The Power in Your People: Why Data and Empathy are Both Needed to Drive Digital Transformation

We are living in an era where the way humans create value at work is fundamentally shifting. Though technology may be behind this disruption and digital transformation, the solutions won’t be found in tech alone.  Find out why we think the people still matter more than the technology and how HR leaders should be rethinking the way they approach people, jobs and performance. 


Introduction

We're seeing the beginnings of a fundamental shift in the way humans create value at work, and it's one in which the people still matter more than the technology.

The key drivers of digital transformation — profitability, customer satisfaction, and increased speed to market — are poised to disrupt legacy businesses across all sectors. In fact, some predict that this churn will lead to half of the S&P 500 being replaced Within the next decade.'

This upheaval being echoed in the workforce. Whole job categories are being eliminated, even as acute shortages emerge in others. Business leaders around the world are scrambling to respond to this growing skills gap and are searching frantically for the talent they need to drive Innovation at the pace their customers have come to expect. As the Fourth Industrial Revolution unites the digital and physical worlds to offer entirely new ways to gather and use information, it will require a new approach from leadership to build the workforce for the digital age. Specifically for HR leaders, disruption and digital transformation is:

  • Changing the types of skills and competencies non-tech companies need.
  • Changing the way existing employees do their jobs.
  • Altering the recruiting landscape for many companies.
  • Bringing diverse rewards philosophies face-to-face like never before.
  • Altering the types of leaders organizations need to be successful.

These shifts might cause panic for many people, but at Aon we view this differently. We're seeing the beginnings of a fundamental shift in the way humans create value at work, and it's one in which the people still matter more than the technology. Though technology may be behind the digital disruption, the solution doesn't lie in technology alone.

To succeed in this era, business leaders must adjust their focus and consider how to best leverage both the technology and the human being — rather than thinking that one will replace the other. In other words, your long-term sustainability is not an either-or proposition: mastering a workforce plan or a technological innovation. True transformation requires the heart and the head — reinforcing the core values that hold your company culture together. To survive digital disruption, you will need empathy for the people whose jobs are changing and for those whose jobs are becoming obsolete. Most importantly, you must put your workforce transformation at the core of your business strategy.

This white paper looks at how this evolving relationship between people and technology is shaping the way we think about human capital strategy at the highest levels, including:

  • Rethinking the architecture of jobs to ignite innovation and better meet customers' rapidly changing expectations.
  • Attracting and retaining the right talent to fill critical jobs through intelligent and efficient assessments.
  • Identifying employees whose skills may become obsolete and providing valuable training and development opportunities for their roles in the new digital economy.
  • Implementing a rewards and recognition program that strategically compensates employees for helping to affect the transformation your business needs.

To succeed in this era, business leaders must adjust their focus and consider how to best leverage both the technology and the human being.

Designing Jobs of the Future

To build a workforce that ignites innovation and better meets the changing expectations of your customers, businesses leaders must embrace a strategic approach to planning.

The digital talent gap is not a challenge left for future CHROs to solve; it's a real problem we see organizations across all Industries struggling with today.

To build a workforce that ignites innovation and better meets the changing expectations of your customers, business leaders must embrace a strategic approach to planning. The external environment is changing so rapidly that workforce planning should be an ongoing process that can give the HR function a key role at the table and a strategic position within the business.

In this new paradigm we must embrace that new jobs will be created just as quickly as others become obsolete. Leaders can start the planning process by re-evaluating the fundamental architecture of the jobs within their organizations, marrying their business strategy and their people data to define new roles and career paths.

In addition to regularly undertaking a strategic workforce planning process, it's important to ensure that your organization has the right skills and behaviors to adapt to market changes in a dynamic manner. A growing number of companies, both inside and outside the technology sector, are in a furious race to attract people with rapidly evolving, highly specialized technical skill sets related to artificial intelligence, cybersecurity, data science, machine learning, and natural language processing. Some of the talent in these areas is so specialized and scarce that companies are willing to acquire entire firms for just a few people.

