TMT business leaders find it difficult to plot the contours of their future workforce. As noted in WTW’s TMT Futures Report 2021, business models and strategies get complicated at a time of digital transformation, rising geopolitical tensions, COVID-19, climate change and other challenges.
The COVID-19 pandemic has clearly accelerated certain nascent trends, notably digitalization and hybrid working arrangements, but have digital transformation and digital-first company cultures and talent needs kept pace? Recent research focusing on related workforce issues indicates:
These insights were affirmed in discussions with a variety of technology, media, and telecommunications leaders conducted in cooperation with Mack Institute’s CIP team at the Wharton School, University of Pennsylvania.
What defines a digitally mature, or digital-first, culture?
Our work with the Mack Institute confirmed our in-house research that in a digital-first culture there is full organizational alignment that consistently evolves around an integrated digital strategy. Key features include enlightened leadership and human capital management as well as new, agile business models and re-engineered internal processes.
We recognise there is no template for what constitutes a digital-first culture that will work for every company, or even narrow industry sector, among TMT and other companies. However, WTW and the Mack Institute jointly found a universal success factor is a clear leadership vision harnessed to highly motivated and skilled employees.
Source: WTW
Digital transformation must have a digital-first culture as its outcome, rather than a disconnected collection of technology investments, organizational changes, and a grab for talent. The moving parts must be aligned to achieve optimal business results and constantly fine-tuned to tackle new competitors, changing customer needs, the shifting skill sets and expectations of a restless workforce.
“Digital transformation usually requires redesign of your operating model, structures, processes, roles, and work,” notes Hamish Deery, WTW’s talent business line leader, Asia Pacific. “Change on this scale depends on your ability to align culture, capabilities and rewards.”
The leadership challenge of the ‘Hybrid World’ is one of mindset, LESS about competencies or skills
“The mindset and behaviors that shape and reflect life in an organization, made tangible through programs, policies, and practices, and experienced through personal connection and contribution.”
Digital technology has transformed consumer habits.
Mobile devices, apps, machine learning, automation and much more allow customers to get what they want almost exactly at the moment they need it.
What’s more, these new digital technologies have caused a shift in customer expectations, resulting in a new kind of modern buyer. Today's consumers are constantly connected, app-native, and aware of what they can do with technology.
Because of the opportunities that rise from using modern technology, customers often rate organizations on their digital customer experience first.
The quality of EX is important for recruitment and retention but also for customer satisfaction. As we have mentioned earlier in this report, in its 2020 study IBM notes the human element is the key to success. Long before the pandemic, IBM permitted many employees to work remotely. However, in 2017, IBM announced plans to have many employees return to central offices with the intent to build agility and encourage innovation.
However, the Mack Institute team notes many employees balked at a return to co-location. In some cases, employees had come to feel remote or hybrid working was an important lifestyle option that contributed to work-life balance or permitted them to work from locations without an IBM office. Without the ability to work from home, some employees left the company, sometimes cynically describing co-location as an excuse for downsizing.
The pandemic, however, prompted IBM to embrace a long-term hybrid home/office workplace solution. In fact, the company now offers technical solutions such as the IBM TRIRIGA application suite to help companies establish more productive and flexible workplaces in keeping with a hybrid model.
IBM’s IBV concludes remote working arrangements will be a, “permanent fixture as part of a hybrid workforce that blends in-person employees with virtual colleagues.” IBM said 72% of respondents in its Remote EX Index preferred a hybrid model that allows workers to split their work between home and office.
In an 2021 Bloomberg interview, IBM CEO Arvind Krishna acknowledged he’s worried about the “career trajectory” of fully remote employees, in particular around people management and building a team culture. This is a widely held concern based on our research with the Mack Institute.
