Kristine Dery, Research Scientist for MIT Centre for Information Systems Research
Jim Berry: Hi this is Jim Berry, CEO of ADAPT and welcome to one of our ADAPT Insights sessions. I’m very proud to welcome Kristine Dery who’s the senior research scientist for MIT in Australia, specifically CISR, The Center for Information Systems Research. We’ve worked together over the last few years running data and sharing surveys together. Kristine, welcome. We’re here today to speak on the topic of employee experience, very good to have you.
Kristine Dery: Thanks, Jim. It’s a topic very close to my heart and it’s a great pleasure to be able to share our research findings today.
Kristine, as part of ADAPT’s digital age and CIO survey programs in 2017, MIT added questions to create a wider study on talent management. Can you walk us through some of the findings from that?
What’s interesting with this is we’ve been studying the employee experience for a long time now and what it takes to build great employee experience. What we’ve been hearing from a lot of our sponsors is a big part of this is about talent. How do we create this employee experience that enables us to build a relationship with the talent we’re going to need for digital? Companies are struggling with this. Companies that typically have been able to always attract the best and the brightest are now finding it hard to attract some of these people so that they can make a contribution. If you think about the world of banking for example, it’s always been incredibly attractive to the top level of talent coming out of universities, but now we’re seeing a lot of that talent wants to go into startups, more of a freelance capability to work in different and new ways.
Their skills are in high demand so the key question is:
“How do you build an employee experience that enables you to create value from this relationship with this talent?”
We were really interested in knowing more about that. The questions that we put into the ADAPT survey were really based on a bigger study and enabled us to get a bit of a snapshot of what was going on in Australia relative to the rest of the world and the study that we had done. Some really interesting things came up that were not dissimilar to what we had found in other parts of the world, but I think are really critical to help us understand the value that building a great employee experience really enables companies to leverage.
If I start by talking a little bit about what a great employee experience looks like, what we’re talking about is how effectively do we build an environment that enables people to do their very best work today and also reimagine their jobs of the future. This is very different from the traditional we had to talent which was more around treating people as a resource. This is thinking about people more in terms of their way in which they engage with us in a relationship. We call it a more relational type of approach. The interesting thing for us was to look at what happens when companies build a better employee experience. What we see is, those companies that invest in employee experience are able to attract and build different types of relationships with the talent that they need than those that have the small traditional approach to talent.
In the companies that have the more traditional approach, they’re tending to struggle to get the sort of people that they need. For example, they’re trying to launch a hole out of new scrum teams. If they’re working in a more agile scale type of way, they need a lot more talent in order to do that so they tend to go out into the marketplace and create this environment where they’ve got a hybrid type of working environment. A lot of contract workers, a lot of companies working employee through third parties and they’re trying to deal with this in a way that is drawing more off traditional skills that have been really built around managing an FTE work force.
This is very challenging, it’s very challenging around some of the key capabilities that you need to manage a more hybrid workforce. We see that these sort of companies are finding it very difficult to on board, difficult to off board, very difficult to share knowledge, very difficult to build a cultural fit that’s required to generate value and this becomes a very turbulent environment. As companies invest more and more in the employee experience, they shift from being an environment where you might have, say 70%, 30%, 70%. Freelancers versus 30% or contractors versus 30% FTEs. They start to move toward a higher level of FTE. We see a real shift in those companies as they move up on that employee experience axis and move to a world where suddenly they’re able to attract, maintain, and build value with a higher proportion of FTEs.
That makes it sounds as if having an FTE workforce is the thing that is most desirable and I think with most organizations that we see today, they are really trying to do that. As they become more mature in their ability to build this employee experience and engage with people on very, very different capabilities, then they’re finding they can move into this more curated world where having a hybrid workforce is much more effective because they’ve become a lot better at sharing knowledge.
There’s been a lot of talk about gig economy and the growth towards that, but this would suggest FTE is an equally bigger growth area.
Certainly in the results from the survey that we had. The FTE is by far the biggest growth area in those companies that are able to do it. That’s the key component, you need to build a great employee experience to be able to move to that more FTE type workforce.