While technical skills will certainly be critical in the digital economy, they are only part of the formula for success. You will also need your people to show up with the "soft skills" needed to connect with customers and collaborate With one another. In fact, these skills have become more critical in the digital age, not less. For example, a recent McLagan study showed that when it came to evaluating what customers wanted from their wealth managers, strong communication skills was listed as more important than statements and reporting. In other words, the study showed that high-net-worth individuals were looking for their wealth managers to do more than just analyze spreadsheets with them — a task they could do on their own. Rather, they want someone who first listens to their needs and builds an emotional connection, and then recommends products that are a good fit.

Finally, your people strategy must go beyond attracting and retaining the key talent you need now. It must also focus on creating an environment that promotes continuous growth once people join your team. You must focus your workforce planning on building a structure and culture that allow high-performers to continuously develop their skills and thrive.

Your people strategy must go beyond attracting and retaining the key talent you need now. It must also focus on creating an environment that promotes continuous growth once people join your team.

In Action

Workforce planning in the digital age will require more than just closing your most urgent skills gaps. You will need to step back and think about how your organization needs to change to keep up with the escalating expectations of your customers.

  • Examine your overall organizational and leadership structure. What are the organizational and leadership skills you will need to meet your business goals? Look closely at your leadership structure and the people in those roles. Particularly if you've had low turnover or relied heavily on a culture of mainly promoting from within, you may find your biggest obstacles to adapting to change are sitting at the top of your organization. And if nobody on your leadership team has been through a digital transformation, who can show your company the way?
  • Consider how you can best fill high- value, emerging roles. Do you already have those skills internally? Do you have a people analytics driven process to identify people who have the potential for building those skills? If not, are you setting up in locations that will provide rich talent pools and be attractive to the people you would need to hire? Do your learning and development programs support and incentivize your people to develop their skills for the jobs of tomorrow?
  • Consider people's competencies and skills holistically. Adopt a talent model that evaluates the totality of the person's experience to determine how his or her skills will translate into business value. For example, is the value of someone who knows Python but doesn't understand how your business makes money equivalent to the value of someone who may not have the programming language skill set but understands your business?
  • Replace the career ladder with the climbing wall. Employees don't just move vertically up a ladder at an organization anymore. As you develop your people strategy, think about skills and competencies in terms of a climbing wall This is a much more apt metaphor in the digital age for understanding the way' that people grow their skills through the life cycle of their career. They move up but also over, acquiring new skills or experience. Make sure your rewards program is flexible enough to accommodate these kinds of moves.

CASE STUDY – Driving Workforce Transformation at a Leading Manufacturer

Situation

This heavy equipment manufacturer was seeking to achieve its next level of growth by driving technological innovation through its people. The company's strong culture and commitment to employees had earned it a long-term retention rate. However, the low turnover, paired with an imminent retirement cliff, was making it difficult to keep pace with technological innovation in their industry. Facing a fierce competition for talent, particularly in the areas of data science, Al, and machine learning, the organization knew it needed to approach its workforce strategy differently.

Challenge

Business leaders knew that to drive digital transformation, they would need to transform the organization's HR function from being process-oriented into a partner that could help collaborate on strategic business initiatives, such as:

  • Designing the workforce of the future.
  • Planning a strategy to identify the right people.
  • Implementing a rewards and recognition program that would attract and retain key talent, particularly for critical tech roles.

Solution

Aon started by assessing the HR function, including interviews with key stakeholders, to illustrate the gap between what HR was delivering and what the business needed from the HR function to grow.

To free up time being spent on transactional, back- office administrative tasks, Aon proposed adopting a shared services model that supports consultation on strategic workforce needs and assigns dedicated experts to more effectively handle recruitment, selection, total rewards, and performance.

Additionally, Aon is helping the organization develop a new model for its people analytics strategy to deliver more relevant reports on talent supply, diversity and inclusion. The reports up into HR dashboards that show with metrics how HR is plugging into the broader business strategy and is helping to drive growth for the firm.