Many organizations are reviewing their organizational structures and implement a stronger focus on skills, for example, overlaying their job architecture with a skills layer. This focus on skills will help employees understand how they can grow in an organization and result in a more impactful career experience. It will also help organizations to deploy the skills they have in the organization to the areas where they are most needed, and to think about skill adjacencies and potential reskill/upskill pathways. You can find further thoughts on this in Michiel Klompen’s insights at WTW’s 2021 HR Talks.
Zapier Inc. has taken a different approach. The web-based task automation company was founded as a ‘distributed’ or fully remote team. Its three founders started the California-based company as a side project, meeting in coffee shops, for example, when they chose to work person-to-person. When the company took off in 2012, they hired staff at a variety of remote locations, and all are working from their homes or other remote locations.
Co-founder Wade Foster has written that, “Running a remote business isn’t really all that different from running a co-located business.” He points to three advantages:
The fully remote Zapier model has proved to be effective, according to the Mack team. New hires enter the firm knowing what to expect, and the digitally savvy founders use technology to keep them informed and motivated.
Corporate culture is a concern for Zapier, too. “With a distributed team, you know going in that culture will be hard to build,” Wade Foster wrote in a 2020 blog. “When you are team building online, you don't delude yourself thinking that culture will magically happen. You go in eyes wide open. If a strong culture doesn't develop it's not because you didn't try, it's usually due to another reason.”
Foster lists seven team-building principles that work for Zapier, including digital tools, a strong element of fun, and even the occasional in-person company retreat. Companies without its distinctive history and business model will more likely default to a hybrid workplace.
Many employees have found that they like commuting less while gaining the freedom and flexibility of working from home or a coffee shop. Gallup, an American polling organization, in a 2021 survey found that 91% of remote workers hope that they can continue to work remotely as the pandemic subsides. Gallup also found that three in 10 employees working remotely said they are “extremely likely to seek another job if remote working options are eliminated.
Companies are warming up to the idea of remote working, too. Paying for less office space is plus, but some companies are finding other advantages, such as access to a larger talent pool. Employee satisfaction is also taken seriously, the Mack team notes.
Our Flexible Work and Rewards Survey 2021 found in three years’ time, European companies expect one-third (37% in the UK) of their employees will be working from home. Three years ago, just 5% were working from home. In the U.S., where 59% of employees were telecommuting at the time of our survey, and while employers expect that number to go down over the next three years, as companies continue to evaluate the cost benefits of alternative work arrangements, many indicate that the workplace changes as a result of the pandemic are here to stay.
The survey also found employees are rethinking their approach to total rewards in light of the new work arrangements. Nearly half of U.S. respondents, for example, might apply a hybrid reward model that might include paying employees based on their location. The real savings, however, are expected in other areas, primarily real estate expenses. In the U.S., 57% of the executives surveyed expect to use less office space over the next three years.
“Striking a balance of in-office and remote working will also require serious thought. Too little time in the office might disrupt the human relationships that are key to innovation. Too much time in a cubicle won’t work for employees,” says Fredrik Motzfeldt, Regional Industry Leader, Great Britain, TMT.
Although remote working was embraced more quickly and with fewer disruptions than many executives expected, formal personnel policies have not kept up. Only 19% of U.S. respondents in our study think current job architecture supports developing a flexible and agile workforce. A similar percentage says current job architecture and job levelling processes do not support these objectives at all.
Organizations must be focused on how their wellbeing and total reward strategies support the new digital paradigm, including remote working and hybrid working. Engagement, wellbeing, trust, productivity, accessibility, and safety are all considerations in a hybrid working strategy.
The pandemic has negatively impacted employee social and emotional wellbeing
Source: 2020 Global Benefits Attitudes Survey
Digitalization and remote working arrangements have worked remarkably well. But now the initial shock of the COVID-19 pandemic has waned, both companies and their employees are becoming more focused on the long-term implications of markedly new business models and strategies.