This may seem a bit of an obvious question after that, but a lot of digital transformation projects sits the buzz, but they don’t consider employee experience and then that result is obviously asking staff to do a lot more and with a lot more complexity, while there may be a focus on well being and nice office space, but not the systems, the workplace, the workflow. Why is it that employee experience is being ignored?
I think it’s hard to do and it requires a level of focus that enables you to build what we call the adaptive work environment. That’s the capabilities you need in order to connect systems more effectively, make them more integrated, build better connectivity between your employees and create the business rules that enables you to have a better employee experience. That’s one half of the coin. The other half the coin, we have to change what we call collective work habits. These are the way people naturally behave. Call it culture, but we prefer to refer to it as habits. These are things that people have almost deep embedded in their psyche, they’re things that have made them successful today that they have to change in order to be more effective in a digital world. It’s the combination of these two things that build a greater employee experience and that requires focus and resources and often changes to governance and who are the people making some of these that have the decision rights.
In a world where a lot of companies are still running very hard at delivering the customer experience capabilities, it’s understandable that some of these things around employee experience get ignored to a certain extent. We call it a culture of heroics. These companies are being carried along almost by virtually the fact that people are very committed to them and very loyal. We do surveys and we understand that things to do with employee engagement are very high in our organization.
“But when we start to measure these things around the adaptive work environment and work habits, we find there are some real challenges for companies that they need focus and attention on in order to create value.”
If we’re talking around that sort of practical action, what are the key areas of focus that they really need to invest in? Practical steps maybe they should be taking.
We find there are three key things that we’ve used statistical methodology called necessary conditions and run that across some of our big data sets to understand once of the things you really need to focus on to create great customer experience. Interesting enough, the first one is virtual connectivity. This is enabling people to have different types of conversations across the organization, building in video connectivity, enabling people to build new capabilities and share data in more effective ways. Change the way in which they connect with each other, change the way in which they enable better conversations. That fits into our talent data as well because what we see is that one of the key capabilities that companies need in order to attract and maintain great talent and this becomes even more key when they move from being a pure FTE focus to an employee experience that enables them to choose to be a FTE environment.
They’re not being dragged across, but rather they are building an environment that enables them to deal with a whole lot of different people and relationships with the organization. One of the key capabilities is sharing knowledge, it’s not surprising that this virtual connectivity comes in at number one. Number two that comes in is search. Not only being able to search and find people, but find ideas, find projects, find and understand where pools of activity are happening within the organization. These are complex digital capabilities that need to be built into the organization, but also very different habits that drive these new ways of thinking about behaving.
Clearly, there’s an issue. Our CIO edge survey in February, when we asked the leaders of IT and we had CIOs responsible for one third of Australia’s GDP in the room. When we surveyed them around what’s holding them back from agility and delivery, apart from legacy systems and process, that they’re second and third issues where business silos and cultural problems. There’s this huge people problem, it’s not so much the tech. When you talk about business silos and then we talk about business experience, who should lead this in the organization and how?
We’re still trying to understand more about who should lead it and most of the organizations that are high performing on employee experience are now steady using a combination of leaders in order to drive this and that’s because so many areas of the business are affected. You typically see IT partnering with HR, partnering with facilities, partnering with internal qualms and increasing partnering with legal and risks. I think that combination of skills coming together in order to make some of the key decisions around how resources are allocated, what our strategies should be around talent and employee experience, where we need to make the investments, and how we make those investments right across the organization are really critical.
Because digital capabilities features so high in our ability to change this employee experience, you have to have technology involved. It’s got to be a key part of the decision making. We see in some parts of the organization that this is being driven out of technology in and of itself. With the right person leading that and able to have the right conversation across the organization, I think that’s extremely powerful. Remembering that a big part of what we have to do here is changing habits, these collect work habits that’s about people’s behaviors.
“Technology can enable and can provide a congruent for those behaviors, it can’t in and of itself make those changes.”
We’ve discussed ADAPT, the digital age, the data set that we shared with MIT, was there anything that surprised you in the data?