Finally, Aon is partnering with the organization to advance its capabilities in employee measurement, which includes a new-hire experience survey, engagement survey and exit survey. The surveys leverage text analytics to mine open-ended comments.

Results

The company is just beginning to embark on its transformation journey and build a new HR operating model. With Aon’s help, it is on track to move away from outdated processes and approaches, toward greater collaboration and best practices. The company’s leaders and decision-makers now have a better understanding of the digital talent issues facing them, and how this impacts their ability to grow their business and anticipate needs for the future.

Identifying and Elevating the Right People

Modern assessment tools can substantially increase the odds of hiring the right candidate by applying rigor, fairness and validity in assessing target capabilities.

Success in this digital era will depend on organizations being able to attract, retain, and motivate the right people. hat starts with understanding who those people are. Resilience, adaptability, flexibility, and curiosity Will be the keys to building a nimble workforce, and leading companies are focusing on those traits in how they assess talent. They look for people with a learning mindset focused on growth and positivity.

Many of these critical capabilities are viewed hard-to-capture "intangibles," forcing hiring managers to rely on gut feelings or intuition. However, modern assessment tools based on predictive analytics can substantially increase the odds of hiring the right candidate by applying rigor, fairness and validly in assessing target capabilities.

And this doesn't just apply to vetting external hires. It's important to think in terms of up-skilling and re-skilling current employees, not just hiring and firing. If you focus too much on recruitment rather than talent development, you risk losing out on the wealth of organizational knowledge and talents of your existing employees

Understanding the strengths of your workforce and displaying empathy for your employees shows your values as an organization and creates a positive company culture. It Isn't just about the data, and it isn't just about the math. It's about the soul of your company.

Understanding the strengths of your workforce and displaying empathy for your employees shows your values as an organization and creates a positive company culture.

In Action

Elite business results depend on elite talent — but we know identifying and hiring top talent can be difficult, especially in high-demand positions or industries and in a strong economy. And While some organizations like to celebrate low turnover rates, that's not necessarily an indicator that you have the right people in the right positions. It is important to design and assessment process that keeps your organization on the right track.

  • Determine the capabilities you need to screen for and then develop a process that best measures them. The right assessments offer rigor and objectivity in analyzing where applicants stand on these non-technical traits that enhance the likelihood of success.
  • Ensure that all elements of your process are mobile-optimized, engaging, and psychometrically sound. You need high quality data so you can make sound decisions. The reports that come out have to be insightful, easy to understand, and usable.
  • Harness the data you gather to deliver a meaningful experience to your workers. Deliver a positive experience that adds value for candidates and employees, as well as your company overall.
  • Connect assessments back to how employees create value in the new economy. understanding how people create value tells you what you need to assess for and what qualities they need to create even more value. Measuring them in a way that yields actionable data can then follow the employee through their full employee life cycle.
  • Revisit measures, metrics, and development plans to ensure you're inspiring the right behaviors and rewarding the right outcomes. Creating and defining a high-performance environment are key.
  • Share data in every step of an employee's life cycle to continually help them develop and refine their skills over time. Assessment should be an ongoing activity. It's not good enough to just assess upfront.
  • Leverage predictive analytics to identify an employee's likely next move. You may even know this before they do.

CASE STUDY – How a Global Financial Services Firm Leveraged Assessments to Build an Agile Workforce

Situation

Financial services consumers have high expectations for products that can meet their needs in real time. Yet this global financial firm needed additional agility in its workforce to be able to bring new products and services to market swiftly. To remain competitive, this global leader was looking to transition to a more agile, skilled, and responsive workforce built for today's fast- paced financial environment and demanding consumer.

Challenge

With a traditional project management culture that's typical in the financial services industry, this firm struggled with the uncomfortable prospect of a more distributed decision-making process — one that would help them become more nimble and reduce time to bring new products to the market. unfortunately, its workforce was steeped In linear, waterfall product development, hindering its ability to act swiftly and deliver consumer value.