Finally, facing global talent shortages, organizations also risk productivity losses if they ignore the imperative to reskill. According to the WEF 2018 Future of Jobs report, 75 million jobs are expected to be displaced by 2022. Concurrently, due to advances in technology and new ways of working, as many as 133 million new roles could be created. However, preparing and reskilling the workforce for these new opportunities will require the CPO’s substantial attention; WEF estimates on average, 42% of the skills required to perform a job will shift between 2018 and 2022.
Companies realize they must continuously invest in the latest technologies while keeping an eye open for disruptive competitors and the whims of a fickle client base. From a workforce perspective, TMT companies in particular scramble to the best possible talent, digital and otherwise, while retaining their best employees and equipping them with the skills needed to thrive in a new, often virtual, work environment.
The war for talent that has long engulfed many TMT companies has been worsened by what McKinsey calls a ‘labour mismatch’ in the U.S., with rising private sector wages despite a persistent talent shortage.
At the same time, the Mack Institute research reminds us employee needs and expectations have changed significantly over the last few years. Many workers like the freedom and flexibility of working from home and resist returning to an office. Others take advantage of digital talent shortages to find new jobs. Many employees in some areas – less technical warehousing or call-in centre jobs, for example – have different needs entirely.
Amazon plans to invest $1.2 billion by 2025 in reskilling programs for 300,000 employees. It expects to offer training in high-demand areas such as medicine, cloud computing and machine learning. The company anticipates several advantages in doing so:
Creating career opportunities for non-technical employees who aspire to technical roles, such as entry-level software development
Providing free cloud computing skills training through Amazon Web Services (AWS) from basic cloud computing to advanced cloud architecture
Building the talent pool among Amazon developers for broader application of machine learning across the company, including retail pages, products, stores, and fulfilment technologies.
An AWS Global Digital Skills Study across 12 countries found 85% of workers feel they need more technical knowledge to do their post-pandemic jobs, and similar percentages found new skills have added to their efficiency and job satisfaction. Nearly 90% of employers in the study said digital skills training helped them achieve digital transformation goals more quickly while improving worker retention.
Inside WTW’s Work and Rewards business, the Digital Strategy and Innovation team is seeing a rapid ‘shift to skills’ happening globally, with an increasing number of clients interested in various forms of skills intelligence, leveraging both external and internal data.
Indeed, the topic of skills is fast becoming a strategic common denominator across the HR function, whether it be rewards professionals considering pay premiums for ‘hot’ skills; learning and development leaders seeking to optimize training programs; or strategic workforce planners looking to identify and close skill gaps.
From an external perspective, organizations are increasingly eager to mine publicly available job description data to better understand current prevalent skills for jobs, or to get a market view on newly emerging skills. For others, rich data sources already exist internally – often in the form of role profiles and job descriptions stored on their HRIS (human resources information system).
The challenge in this scenario is how to handle and clean the sheer volume of data. For those without the required data science skillsets in-house, the pursuit of a clean skills inventory will often rely on finding a partner capable of applying more advanced machine learning techniques to the trove of internal data. Usually, the intended outcome is to produce a dynamic list of employee skills and then mapping how these skills are related to evolving business needs.
Kelley Steven-Waiss, founder and CEO of Hitch Works – a cloud-based SaaS (Software as a Service) talent mobility platform, and a WTW digital ecosystem partner – has talked about the need to provide people, “with the insights about their current skills and those they need to develop across new jobs, gigs, and projects that not only fulfil their personal goals but also support business outcomes.”
Successfully linking skills intelligence, the EX, and business outcomes could potentially be the grand prize for organizations successfully achieving their ‘shift to skills’.
Writing in Harvard Business Review, chess grandmaster Garry Kasparov and behavioural scientist David De Cremer asks if humans and machines are really in competition with each other. The growth of AI has been widely envisioned as a “zero-sum game,” they wrote in the 2021 article, but to their thinking, it’s wrongheaded to think this way.
