you are in business and want to stay in business, there is no choice but to adapt.
But here is the good news.
There is a threshold of advancement that when reached, the ability to keep up with technology advances will be much easier than if delayed.
Once a commitment is made to the initial investment or the "Initial Digital Adoption Inflection Point," a launch platform will be created that allows further expansion and makes adoption of technological advancements easier to achieve. Otherwise, the "Digital Adoption Gap" will expand exponentially, and the financial investment to effectively start over could be insurmountable. Furthermore, the level of change will also be more drastic and costly, potentially causing high turnover to re-staff or train existing resources.
The other good news is, while the HR department may not be focused on Digital Transformation, the IT department has most likely been plotting this for some time. This means the HR team will have a willing ally to promote its project.
And the good news keeps on coming! Even if the IT department is pre-occupied with other projects, most of the new digital technology applications are Cloud-based, so system infrastructure is not as big an issue as it once was. And, the configuration of the applications does not require complex programming skills.
Once commitment is made to the initial investment, or the "Initial Digital Adoption Inflection Point", a launch platform will be created that allows further expansion and makes adoption of technological advancements easier to achieve.
In my personal experience, I have had many customers who received only minimal help from IT. They were able to work with the system integrator, take training from the app vendor and together design, configure, test, and deploy the applications with the HR staff. Of course, it helps to have a few members of the HR team who are tech-savvy, willing, and enthusiastic to work with the new applications. This is important because after the system is implemented, it is these team members who will likely be responsible for extending the platform features and functions.
So, it is likely that the company is already thinking about or engaged in digital transformation projects. The IT department is HR's friend, and there is a reasonable chance that HR has resources in the existing department to lead the effort. If the HR resources are not available, then this must be a critical planning factor in business case development.
So, what is holding business executives back from funding HR's technology project?
The number one reason we hear from IT Departments about HR Departments requesting spend on technology is the lack of a business case, a strategic charter, and an execution plan.
What every business needs and how the promise of HR technology has thus far fallen short
According to David Ulrich, co-author of the book HR Scorecard, what is always missing in these scenarios is that the "C" suite needs to understand that HR can't be reduced to the same quantitative formulations that operating departments can.
HR adds value THRU what it does for the rest of the company much more so that what it does "for/by" itself.
Neither is it merely qualitative, especially now with the five generations currently sitting in the workforce – they each have wildly different needs to reach job satisfaction and "stay. " Left to most (former finance/sales) CEO/COO/CAOs, it is "give me A program" to get them to stay and deliver.
Hence the need for HR to partner with each operations department to show their impact on what that operations department's ROI will be.
HR will need the support of the business executives if Digital Transformation is to be funded. To do this, HR needs to think like the business and be aligned with business goals. Investors and business owners want certainty more than anything else. There are three important factors to keep in mind in soliciting support:
HR must be able to articulate the value to the business clearly.
The need must be realistic and pragmatic but also have a sense of urgency to act.
Business leadership must already be supportive of digital thinking; otherwise, approval will be harder to achieve, and more education will be required.
So, what are the expectations of the business for the future of HR, and what is the expectation of employees for the business?
The business needs to execute well on the business strategy. Based on 2014 research by Steven Hunt, Ph.D., at its core, every business needs to do three things to succeed:
Defining Business Strategy - Determining what is required to succeed (which is the business purpose and objective).
Managing Assets – Securing the capital and the resources required to support the Strategy.
Driving Business Execution (BizX) – Building and Managing the Workforce to effectively leverage company Assets to deliver Strategic objectives.
Essentially, how I interpret this is that no matter how great the business strategy is unless the workforce is fully aligned with the business strategy, the business will likely fail. BizX is the most important factor in the formula, and in its role as the curator of the workforce, HR is a critical partner in the success of the business. Steven Hunt posits three guiding responsibilities that fall mainly to HR to lead:
Achieving a high level of Business Execution requires the business to excel in 3 ways:
Increasing workforce performance
Attracting, developing and retaining high-performing employees
Identifying, and addressing low-performing employees
Steven Hunt goes on to identify 6 categories of Business Execution Drivers to support the business strategy:
Alignment - Are our people Focused on things that impact the delivery of the Strategy?
