Why HR and HCM Are Key to Digital Transformations [HR Departments and Human Capital Management]

Written By: Eric Kimberling
Date: August 9, 2023

When considering the key contributors to a successful digital transformation, one typically reflects on project managers, executive stakeholders, outside consultants, and system integrators. However, in reality, HR plays a pivotal role as an unsung hero in achieving a triumphant digital transformation.

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It is natural to consider various stakeholders who contribute to the success of your project. Many of us immediately think about project managers, executive sponsors, the executive steering committee, system integrators, consultants, and all internal individuals who can provide project support. However, we often underestimate the significance of Human Resources (HR) and their role within a prosperous digital transformation.

In this discussion, I will elaborate on the reasons underlying the importance of HR in this context. Even if you are not a part of the HR department, but rather an executive sponsor or a project team member, I hope this will offer you insights into fostering better collaboration and partnership with your HR department to enhance the success of your transformation efforts.

Project Resourcing

One way through which HR can significantly contribute to the success of a digital transformation is by addressing a common challenge faced by many such initiatives: insufficient resources allocated to support the project. The key lies in involving the organization's top-performing individuals, the A-players, who possess both a deep understanding of the business and a clear vision of its potential improvements. These individuals are invaluable additions to the digital transformation core team, alongside subject matter experts who provide support.

However, attracting and retaining these individuals can be challenging due to their high demand in other areas of the business. This is where the HR department's role becomes crucial. HR can outline a strategy to engage, backfill, and assemble the right team to bolster the overall project. Collaborating closely with the HR department is vital in order to achieve this vision.

Whether you are seeking resources from within the organization or externally to support your project, it is essential to consider how you can effectively partner with HR to accomplish these objectives.

Future Skills and Competencies

If you have engaged with my videos or read my blogs, you are aware of my strong advocacy for organizational change management. Change management is frequently disregarded and can often lead to implementation failures. One specific aspect where change management holds paramount importance, and where HR can play a pivotal role, involves defining the future-state skills and competencies within your organization.

In essence, our efforts encompass more than just the deployment of technologies. We are introducing a novel operational model, a fresh organizational structure, and a new approach to conducting business. Accomplishing this necessitates not only the adoption of new technologies but also individuals possessing the appropriate skill sets to utilize these technologies effectively. Moreover, they need to facilitate other business processes, embrace novel perspectives, support the emerging culture, and embrace the novel operational models.

HR should be actively engaged in shaping the vision for the future state in terms of organizational design, job skills, job roles, and responsibilities. A well-defined blueprint in these areas will considerably streamline the path of change management.

This aspect is closely tied to training and communication, which I will revisit when discussing how HR can facilitate change management comprehensively. Nonetheless, it transcends mere training and communication. It also encompasses equipping individuals with the required skills and competencies to align with the evolving business model. This might entail diverse forms of learning and development as well as fostering cultural advancements within the organization. By ensuring these facets, your project's triumph is bolstered, and the long-term success of your organization is secured.

Preventing Burnout

During the course of a digital transformation, it is often likened to a marathon rather than a sprint. Typically, these transformations unfold as long-term endeavors. Individuals find themselves juggling multiple responsibilities concurrently—supporting the digital transformation alongside other roles. This situation can lead to burnout. Without appropriate care, a well-devised strategy to rotate team members, and a system for compensating and recognizing these members, their optimal performance cannot be expected. The focus and dedication essential for a successful transformation would be lacking.

This is another domain where HR's strengths can be harnessed. Within the HR department, there are individuals who possess the training and specialization to ensure that employees remain motivated and that the risks of burnout are minimized or eradicated.

Considering aspects such as project staffing, maintaining high project morale, and sustaining a continual commitment to the project, your HR department stands as a facilitator in this regard. It can greatly contribute to these factors throughout the transformation journey.

