A third of CHROs do not believe their company’s approach to strategy enables them to respond to external market shifts, according to new global research from Workday. The study “Organizational Agility at Scale: The Key to Driving Digital Growth,” conducted by Longitude, surveyed almost 1,000 business leaders across Asia, Europe, and North America. In addition, and in keeping with their people-centric mission, CHROs are the most likely of all senior leaders to believe that success in the marketplace is directly related to keeping employees engaged.
The research focused on how organizations can translate their digital transformation investments into the right business outcomes. The findings highlight a strong correlation between digital revenue growth and organizational agility—a set of behaviors that help leading businesses drive digital revenue growth and shift digital transformation from a one-time event to an ongoing, new way of operating.
In the survey, Workday identified a group of leading organizations whose characteristics indicate they have embraced agility as part of their day-to-day operations in order to successfully transform their business for digital revenue growth. This group, the “leaders,” make up 15% of the global survey sample.
By contrast, those that show significantly slower progress or are yet to begin their transformation to a more agile way of operating, the “laggards,” make up just over half of all respondents. The remainder—those that have yet to embrace organization-wide agility, but are on the path to doing so—”aspirers”—make up the final 30% of the sample.
In the study, we found that there are five best practices that set the leaders apart:
Continuous planning. They plan in a continuous, real-time manner, which gives them the speed, agility, and dynamism they need to innovate successfully.
Fluid structures and processes. Leading organizations build fluid organizational structures and processes. Nearly half claim the ability to reallocate people quickly to where their skills are needed.
Building the future workforce. Leaders are much more likely than laggards to have plans to upskill the majority of their workforce and push specific initiatives to increase employee engagement.
Informed and empowered decision making. At 80% of leader organizations, all employees have access to timely and relevant data and are empowered to make appropriate decisions.
Measurement and guidance. Leaders have made significant progress in developing tools and metrics to measure the performance of digitally driven innovations. This is giving them a “fail fast” mentality: 94% say they are able to steer away quickly from unsuccessful projects.
Let’s break down where the CHRO fits into organizational agility against each of these five attributes.
Dynamic planning helps organizations react quickly to changing market conditions and potential threats to the business, according to our research. Businesses can’t wait 12 months to discover if a product or service is profitable or achieving market share. The parts of the business that rely on revenue through digital efforts, in particular, require rapid and continuous planning cycles.
Overall, we found that the main obstacles to real-time planning are inflexible legacy technologies (which leaders often cited as their biggest roadblock) and bureaucratic organizational culture (most often cited by the laggards). The CHROs surveyed agreed that a bureaucratic culture is the biggest obstacle to moving to a more comprehensive, real-time planning system.
Interestingly, when compared to other functional leaders, CIOs tend to agree with the CHRO outlook on bureaucracy, whereas CEOs and CFOs say that it’s unskilled employees, not red tape, that’s keeping the company from moving to real-time business planning.
A change in business plans often forces changes to organizational structures or business processes, or even the creation of completely new ones. Businesses demonstrating organizational agility are able to quickly realign their two most important assets—people and financial resources—to meet organizational requirements.
Our research found that leaders build flexible structures and processes to adapt to changing business plans, including having the systems in place to understand skills gaps in their business, while laggards do not. Once again, inflexible technology and a culture of bureaucracy also prevent businesses from building agile structures and processes.
Most of the functional leaders surveyed, including the CHRO, name inflexible technology as the main barrier to updating business processes. The CIO is the only C-suite position to point to a bureaucratic culture as the biggest barrier.
When it comes to the proportion of C-suite leaders who agree that their organization’s back, middle, and front office processes are “completely integrated,” CHROs have the brightest outlook, with 71% of them (followed by 70% of CEOs) saying these processes are completely integrated.
Many organizations have discovered that vast proportions of their recent revenue are directly linked to skill areas that didn’t exist even five years ago. Skills are constantly changing, with new ones appearing while others become obsolete. Businesses have to help their workforces develop new skills to support and deliver new digital revenue streams.
In our study, leaders were four times more likely than laggards to have plans to upskill at least 75% of their workforce in order to meet talent requirements in the future world of work. More than three quarters of respondents agree that, to retain talent, their organization needs a more fluid approach to growing and deploying their people.