“AI-based machines are fast, more accurate and consistently rational, but they aren’t intuitive, emotional, or culturally sensitive,” according to the authors. “And it’s exactly these abilities that humans possess and which make us effective.”
Kasparov and De Cremer believe humans represent a different type of AI they call “authentic intelligence.” This form of intelligence allows humans to imagine, anticipate and judge changing situations, allowing focus on long-term concerns. They cite an example where Kasparov used AI to take care of calculations while he focused on strategy.
By way of example, The Mack Institute team identified ASAPP, Inc., a New York-based developer of AI-powered software, has transferred the Kasparov model to practical business applications, including to call centre operations.
In context, the Mack Institute team notes AI in the form of bots have long been used by call centres, which can impact customer service. In fairness, some companies have refined AI call-centre capabilities to improve the customer experience, with workers remaining vital to call centres when AI is unable to handle certain customer queries or complaints.
The ASAPP approach was described at length by Forbes in a 2020 article headlined, Meet the AI Designed to Help Humans, Not Replace Them. It gives the example of how AI can analyse a problem, offer suggested responses directly relevant to the customer concern, and enable to agent’s judgment to come into play for prompt problem resolution. Productivity improvements of more than 150% have been logged while improving the EX and reducing staff turnover.
IBM and other companies are also deploying AI and automation in HR. Diane Gherson, IBM Chief HR Officer, finds AI valuable in knowing and shaping skills, reskilling, preventing unwanted turnover, linking employees and candidates to career opportunities, and facilitation learning ‘on the go.’
IBM initially developed AI HR tools for internal use but has since commercialized them with tools for candidate assessment, career coaching and even an AI Skills Academy.
The company touts its use of AI to ensure talent pipelines remain diverse and inclusive, with women and diverse ethnic groups involved in the creation of algorithms. The goal is to remove bias from job descriptions, talent sourcing, screening, and interviewing.
At WTW we view work automation technologies, such as AI, robotic process automation, robotics and blockchain, as opportunities for delivering exponential improvements in business processes efficiency, customer service and experience, human productivity, and EX. The ‘secret sauce’ in aligning automation strategy with business success and resilience lies in redesigning job roles by deconstructing and reconstructing tasks within roles while setting specific goals for improvement.
Such goals may range from using automation to reduce errors or minimize variance, to delivering incremental productivity and/or exponential performance. While setting goals for each role under redesign, there will be tasks that are, for example, repetitive and well-defined, and therefore a perfect fit for fully automating. Other tasks may be redesigned with AI systems ‘augmenting’ human workers, for example, an AI system that supports a sales agent, or a predictive analytics dashboard that enables a risk offer to make a better assessment of risks and associated premium costs.
By redesigning jobs, companies can then easily identify skills gaps in their workforce, and thereby design cost-effective reskilling programs. Getting the balance right between ‘automation’ and ‘augmentation’ can pay handsome dividends to digitally transforming the workplace too. As the workforce moves to a hybrid work model, enabling technologies powered by AI systems can help remote workers manage workloads better, reduce stress, as well as make better career choices.
Our work with the Mack Institute identified a variety of approaches companies are taking to achieve a digital-first culture with a nimble, continuously reskilled workforce enabled by AI and other evolving technologies.
As the examples in this paper have shown, there is no one way to achieve a digital-first culture. The culture in any case must reflect leadership vision and behaviour as well as the particulars of a business setting, client base and even geography and other factors.
Although COVID-19 has served as a change accelerant, the pandemic is, to some degree, a distraction. Digital transformation was already underway, and it was ineluctable. Employers simply can’t return to factory setting for their post-pandemic workforce, nor should they. Now is the time for them to examine their businesses, root and branch, with particular focus on delivering the best possible EX to achieve customer satisfaction and business success.
Our current global business environment represents a rare, exciting opportunity to rethink how work gets done, how jobs have changed and will change, and the upskilling and reskilling pathways needed for a new workforce model to be successful.