Despite this well-entrenched culture, the firm resolved to move toward new ways of working. It sought to build an environment where managers could make more impactful decisions and bring agility to ts workplace and product pipeline through employee development. To achieve these breakthroughs, leadership sought a partner that would help the organization assess, coach, and transition Its workforce into more agile capabilities and roles

Solution

To gain insight into the firm's current workforce, Aon partnered with the organization to create a Development Center to find current employees Who already possess the skills and qualities needed for agile roles. Composed of multiple layers, the Development Center assesses for behavioral competencies, and agile knowledge. After completing the assessment, participants receive a custom development report showing their strengths and weaknesses, as well as follow-up courses to help develop their skill sets The insights garnered through the assessments provide managers the knowledge they need to have personalized coaching and ongoing developmental conversations with employees

The Aon team also added strategic value by rolling the Development Center data into a macro-level dashboard. This intuitive dashboard allows the firm to easily see the density and prevalence of talent across their organization. With this knowledge, decision-makers can now pinpoint their most acute development needs by employee group and quickly arrange the exact training and coaching to accelerate capabilities development for maximum impact. These unique data views can also be leveraged to target a group of employees as change agents, an efficient and cost-effective tactic.

Results

Hundreds of employees have gone through the firm's new assessment process, with outstanding initial results. The firm is using a methodical and phased approach that will ultimately scale to assess 8,000 employees. Some unique understandings have already been revealed. For example, the firm discovered specific strengths and development needs based on geography, employee tenure, business unit, and functional alignment of employees.

The initial impact of these assessments, the resulting data insights, and development coaching show that the firm has a clear-cut path to execute its overall talent strategy, which includes a much more agile, nimbler workforce that can grow and thrive in the rapidly changing financial services marketplace.

A New Way to Measure and Reward Performance

The fusion of rewards, people analytics, and performance drivers should be on the mind of every HR leader today.

Rewards programs are where your human capital strategy should connect directly to your business performance. In other words, can you tie the ROI of your total rewards program directly to the business outcomes you are looking to drive? How often do you measure this?

The fusion of rewards, people analytics and performance drivers should be on the mind of every HR leader today. There are ways to predict the employees who are going to have the biggest impact on business performance, and can know in advance what types of rewards are going to drive the performance your business requires. In other words, now is the time to adopt a more rigorous, data-driven approach to optimize and align your rewards program to business objectives, market data and your workforce's needs.

The companies that succeed in this arena will be those that develop sophisticated performance-based compensation models that strategically reward the workers who contribute the most toward the organization's growth. Start by identifying who the innovators are within your organization and assess what skill sets and behaviors those employees exhibit on a regular basis. Next, determine whether your current rewards program is incentivizing the behaviors you are looking to drive by analyzing outcomes against to objectives. What kinds of rewards are going to drive the performance you need? Asking your innovators and superstar performers is one place to start.

Overall, smart employers will develop an approach that relies on both data and empathy to maximize employee satisfaction and employer ROI_ If you can start to predict the behaviors that drive performance, you can ensure you have the right people in those crucial roles and align your rewards program accordingly. It's a win-win for both the employer and employee.

Smart employers will develop an approach that relies on both data and empathy to maximize employee satisfaction and employer ROI.

In Action

Maximizing non-financial differentiators is key to an innovative rewards program. Develop creative rewards packages and articulate your real value proposition to employees to attract great talent and incentivize people to focus on delivering on key business outcomes.

