How to close the gap between your organisation and the digital age

By Kate Neilson
Deloitte Global Human Capital Trends report

The 2017 Deloitte Human Capital Trends Report revealed that the top three areas of focus for Australian companies needs to be creating a great employee experience, designing the organisation of the future and redesigning learning programs to suit the 'digital age'. We spoke with Juliet Bourke, Partner in the Deloitte Human Capital Practice, Australia, about how organisations can 'future proof' themselves, why traditional organisational hierarchies will soon be a thing of the past and both the positives and negatives of digital disruption.

Q&A with Juliet Bourke

Juliet Bourke

With over 80% of Australian organisations stating that "future proofing" their organisation is a top priority, but only 9% having a clear idea how to achieve this, what advice would you offer to the remaining percentage?

Employees are more empowered than they have ever been. I think we've underplayed the shift in the balance of power and thus the importance of creating an irresistible employee experience. If organisations could do one thing to future proof themselves, they should not look past valuing their employees just like they value their customers. That means putting to rest clunky HR IT systems, annual retrospective engagement surveys and non-collaborative and siloed business units, for example.

How do you 'rewrite the rules' that have been in place for so long and how long do you predict that it will take for the majority of organisations to shift into the digital age?

The speed at which organisations need to rewrite their rules of engagement will vary based on their industry and current levels of maturity. However, the outcome will be the same for everyone. Whether digital is driving fundamental shifts to business operations (as evidenced by Borders, and Kodak), enabling disruptors to enter the market (such as Uber and AirBNB) or improving productivity and safety (such as driverless mine vehicles): change is inevitable and occurring at an accelerated rate.

We have seen many periods of disruption of the market (including mechanisation, steam, electrical, and mass production) but what differentiates this period of digital change is the pace of change - it is exponentially accelerating. Recognising where organisations sit in the cross hairs of change is the first step.

The top three priority areas in Australia, creating the most tension are:

* The disconnect between people's digital experience as a customer (personalised, on demand, variable channels of access) and as an employee. 85% of HR and business leaders told us that focussing on creating a more positive employee-centric experience is the number one priority.

* The structure of organisations, which continue to be very hierarchical and siloed. 84% of HR and business leaders reported that it was very important to create a collaborative workplace with a network of teams.

* Careers and learning. Careers and learning are assumed to happen in blocks of time. For careers this means a sequence of study-work-retire, and for learning this means taking out days or weeks to learn in a formal classroom. 78% of HR and business leaders told us it was important to focus on this change.

Notably, creating a workplace which is inclusive of diversity was rated as the fourth most important priority for Australian organisations (77%). The disconnect is between the introduction of stand-alone programs delegated to HR and redesigning the organisation's workplace processes to ensure that they all deliver workplace diversity and inclusion, with accountability sitting with the CEO.

Deloitte

Some people might argue that project based work, that allows for teams to work closely together for a short period of time, causes a lack of structure and consistency. What benefits do you identify from project based/short term teams?

The benefits of short term teams are that they are likely to have greater dynamism: in other words, enable people to develop specialist skills more quickly, acquire and disseminate information without red-tape, and respond to clients' needs nimbly. Empowering teams to respond to a fast moving environment is critical for organisational sustainability. Potential inconsistencies can be mitigated by ensuring teams have an explicit purpose and set of agreed values; clarity about roles and responsibilities; and a selection process which ensures team members are selected on the basis of their skills and capabilities.

Aesthetic based changes are effective in bringing an organisation into the digital era, especially from the point of view of a client/customer, but what would you say are the most effective ways to refresh the internal aspects of an organisation?

Successful large organisations will keep pace by building stronger internal workforce digital ecosystems, communications platforms and performance measures, and well as more fluid between-division partnerships that broaden staff exposure to new workforce challenges and capabilities.

In your opinion, what are the positive and negative aspects of digital disruption?

On the positive side, the impact of digital disruption on the market has meant that those more digitally engaged businesses have seen increases in their revenues, and that their staff are enjoying greater flexibility and a varied and innovative workplace. It also allows for newly emerging business to shake up services to better meet the needs for clients.

However, on the negative side, businesses which are slow to change - and potentially governments and their agencies - are being left behind and their continued relevance is put at risk. This is reflected in declining revenues and weakening public trust.

