Digitalisation prioritised in business strategies, but lack of leadership is hindering progress
Despite its importance in staying competitive and accelerating growth, business leaders are not seen as driving their company’s digital transformation, according to Mercer’s latest survey report, ‘Still transforming or already performing?.
While 61% of UK HR leaders confirm that digitalisation is embedded in their company’s corporate strategy, only 3 out of 5 rate leadership as the main driver of transformation. In addition to this disconnect, a lack of shared understanding of what digital transformation involves or should look like is blocking progress, and ultimately businesses’ chance to reap any commercial and competitive benefits.
HR Digital Transformation Index Europe
Mercer’s report asked 600 HR leaders across multiple industries in seven European markets*, including 121 in the UK, about their company’s digital transformation progress and their role in it. Despite being in an optimal position to help drive business-wide digital change, with the most touchpoints with employees, only 3% of HR leaders see it as their responsibility.
“Most companies realise digitalisation is key to staying competitive and accelerating growth, but the lack of understanding and agreement as to what it means, who owns it and how it should be done is slowing progress,” said Armin von Rohrscheidt, Partner, Mercer Promerit.
“To be successful, companies need a clear picture of what digital transformation means for all parts of the business. With transformation embedded in the business strategy clear actions are needed, then leaders can act as role models which will better drive engagement and progress.”
HR also lags when it comes to digitalising their own activities: Only 47% of respondents have a documented Human Resource Information Technology (HRIT) strategy and 44% have started implementation. UK HR functions are also slow at implementing cloud-based HRIT systems, with over half (54%) still using on-premise solutions.
“Cloud-based systems are an essential tool in reducing administrative tasks for HR functions and so a great first step in a company’s digitalisation journey. However, just implementing technology has no value in itself; the output is what can release benefits and enable change. Armed with workforce data insights HR functions can elevate their own role in the transformation process and enable organisations to effectively anticipate and respond to disruption,” said Davide Pediglieri, UK HR Transformation Leader, Mercer.
HR Digital Transformation Index
As part of its research, Mercer created the HR Digital Transformation Index to assess companies’ progress on digital transformation in HR departments and throughout the company. The Index is comprised of nine key levers: enterprise-wide digital strategy and digital maturity, human digitalisation (digital culture, digital workforce, agile leadership, new work and collaboration), and HR digitalisation (digital HR services, digital HR organisation, and digital HR processes). The index ranks markets on a scale of 1-5, where 5 is the most mature. According to the research, across the markets covered, the UK is ranked as the most mature country for HR digital transformation, followed by Portugal (see Figure 1).
“The findings of the index show that companies with higher scores are more innovative, more agile, and more attractive to employees.” said Mr Rohrscheidt.
“Being at the forefront of digital transformation brings companies positive effects on many levels. For example, higher levels of digitalisation translate into less administration. For HR leadership, that means more time for core business and strategy consulting.”