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Identifying Change Impacts

Earlier, I discussed how HR can contribute to the development of new skills and competencies within the organization. In a similar vein, it's equally important to define the potential changes that the organization will undergo. This encompasses not only the acquisition of new skills and competencies, but also the emergence of fresh roles and responsibilities. Jobs will inevitably evolve, possibly involving automation of certain tasks that were previously carried out manually using spreadsheets. Additionally, new roles might be introduced to replace the processes now automated.

It is crucial to have a well-defined vision of what the job design will encompass in the future state. Moreover, it is imperative to articulate the specific impact on various parts of the organization, distinct workgroups, and teams. In this respect, HR plays an integral role, as it aids in shaping the vision of the future organizational structure. HR's strengths naturally align with organizational design, culture, and learning and development—crucial elements in achieving the goals of digital transformations.

Consequently, involving HR in your digital transformation journey serves to delineate the upcoming organizational model and the evolution of job roles. This, in turn, facilitates the development of a robust change management plan and strategy that effectively supports these impending changes.

Executing Change Strategies

One of the most promising sources of candidates for an organizational change team in my career has often been the HR department within the organization. Within the HR department, you'll commonly find individuals who focus on the human aspects of their roles. Ideally, this alignment stems from the core responsibilities of HR professionals. This human-centric perspective is of great value when directing efforts toward organizational change management. Even if these HR professionals haven't previously engaged in formal change management or executed a comprehensive digital transformation, their skill sets can readily transition to effectively support the people-oriented facets of a successful digital transformation.

Their contribution involves not only the execution of change strategies but also the formulation of these strategies, which heavily rely on the change impacts and adjustments in skills and competencies discussed earlier. Involvement of the HR department becomes crucial. It serves as a potent means to capitalize on the internal competencies and strengths that HR personnel can offer.

While seeking support for change management, it is undoubtedly important to consider external consultants who specialize in this field, equipped with methodologies, toolsets, and frameworks tailored for change management. However, a holistic approach necessitates collaboration between these external consultants and internal HR teams. This partnership efficiently drives the execution of change strategies.

Enabling Culture

If you aspire to achieve enduring success in digital transformation while also mitigating potential obstacles that often arise during such initiatives, it is imperative to prioritize culture. Examine how your organizational culture might impede the attainment of your goals and objectives, and consider strategies to transform it in ways that facilitate the intended transformation. HR can play a pivotal role in this endeavor. HR is accustomed to gauging employee engagement, morale, and other factors that contribute to shaping the organizational culture. Consequently, conducting a structured evaluation of the current culture, envisioning the desired future cultural state within the context of the transformation, and devising approaches to navigate cultural challenges are pivotal steps.

Incorporating HR professionals into this process is a natural fit. Their involvement can span defining the future cultural landscape, articulating the existing culture and its strengths and weaknesses, and outlining the path toward the desired cultural state.

On a related note, it's worth highlighting that culture often goes overlooked—much like the broader concept of change management—within the context of organizational change. Regrettably, the cultural facet of organizational change management is frequently disregarded and sometimes not even acknowledged as a consideration in the context of digital transformation initiatives. However, it is crucial to address culture comprehensively to achieve true success. Thus, harnessing the expertise of your HR department to address the cultural dimension is highly advisable, as it aligns well with the overarching objectives.

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Inclusion and Diversity

Frequently, considerations surrounding inclusion and diversity within HR predominantly revolve around aspects such as gender, race, and socioeconomic status. The objective is to foster an environment of inclusivity for individuals of various backgrounds—an aspect of paramount significance. This pertinence extends to the sphere of digital transformation as well. Beyond focusing solely on gender, race, or similar factors, the overarching question becomes: How can we expand the circle of participation in our transformation efforts? The aim is to shift from changes happening to individuals to them actively becoming contributors to the change process.

In this context, HR can effectively leverage the ongoing drive towards diversity and inclusion. The digital transformation can serve as a platform to further advance these principles. Should diversity and inclusion be among your HR department's or your organization's foremost concerns, incorporating them into the overarching digital transformation strategy offers a dual benefit. This strategic alignment enables the convergence of diversity and inclusion objectives with the objectives of the digital transformation, thus creating a mutually reinforcing relationship.

I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices.

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Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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