Deloitte

Why do you think it's important for organisations to change the way that we look at leaders and adopt a "working with" rather than a "working for" attitude? What are the main benefits in doing this?

In the organisation of the past, organisation placed people into positions of leadership, often based on their seniority or technical expertise, and expected the leader to hand out instructions. In the new organisation, leaders are expected to create followers, and their role is more akin to a coach, or synergist, who enables the team to reach their full potential together. We think of the new leadership style as "inclusive" and the old style of "heroic". Today, high performing leaders need different skills and expertise than in generations past. Most organisations have not moved rapidly enough towards selecting and developing more inclusive leaders who are adept at working across diverse markets, with diverse employees and in a flat hierarchy.

The paper mentions 'networks' and 'ecosystems' replacing traditional organisational hierarchies. Is this something that Deloitte has implemented and if so, how are employees responding to this?

One example of breaking down the hierarchies in Deloitte is our internal social networking channel, which started in 2008. Deloitte was one of the first to develop this kind of internal systems ten years ago, and today the network is completely embedded in the organisation's DNA. It has been instrumental in flattening organisational structure, provided an innovation platform, and an open problem-solving function across all levels of staff roles and business groups. Today, the service continues to allow teams to post questions and organically form groups to solve problems: all in a conversation room open to some 7,000 staff.

"Change is inevitable and occurring at an accelerated rate."

The paper also mentions pushback from executive teams who are showing "creative disobedience" when it comes to organisational shifts. Why do you think this is?

The 2017 Deloitte Human Capital Report shows that many consulting firms anecdotally report that up to 70 percent of reorganisations fall short because of "creative disobedience" from the executive team to change.The reason for this is, that it's not easy to shift out of established comfort zones, and yet the way high-performing organisations operate today is radically different from how they operated 10 years ago. Today's organisations and today's leaders can no longer afford to operate within the same framework.

A culture of agility, learning, innovation and acceptance of change is vitally important to help move an organisation from legacy practices, systems, and behaviours. Just as a recent tweet from Tesla's Elon Musk can raise the debate about the energy market in South Australia and potentially reduce the cost of batteries around the globe, all future organisations must be prepared to be evaluating their core business, value and service within very short time frames.

Why do you think smaller teams are "a more natural way for humans to work"?

Despite formal hierarchies, most of us know that the real, day-to-day work gets done through informal networks. Humans tend to gravitate naturally to those who have shared interests, experiences, and communities. Finding these commonalities occurs naturally in our social lives, and is also emerging as being highly successful in getting results within organisations. The 'organisation of the future' recognises the power of networks and harnesses this through supporting a "network of teams." This means that top companies are built around systems that encourage teams and individuals to meet each other, share information transparently, and move from team to team depending on the issue to be addressed.

The old design of organisations with siloed business units and organisational charts is very mechanistic and more reflective of an assembly line approach to work, rather than the reality of small, almost family like, units, with key points of connection between the units.

Deloitte
What do you imagine the organisational structure will be of the average company in the next 20-30 years?

There are two forces at play influencing the organisational structure of the future. On the one hand, digital connectivity and the proliferation of small business creates organisational complexity. There will be more formal partnerships between specialist organisations and a web of complex personal relationships given the high level of employee mobility and contingency.

On the other hand, people will seek simplicity, which will foster workplace "neighbourhoods" and a desire to work in small teams. What is most likely is that the organisational structure will be less siloed and hierarchical, and it will continue the trend towards networks of teams with devolved decision making.

Some market experts think that the headcount in traditional companies will shrink in size but expand with off-balance sheet/contingent workers and formal partnerships in response to a specific project or business opportunity. In addition, there may be much more augmentation of the human workforce by robotics and artificial intelligence. What impact this will have on organisational structure is at this stage uncertain.

Deloitte

Why do you think that 86% of Australian organisations are under-utilising their data analytics and how do you fix this?

It's simply that many HR practitioners today still don't understand the power of using data analytics, or do not engage those with the skills to make the analysis and insights. To make a real contribution, HR practitioners need to embrace the need to become data savvy and digitally conversant. But even more importantly, to see themselves as strategists, not the custodians of policy and the administrators of process.

You can read the full Deloitte Global Human Capital Trends report here.