Digital transformation starts with the employee experience

What is digital transformation, and how should companies go about it? That’s a question many companies struggle with as they limp toward the future on aging and outdated  technology. In its “State of Digital Transformation” report last year, the research and advisory company Altimeter Group raised some big red flags that should alarm every executive:

  • Just 40 percent of companies have an executive-mandated steering committee to shepherd them through their transformation.
  • A mere half are investing in new digital talent to support their transition.
  • Only about a third have mapped out the customer journey to help them identify digital transformation strategies—despite the fact that changing customer behavior is the primary force driving their shift.

The bottom line here is that the majority of businesses are attempting to navigate their digital transformation without an accurate map or working compass, and their leaders aren’t stepping up to show the way. These findings “signal the need for more businesses to develop and realign priorities and operate with a sense of purpose and urgency,” the report warns.

For organizational leaders, then, the question isn’t whether or not they should make the shift. It’s whether they’ll take the reins of their own digital transformation or sit back and let it happen to them.

Employee experience as catalyst for digital transformation

“Employee experience” is another buzzword being thrown around that’s worth  paying attention to. It’s “a crucial, yet often overlooked element of a successful digital transformation,” says Brian Solis, principal analyst for Altimeter. It will play an increasingly vital role in business success moving forward, serving as both a driver and enabler of digital transformation.

After spending the past several years focusing on the customer journey, business leaders realized any effort to improve customer experience hits a wall if employee engagement levels are low. Up to that point, companies invested more effort into customer-facing applications than enterprise software. Now, employees have become the focus in many firms as they search for technologies that help maximize employee productivity and satisfaction.

Customer experience might drive business growth, but so does employee engagement—and it might be more effective at driving your bottom line.. Companies that invest in employee experience enjoy more than four times the average profit and twice the average revenue compared to other companies, despite being nearly 25 percent smaller—a sign of greater innovation and productivity.

“It is clear that the connection between the employee and customer experience is real and presents a significant opportunity for those technology companies willing to step into this uncomfortable space—and it may just be the linchpin to successful digital transformation for those that get it right,” says CIO contributor Charles Araujo.

Improving the employee experience

Harvard Business Review contributor Jacob Morgan deconstructs the employee experience into three main components: cultural, technological, and physical. When organizations tackle all three together, they get tangible results.

Most companies focus all of their efforts on just one of these areas rather than considering the totality of the employee experience. It’s no wonder, then, that despite the $720 million a year organizations pump into engagement initiatives, two out of three employees aren’t buying in.

“Most initiatives amount to an adrenaline shot,” Morgan says. “A perk is introduced to boost scores, but over time the effect wears off and scores go back down. Another perk is introduced, and scores go back up—and then they fall again. The more this cycle repeats itself, the more it feels like manipulation. People begin to recognize the short-term fixes for what they are.”

In other words: If you think investing in employee experience doesn’t work, it’s because you’re doing it wrong.

The core of any successful digital transformation is to find an employee experience solution that operates on all three levels: physical, cultural, and technological. Technology plays a pivotal role, but it only works if it supports the changing needs of a workforce that’s increasingly demanding a more mobile, fluid, “anytime, anywhere” approach to work. At the same time, it must also help fuel a culture of innovation and change.

Digital transformation doesn’t happen overnight. It’s a multi-stage process, and every organization is at a different place on the spectrum. Companies at the front of the pack are those that have cracked the code on employee experience. They’ve learned that the key to digital transformation is to empower employees to adapt and change the way they work—because in the future of business, constant change is the new normal.

Topic: Employee experience

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