Productivity - Are people doing what we asked them to (or something else)?
Efficiency - Are we using our people efficiently?
Sustainability - Are we able to maintain stable, consistent performance over time?
Scalability - Do processes support a steady supply of talent to execute our strategies?
Governance - Is anyone in the company doing something that creates significant liabilities to the company (security, compliance, risk management)?
Steven Hunt also provides a managerial guide to achieving BizX success for these drivers that I prefer to call the "4 Rs"
Employ the Right People
Hire workers to support business strategies and who stay to realize the ROI.
Focus people on the Right Things
Make sure workers spend their time on things that support strategies.
Ensure people do things the Right Way
Recognize high performers and address low performers
Give people the Right Development
Provide employees with development opportunities aligned with business objectives
Statistics show organizations spend an average of 50% to 70% annual expense maintaining the workforce (Human Capital). According to a recent study from Paycor, the same companies spend only about 15% of their time managing the workforce. This indicates just how impactful BizX can be on business success or failure.
It's not just about people, it also about the tasks that applications perform. Try substituting "Applications" for "People" in the 4 Rs.
Steven Hunt's conclusions seem to be logical and practical, and I very much support his research. However, Steven's book was last published in 2014 and written before that. The Apple iPad was first introduced in 2012, the same year that Facebook went public. My point, as previously stated, technology moves very fast, and in 2019, one very important aspect of the 4 Rs has changed. It's not just about people; it also about the tasks that applications perform. Try substituting "Applications" for "People" in the 4 Rs.
I have worked with hundreds of HR departments, and I can say confidently that most are understaffed, underfunded, and overworked. Business leaders like to use phrases to describe their HR departments as "lean and mean," "highly efficient and productive," and they often are, but only in the tasks, they are charged with. Most HR Department would like to do much more. The problem? According to Steve Browne, author of HR On Purpose: Developing Deliberate People Passion, "HR departments continue to practice transactionally (task perspective) rather than being strategic." As a result, there is seemingly little or no interest by the business to support HR with more funding to support HR business initiatives. So, when new business acquisitions, mergers, or initiatives arise, when HR's support is truly needed, HR is ill-equipped to respond.
Even when companies have HCM applications to support the business, the actual performance of such apps fall well short of expectations. When reviewing the 4 Rs in the context of an enterprise business with 1,000 employees or more and an HR staff of maybe 5 to 8 HR professionals where two-thirds focus on payroll or compliance, scalability is effectively impossible.
A single HR administrator focused on the needs of hundreds of employees, can only address the high-risk issues, which are almost exclusively on-demand. Another useful analogy is that if HR is always focused on treating the sick employees, they never have time to focus on prevention.
One of the chief mediation strategies is to leverage an HR application is the distribution of various tasks to all employees via self-service portals. But getting compliance can be daunting. And spending time on the data and analytics to understand where and how to prioritize is most often one of those "when-I-can-get-to-it" tasks. The chief reasons for low expectations are centered mostly on:
Not having enough automation in process steps.
Self-service processes are too complex and vary too much across the business.
Lack of communication or too much of the wrong communication to assist with user compliance and often engage with employees.
Not having the correct HR organizational structure to support the applications.
Improperly implemented or unmaintained systems constantly break causing more problems than they solve.
No one dedicated to data and analytics.
Lack of support and alignment with executive leadership.
Each of these reasons is a BizX deal breaker that can prevent the business from success.
Getting the business to support HR Digital Transformation
A strong argument for digital transformation projects includes a strong financial incentive and promise of further opportunity. However, I believe it must also have a strong vision. It should tell a story that extends and builds on the founders' vision. Always make it sound more expensive to achieve than it is, and how it will save the company from competitive extinction. Sounds dramatic, but it works.
A strong argument for a digital transformation project obviously includes a strong financial incentive and promise of further opportunity. However, I believe it must also have a strong vision. It should tell a story that extends and builds on the founders' vision.
Every company is different, so the amount of effort invested in a business case should be commensurate with the scope of the project. It is important to have reasonably accurate details, but don't sweat the details or have too many. Keep it big picture at first, because, in my experience, every initiative starts with a vision and evolves through several iterations to become an executable plan. Each iteration can be an approval milestone that builds on the previous as the plan takes shape.
