Statement: Is human resources coping with the digital transformation?

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If you have been following business media over recent months, you could hardly have missed the subject of digitisation. There is not a single magazine that does not regularly report from the frontline of the new digital world order: They look at the challengers: the start-ups who want to teach established businesses the meaning of fear. Or they cast their gaze at this old world, which does not yet know what it has to fear or even what it might possibly hope for. It is all increasingly reminiscent of the first New Economy in the wake of which the swansong of the familiar economic order was heralded at the end of the 1990s. What materialised from that?

Quite a lot, even if not as radically or as fast as was predicted. At the start of the 21st Century we reached the age of the internet, or to put it better: we arrived there. The real innovations in the 2000s, such as the emergence of social networks and the proliferation of mobile internet, have fundamentally changed our social and consumer behaviour. Along with this there has been a significant shift in the economic power ratio in favour of the US, the birthplace and breeding ground of digitisation. While Europe fails dismally in reaching the head of the pack in this race (e.g. Nokia or Intershop) or hardly gets out of the peloton (e.g. myTaxi or Rocket Internet), the competition from the Land of Opportunity shoots ahead with ease. Although, and this is still good news with the predictions of the first New Economy in mind, our economy is not just digital. Germany has remained the workshop of the world. This is where a good portion of the machines come from that produce goods which are then marketed online, sold and delivered to our door. German companies clearly have not done a bad job so far. Their share of software in machines is constantly growing – this is where the biggest increases in added value are to found. Efficiencies arise from the synergy between automation and digitisation, which now enable production capacities to be brought back to Europe from low-wage countries. This has now been given its own name: re-shoring. The Adidas Speedfactory shows what is now possible – a scenario that is for the start giving countries in Asia a serious headache. In order to maintain our share of global economic output, we will have to rely on the combination of hardware and software even more than in the past. The next stage is the ‘Tour of the Internet of Things’ and is called Industry 4.0. When it comes to this, Germany is at the head of a very fast and dangerous breakaway group. Whether we win is not decided first and foremost by the technology, but by the quality of the rider. This realisation is not new. It always comes down to the correct application of technology and converting it into successful business models. (Who was it who discovered the mp3 format? And who turned an industry upside down with it?)

Risk or opportunity?

Whether we see digitisation as a risk or an opportunity is primarily a question of our own disposition. This is true for individuals as well as the organisation. The risk for the company is losing the business model (e.g. advertising business for newspapers). It is the responsibility of the stakeholders in the company to find the right ways to take advantage of the opportunities presented by digitisation. In fact this is the only way to avoid risks – i.e. that others will do it sooner than us.

The risk for individuals is as clear as the risk to the company: the loss of the personal business model, i.e. job losses. Nightmare scenarios arise that even respectable media like to pick up on (see Spiegel front page, issue 36/2016). It is true that model-based (monotonous) activities and simple decision making will no longer be needed in future. But is that a loss? Has the disappearance of difficult, monotonous physical work through automation been a loss?

Behind this question is the question of the underlying concept of man. The liberally oriented, autonomous man with a desire to shape his surroundings, looking for meaning, is happy to be released from monotonous, mindless tasks. The others have a problem. But this is exactly where there is an opportunity for individuals, the company and our society to find and claim our place in the new digital economy.

Human digitisation as the answer

Together with Lufthansa, Promerit asked the University of Liechtenstein and specialist magazine Personalwirtschaft what digitisation means for HR management – or conversely, to what extent the human factor is crucial to the success of the digital transformation. To answer this, in a comprehensive procedure, a benchmarking study of 18 DAX companies was carried out, best-practice companies in the USA were analysed and the digital maturity of an additional 120 companies was surveyed.

This is based on a model which formulates the responsibility of the HR department in two dimensions. The first, obvious dimension includes activities for the digitisation of HR processes and HR services. Not an insignificant task for the department with the most touchpoints in the organisation with each of its employees and also a high level of external interactions (with applicants) each day.
The second, more important dimension for the organisation includes the measures with which the conditions for successful digitisation are created. These are the competencies necessary for digitisation, an agile corporate culture, a new form of management and the new digital world of work, which must be formulated.

The biggest task for HR management lies in recognising that the technologies exist and that their benefits can only be exploited by using them. Ultimately it comes down to bringing people into sync with the new reality of work. We call this field of activity human digitisation and see it as the key to the future success of companies in the age of digitisation.

The levers in this field of activity are as follows: In order to take advantage of the opportunities presented by digitisation, a company must ensure that its employees have the necessary digital competencies. We see this as a broad approach that ensures that every employees has the opportunity to carry out meaningful work using modern tools and technology. This is both a prerequisite and employer pledge. The development of the individual and of the organisation can be achieved in equal measure in this way. Regardless of this, certain target groups in the organisation (for example knowledge workers and the organisers of the digital world of work) must have these competencies and additional skills (such as programming skills) to a greater extent.
Digital competencies address the ability side of the digitalisation equation, but people also have to have the desire to capitalise on the promise of digitalisation.

An agile culture is needed to drive the changes associated with digital transformation. Curiosity, openness and a willingness to change form the bedrock of the road to digital organisation. Consistent digital transformation requires a corresponding strategic alignment, which must be conveyed to every part of the organisation and every employee. Communication, dialogue and role models at the top management level are the means, which must be used in combination.

Closely associated with an agile corporate culture is a new form of management – we call it digital leadership. Management becomes leadership. In this way the self-image of the managers changes. Disciplinarian supervisors become coaches and mentors. Delegation and trust are essential to building a workforce that is autonomous and seeks responsibility. These traits provide the freedom to develop new solutions that accelerate the company’s digitalisation.

The framework of our future activities will be determined by the New Work Order. Tomorrow’s digital workstation can be anywhere. Our working and collaboration habits are changing dramatically, driven by new technologies (such as collaboration platforms) and new work methods (such as scrum or design thinking). Even stationary workstations (e.g. in the service department) will change significantly. Shaping these conditions will have a significant influence on the success of the digital transformation.

What is to be done

The provision of competencies and skills is the core responsibility of HR – it should be possible to achieve this task with a view to the necessities of digitisation. The changes in business requirements will have to be dealt with intensively. Entire job descriptions will disappear, others will change massively. It is the strategic task of HR to anticipate the developments here and draw the right conclusions with regard to training and staff development.

It is also imperative that all employees come along for the ride. Individual reservations must be addressed by citing the opportunities for the individuals and the entire organisation. Digitisation can overcome boundaries in communication and collaboration in the company and enable entirely new forms of organisation. The loss of information sovereignty creates transparency for every employee. This presents an enormous opportunity to help shape the development of your own field of activity. At the same time the acquisition of digital competencies increases your own market value and allows you to be deployed flexibly. This can only be an advantage considering the coming changes. A condition for successful digital transformation is that it has strategic foundations. Companies and their HR departments must be clear about what digitisation means for their business and what goal is being pursued. As well as formulating the appropriate strategies and road maps, it is a matter of getting these rolling. If the framework parameters are defined in terms of milestones, scenarios for digital transformation must be developed and approached in an agile way. Trial and error is the tactic to achieve stage victories with sprints, which have a signalling effect for the organisation. This requires courage, consistency and ability – characteristics that are ultimately crucial in the race for digitisation.

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Written by promeritcarolin · · Uncategorized