The human factor and its surprising impact on digitalization
We are in the midst of the digitalization of our economy. Digital technologies are transforming the earlier product-oriented business models into comprehensive, service-oriented ones by offering new abilities like collecting and processing massive amounts of data to enable accurate predictions of asset failure or customer demand.
Nevertheless, many digitalization projects fail or do not deliver the expected success. As stated in my earlier blog, Why Investments in Industry 4.0 fail, the reasons for failure are mainly linked to business, not technology. The lack of a digitalization strategy, company processes unable to accommodate digitalization, or the fact that the monetization of these investments is often overlooked are major reasons for failure. The human factor can be another reason, and one that often goes unaddressed in the implementation of digital technology and solutions. This blog will outline how human resources impact the success of digitalization and what actions need to be taken to ensure it.
The human factor often goes unaddressed in the implementation of digital technology and solutions
Human factors govern digitalization
The digitalization of company processes, the introduction of human-machine collaboration and the cross-company integration of processes will affect the traditional working model within companies in many ways. We will see less repetitive, physically demanding work and more knowledge-intensive work. Digitalization will require a workforce with competencies such as data analytics and security. This, and the human factor itself, will create challenges that organizations must address to achieve a successful digitalization.
Here are some of the key challenges:
- Existing skills and talent are not suitable to fulfill the requirements of digital transformation and the shortage of skilled personnel in the external labor market.
- Many companies' human resource (HR) strategies do not address digitalization demands regarding education, training and personnel development.
- Digitalization projects do not involve relevant stakeholders in the implementation project.
- Adequate change management concepts and processes are missing during project implementation.
- Projects are driven by a focus on technology and technological excitement, not workers' needs and buy-in.
- Team members feel uneasy or anxious, and are reluctant to change.
The overall challenge lies in the alignment of digitalization and human resources. Additionally, technostress, which stems from digitalization, may hamper the workforce’s commitment to adapt and achieve satisfaction in the changed work environment. The management cannot afford to make any mistakes when it comes to convincing their personnel to adopt digitalization and reinforcing the changes that it brings to their individual work.
Unlocking success with change management and an evolved HR strategy
In line with the digitalization project, HR may introduce two key aspects of change that can keep teams informed, engaged and better prepared for the change:
- A general HR strategy and activity bundle to adapt the organization to a digitized organization
- A project-specific digitalization change management concept that provides for the preparation and commitment of the individual worker in scope to change
The latter needs to include the following:
- The involvement of major digitalization project stakeholders from the beginning by communicating the changes, their impact on the stakeholder, the individual benefits that the change will bring, and a convincing individual transition plan (including training, upskilling and more).
- Regular monitoring of the workforce’s perception of the digitalization project and its impact on their jobs. The project plan and change management concept should be adapted based on an evaluation of the workforce’s feedback.
- Definition of stakeholder and/or role-based incentives to speed up and support the adoption of change. These may not necessarily be financial incentives, but could include job enrichment or increased responsibilities.
A digitized organization will need a general HR strategy and concept that comprises the whole company. This must cover corporate culture, leadership, personnel development and communication. The cornerstones of a well-equipped and adept HR management prepared to master digitalization are:
- A well-defined personnel development concept that acknowledges the requirements set forth by digitalization and comprising individual and/or role-specific development plans, digital specific training curriculums and expert programs.
- Collaboration with academia and universities to attract applicants with the new skills needed in digitalization and to avoid a shortage of these skills within the enterprise.
- A robust structure to govern all digitalization-related projects and ensure adherence to the change management guidelines defined by HR and management during projects.
- Active leadership support for HR concepts targeted at advocating digitalization, including communication to the workforce concerning digital changes.
- Implementing mechanisms to regularly enforce and evaluate the impact of digitalization on the workforce, and the introduction of a continuous improvement process.