Most importantly, the team that crafts the plan needs to think like business owners, so they are more attuned to unintended consequences of any recommendation. Put on your CEO hat and think digitally. Here are some practical steps to gain the approval of the business.
The Story – Craft a brief story of the vision for HR Digital Transformation. It should start as a casual conversation with a trusted advisor and graduate to a top executive who is willing to put their sponsorship behind the effort and include an Executive Summary Proposal to explore the project further.
The Strategic Charter - State the business issues or opportunities to be addressed.
Should state the expected business benefits
Should include financial consequences of not acting
Should include a high-level roadmap
Should state the guiding principles of the project
Business Case - Steps to Build a HR Digital Transformation Business Case that addresses the vision and the Charter objectives, should include:
Enlisting an advisor to help make the exercise can go quickly
Calculate the available project team hours available for the project after all mandatory HR and HRIS work is completed.
Re-State the business objectives and where they impact HR (the sub-category of challenge)
State the impacts, both positive & negative, for the internal customers (both revenue and expense departments)
Be certain to emphasize any regulatory requirements being served
Be certain to explain the expected next steps beyond this project
If possible, place a financial and HR Labor impact on each issue/opportunity (this is usually a factor of how much labor would be spent on each task area annually), if distributed to users, or if automated.
Think Digitally – apply a possible digital solution to each challenge and calculate the reduction in HR hours effort, then apply financial savings.
If this is a major transformation, get some advice on how the go-forward HR Organization should be reorganized and staffed (this can be an essential factor in achieving ROI). There is a reasonable chance the current staffing model of the HR Organization will need to change to support and extend the new technology, including new roles and new skills.
If technology is to be purchased
Invite vendors to provide an RFI (not an RFP – an RFI is less formal and a less effort for the vendors which they will gladly respond). Application vendors are also very forward-looking, so they may see a digital solution not yet considered. This will help you significantly narrow the field of vendors you will ask to respond to an RFP.
Seek advice from other companies with similar projects (the vendors will provide company names)
Build a rough effort on the application and infrastructure costs (IT and Finance can help)
Estimate the one-time implementation cost and ongoing maintenance and extensions to apply to the digital solution over no more than three years. Two years is better (at this stage, ROI on a Digital investment should be very quick, often less than a year). Consider an RFI to vendors for consulting estimates, including timelines and internal project staffing requirements. Use the same approach for technology vendors to gather information and narrow the field for the RFP.
Evaluate the project contextually on the business, to determine if there are other initiatives or projects with impacts (e.g. where resources are already or may be committed).
If not already there, focus on getting to the Digital Adoption Inflection Point first.
High-level Execution Plan:
Summarize the pros/cons, expected ROI, and HR's (and IT's) recommendations. I think PowerPoint is still the best tool for presenting the executive summary.
Make sure to consider small or less costly alternatives that can at least get to the Digital Adoption Inflection Point.
Get the business READY for the project BEFORE it begins. There are six areas to consider, even before the product is acquired and the implementation project starts. I have a planned article about Readiness, which will provide a key recommendation to help avoid common project mistakes. See Part 6 for an overview.
Getting the support of the business means treating the task like any other business proposition. The value must be demonstrated. Creating a convincing plan is the easy part. However, it may be much harder to convince the business that HR can lead and execute the plan. Leading the organizational change that may be required of HR means willingness to make hard and sometimes difficult decisions and a realistic self-assessment. Does HR have the right structure and team to be able to carry it off? Will HR be ready to think digitally and lead the organization through a successful transformation project?
In the final segment of the series, we will examine the steps that HR should take to be ready for transformation.
"Creating a convincing plan is the easy part. However, it may be much harder to convince the business that HR can lead and execute the plan."
I look forward to your comments and extensions of this discussion. I am sure I will learn something from the feedback.
Steve Bradley is Former VP and Director for the Cloud HCM Practice at Birlasoft. He has over 20 years of HCM technology experience – and founder of two HR service companies, SystemLink and Learn2Perform. He is a frequent speaker at conference events and advisor to organizations of all sizes on the topic of HR Digital Transformation, HCM Technology and HR Organizational Change in a technology age.