Functional leaders expect different skills to increasingly become a priority to their role over the next five years, with CHROs naming “competence in using new tools and technologies” as the most valuable skill in their function over the next five years, and CEOs naming “advanced analytics and data visualization.” Interestingly, CFOs list “cognitive ability to contend with constant change,” which we found especially forward thinking.
Functional leaders are largely in agreement that their ability to succeed in the marketplace is closely tied to keeping employees engaged. CHROs are significantly more likely to be driving this agenda (88% in agreement). CIOs are the second most in agreement with this notion, at 85%.
Ultimately it’s the workforce that will drive successful execution of business plans—including digital, the focus of this study. Workers need to be empowered with the right information at the right time to make the best possible decisions for the business.
Data is absolutely key in empowering decision making closer to the customer: Laggards say that out-of-date information and siloed teams are major barriers to the democratization of decision making. Among leaders, 80% say all employees have access to timely and relevant data without gatekeepers blocking access to such information, compared to just 24% of laggards.
Looking only at respondents from the C-suite, nearly two-thirds (64%) of CEOs believe that employees have full access to the data they need to do their jobs. The broader C-suite is not so certain—fewer than half of CIOs/COOs (42%), CHROs (47%), and CFOs (47%) agree with this.
The C-suite is divided over how effective data accessibility is at facilitating decisions that are better for the business. When it comes to effectiveness of the free flow of information and data in facilitating this decision making, 71% of CHROs think that this free flow of information is “effective/extremely effective.” This is second only to perennially sunny CEOs, 84% of whom agree with this sentiment.
Agility and speed are dependent on robust, accurate, and timely measurement and control. Businesses need to know quickly whether a new product or service is performing well—in which case it could rapidly need additional financial and talent investment—or performing badly, signaling that financing and talent may need to be reduced or reallocated, and the product or service changed or terminated. New metrics may also be required to supplement traditional financial metrics to truly understand the impact of digital strategies on the organization.
Our study shows that businesses recognize they don’t have the right measurement frameworks in place for the new digital world of work. In fact, just 25% of all respondents say their organization has made significant progress establishing performance metrics to measure digital revenue growth performance. This is crucial, because the research found that fast action on failing investments (which could mean pulling the plug on the project or giving additional resources to make it a success) reaps higher returns.
CHROs overall align with their peers in the C-suite when it comes to their belief in the effectiveness (or lack thereof) of current key performance indicators. One area where they are most positive—more positive than the CEO, for once—is the belief that their organization has a culture in which learning from failure is encouraged: 80% of CHROs believe this to be the case, vs. 78% of CEOs.
The majority of organizations with anticipated digital revenue growth above 50% in the coming three years (77% of respondents) agree that their organization is fast to act on failing investment in new technologies.
Overall, and rightfully so, CHROs have faith in the power of motivated, engaged, and informed workers to drive the business forward. As Workday’s Chief People Officer, Ashley Goldsmith, is fond of saying, business is personal.
As she explains in a blog post: “People are a company’s most valuable resource, and in this tight talent market, there is even more responsibility on organizations to create a culture where workers can have meaningful experiences and bring their best selves to work. Business leaders everywhere, particularly CHROs, are recognizing why this is so important: It’s better for all employees and it’s better for business.”
What’s certain is businesses today must wisely harness their people to deliver on digital transformation and the growth opportunities it brings—and the entire C-suite needs to be moving in the same direction to lead this effort. The evidence from the research is clear: Those leading the race to continuous digital growth are those that have successfully embraced most—if not all—of the capabilities of organizational agility. For those playing catch up, there is still time, but the clock is ticking.
Critically, the move to agility is a continuous one—as organizations shift from siloed structures, bureaucratic processes, and traditional ways of working to embrace all five capabilities of organizational agility. Those who plan continuously, build adaptable and fluid organizations, upskill, inform and empower their workforces, and put in place the right measurement and guidance will be best positioned to harness continuous innovation, grow their digital revenue, and future-proof their business.
Interested in learning more? Check out other articles based on this research, with more coming throughout the year:
Get an overview of “Organizational Agility at Scale: The Key to Driving Digital Growth” findings or download the full report.