Make UK, exhibiting at IFE Manufacturing 2024, on how digital transformation might change the face of HR and people strategies. 

To say that digital transformation is revolutionising every aspect of life and business may sound like an overstatement. But is it?

By now, most companies have given some thought to the prospect of rolling out AI or broached discussions about the cloud, big data, and automation. Digital-first ways of working are increasingly serving as a springboard for businesses to redefine their strategic priorities and reinvent core people strategies.

Yet it’s the speed of these developments - and the decisions that must be made in lockstep with them - that has companies in a knot. The World Economic Forum reports that 85% of organisations see technology adoption as the key driver of business transformation over the next five years. Dealing with this means rapidly changing talent skill sets, with employers expecting 44% of workers’ skills to be disrupted in the next five years and 60% of employees needing upskilling by 2027.

Further complicating matters, the 2020s have ushered in the age of flexible working, prompting many firms to adapt their tech infrastructure and rethink protective policies around remote cybersecurity.

As HR leaders plan to address the challenges driven by digitalisation, well-thought-out people strategies should remain at the forefront of the function’s priorities, says Sharon Broughton, head of HR and legal commercial services at Make UK.

HR strategy is business strategy

“The main challenge of technological change for HR is understanding what it means for the future. Too many organisations see digital transformation as something they are embracing or as too hot to handle. They’re not looking at the bigger picture,” Broughton explains. “Much of our work with clients is about answering the question: What will your organisation look like in five years? HR has an important voice in this conversation to align the workforce needs accordingly.”

She adds that HR can sometimes become disconnected from broad business goals by virtue of its position and proximity to employees, making it infinitely more difficult for CHROs to develop a clear vision for the company’s people strategy. Here, short-termism can start to set in. Flexible working is just one area in which many organisations get wrapped up in micro solutions rather than  long-term, macro thinking.

Broughton advises: “When receiving a flexible working request, take the opportunity to consider the wider organisational picture, both now and in the mid to long term, rather than just looking at it as a need to adapt that individual’s working patterns. You may well find you can make a positive change across the organisation by considering if your job roles are fit for purpose. Look at them closely and make changes to the business that will take everyone forward.”

The overarching vision must remain in sight. Lucy Atherton, a colleague of Broughton’s and Make UK’s head of HR and legal, contends that leaders should adopt a digital mindset when contemplating strategic transformations.

“HR has been firefighting in the post-Covid era, but it needs to start thinking through a digital lens. How can your home workers get the benefits from newer technologies beyond Zoom? How do you embrace effective communication regardless of location or job? Think with a digital mindset around those issues and get the business to understand that collaborative working is easier with a digital plan behind it,” she says.

Law and ethics

Any innovation in the workplace comes with a raft of ethical and legal implications, and the boom in workplace technology is no different. While implementing a digital mindset is vital, HR must ensure processes, procedures, and related training are up to date, too.

“The devil is in the detail,” says Broughton. “You may well be embracing technology, but if you haven’t considered how your policies and procedures reflect and support this, alongside ensuring employees are trained to understand the details and implications, this is where problems will arise.”

Next, leaders should remember that technology is an aid to human decision- making rather than a substitute.

Atherton points to artificial intelligence. Although the commercialisation of AI has marked a significant step forward, the tech is also raising concerns regarding disinformation, data protection, privacy and discrimination.

“A lot of people are using new technology in recruitment, but they are apprehensive of the risk of profiling and bias. Ultimately, there needs to be a human at the end of the decision- making process,” she says.

Getting culture right

Arguably, digital transformation is as much a cultural change as a practical or strategic one. “With any change, you need to bring your workforce with you,” says Atherton. “Some people will be nervous about technology, so transparency, trust and communication are critical.”

Central to this is empowering employees to have a voice. Broughton recommends that firms delve into diverse perspectives, from grasping how employees perceive the business’s current position and where they envision it heading to researching how the company is perceived in the market. “Too many organisations have a tendency to act rather than ask,” she says.

Cementing the culture change needed to become a truly digital business might be a long-term goal, but HR teams are struggling with the here and now. Immediate concerns such as talent shortages, the dynamics of multi-generational workforces, and skills training are all at the forefront. Some have already begun reviewing flexible working policies and training line managers on handling employee requests ahead of the new legislation on flexible working, which is set to take effect in the spring of 2024.

The job, Atherton notes, isn’t getting easier as HR chiefs will only need to get more comfortable balancing day-to-day HR processes, regulations, and longer-term culture and strategic goals.

Looking at this short-term work holistically could allow businesses to better understand their long-term goals and act appropriately. “When new regulation comes in, it shouldn’t be about needing to change strategy but responding more broadly. Yes, it might present a temporary challenge, but if organisations keep their longterm goals in mind, they might be able to make the short-term more palatable,” says Broughton.

What companies and their HR teams are really battling as 2024 draws ever nearer is a series of known unknowns. The digital revolution will keep marching bravely on, and employees will continue to make their doubts heard. Regardless, Broughton and Atherton agree: now is the time to set up strategies to tackle the complexities of technological innovation and - most importantly of all - to engage people on that journey.

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