  • Talk to your people about rewards in a holistic fashion. Total rewards includes everything an employee gets from their employer that they find rewarding. Knowing what is most important to employees should influence how you talk to them about total rewards. Some employees may value their workplace environment or level of work-life balance. Others may favor developmental benefits like hands-on career coaching and tailored growth opportunities like out-of- country assignments.
  • Take the spotlight off money. Put the focus on giving employees something else that gets them out of bed each morning to do their job. What truly motivates them? What value do they get from their work? Tapping into what makes their work meaningful allows you to create rewards that speak to their values. Being able to offer "cool work" has more sway than dollars, particularly for technical talent.
  • Create a rewards framework that enables you to compete for top technical talent. Benchmark innovative compensation and benefits practices for top tech firms. Identify competitive gaps and propose new reward program designs to be competitive without damaging internal equity.
  • Customize your rewards programs. The days of lust handing employees a gift card in an envelope are over. Companies are moving toward a much more flexible sense of the term “recognition" that will involve creating experiences and redesigning performance- management and talent programs so they're easier to follow and stick to over time. If you don't know what your employees value, ask them through feedback mechanisms such as focus groups or frequent employee engagement surveys. Analytics-driven rewards programs will allow you to better meet the needs of specific employee personas — and even individual workers.

CASE STUDY – Revolutionizing Assessment at a Fortune 500 Manufacturing Company

Situation

A major global manufacturing company was at a crossroads. The company was facing intense pressure to rework its basic business processes, including recruiting and hiring. The goal: Hire top-notch talent to help the organization realize its new vision, which was a high performing, customer-centric, innovative one. After many years of hiring and promoting candidates based on tenure and perceptions, it was time to develop an objective assessment process that could drive intelligent decision making on its tens of thousands of potential hires around the world every year.

Challenge

After many years without a formal assessment model, the company needed to completely rethink and realign its hiring and promotion processes to fit a new vision for innovation. The previous methods were overly subjective and not tied to the organization's high- performance, customer-centric, innovative mission. Talent leaders were looking for a global assessment solution that was objective and evidence-based to ensure the organization could hire the absolute best talent available.

Solution

The company compared multiple assessment partners through a competitive RFP process. Ultimately, leaders chose Aon because of Aon's deep experience in the manufacturing industry, as well as its ability to deliver an assessment solution on a global scale. The company knew this project would be very large, and it needed a reliable, tested solution that would work across multiple time zones and in multiple languages.

Aon rolled out an assessment solution that is completely customized to the company's needs, including a culture-fit assessment that measures every candidate's alignment to the company's innovation-first culture. The Aon team developed more than 20 assessments. The tests are translated into more than 22 for use around the world.

Because of Aon's Computerized Adaptive Testing technology, no two test experiences are the same, making it very difficult for any candidate to replicate or share test questions with others. The added security means tests can be offered without a proctor and taken by candidates on mobile devices.

Due to the large-scale size of the project and because it involved a wholesale change in the talent recruitment strategy, Aon worked with the organization to roll out the new assessments, in phases. It was especially important to communicate to employees and managers why changes were being implemented and what the results that a standardized assessment system would bring for the company and its people in the long term.

Results

To understand the new assessment system's impact on performance, Aon tested groups of existing employees. Those employees who scored highly on the assessment were twice as likely to be high-performers on the job. That close connection between the assessment and eventual performance inspired confidence from the company's talent team.

After rolling out the assessment system globally, the company tests between 50,000 and 60,000 candidates each year. Prioritizing evidence-based assessment is changing the company's culture and leading teams toward a vision of innovation and excellence.

Conclusion

Building a responsive, agile 21st-century workforce is just not about the technical skills of the people you hire in the short term. It's about creating a strong, unique workplace culture that puts people at its center.

The companies that thrive during the Fourth Industrial Revolution will be those that leverage predictive analytics to maximize the potential of both the people who want to work with them and the people who already do.

The importance of empathy and understanding in the digital age can't be overstated. Building a responsive, agile 21st-century workforce IS just not about the technical skills of the people you hire in the short term. It's about creating a strong, unique workplace culture that puts people at its center.

Candidate-centric recruitment and assessment processes, up-skilling and re-skilling rather than just hiring and firing, and creating rewards and recognition programs based on shared value Will all play critical roles in this transformation.

The challenges companies face in making this transition are urgent, but those that embrace them today will be better positioned to create a workforce that can thrive in the digital age. They will truly be powered by their people.

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