I think that one of the things that surprised us most about the talent data is the ability for companies to change the way in which they attract and build a relationship with talent based on their investment in employee experience. There’s a significant different between companies that are a hybrid work force, but just simply filling skill gaps from that more contract, freelance, or gig economy. A significant different between those companies and companies that are intentionally architecting to create a different relationship with talent. Those companies that are building that employee experience, building that more relational approach to talent are recalling reaping some significant advantages and significant value in their ability to get the right people that they need in order to help them became more innovative and create these environments where they do have the skills to meet the needs of this more digital environment that they’re operating in.
Really interesting part is coming in here, are the companies that are creating options, investing in options, to move to this more curated environment. The more curated environment is really enabling them to play in the world that we are seeing coming up and that is a world that shifting from being primarily and FTE approach with added talent that’s filling in gaps to a world where we’re seeing some companies that have traditional been very FTE take the professional services companies for example, almost 100% FTE, invested a lot in the last few years over building great employee experience. Remember, that’s not well being, well being is a very big part of it for them, but the biggest thing they are really focusing on as well is how affectively are we enabling people to do their job and reimagine their job of tomorrow.
With those capabilities, they’re building new platforms, new ways of attracting and being able to engage the freelancer and gig economy so that they can future proof themselves for the challenges that at the moment, they can’t predict.
What advice would you have for talent management in a market already short of skills?
I think the advice I would give them is to, one invest in employee experience. Really focus on how your innovation dollars are being spent, not just around customer experience, but about employee experience. Companies that are high performing that have a customer experience strategy. These are companies that are chasing that customer very hard, the highest performers based on their business outcomes are investing dollar for dollar in customer experience and employee experience. They are really thinking about new ways to engage the people that they need and they’re thinking very strategically about how many of those people really need to work with them full time and how many of those would be working for them in a variety of different capacities. That’s enabling them to do a number of things.
First of all, it’s enabling them to attract and get access to talent that wouldn’t typically come and work for them full time. That’s often, some of the highest levels of digital capabilities. Second thing it’s enabling them to do is be more flexible around what skills they’re going to need, when and where in order to deliver on a digital strategy when it’s not as easy to predict what’s that’s going to look like. I think the third thing that’s enabling them to do, is its enabling them to think very differently about their relationship with their FTE talent. In traditional organization, we design people’s careers for them at a pretty top down kind of way then we offer them a series of training and support in order to enable them to climb that ladder.
In this world of digital, the way that we’re thinking more about talent is offering them the opportunities to curate their own digress, their own talent rather. If you can curate your own career, that means you can select and you’re empowered to start thinking about where it is you want to go in the organization. How you want to build your own capabilities. Some of these companies that we’re talking to that have quite advanced, matured in their thinking around this are talking about future proofing, not the organization, future proofing their people. That’s a very different type of approach.
It’s a question I was going to ask. There’s a big conversation around automation and displacement of humans. Percentages … some people say up to 40% in the next 10, 20. We’re clearly going to see a sort of digitalization of the easier stuff, it’s going to leave the more complex stuff. How do … not just on behalf of the re skilling of the workforce, how do enterprise leaders future proof themselves?
There’s a few things that enterprise leaders are focusing on, the first part of that is they’re really building the capabilities of their own middle management. This is the area where command and control organizations, large companies that we study that are being built on a command, control type of culture have a whole team of leadership that has got to where they got to because they’ve been great at command and control. They have built a whole lot of capabilities around that type of way of managing people and that type of way of leading people. Great leaders are doing a huge amount of work in transforming that middle management group. That in fact was the third thing that came out of our necessary conditions was the ability to retrain and future proof middle management, if you can do that, then you start to shift the thinking of the whole organization.
Companies that are investing in making their organization digital to the core, future proofing to their organization, companies like DBS are putting enormous amounts of investment into that middle management group and it’s that shift in the way middle managers are thinking that’s enabling the rest of the leadership and the organization to lead in very different ways.
In February, CIO in Melbourne, we hosted Peter Weill, your colleague who flew in very kindly. He spoke on the four pathways to digital transformation and there was an axis presented which had customer experience in one direction and operational efficiency or excellence on the other. Basically, there was a combination of the four journeys to reach digital transformation, challenges, and explosions along the way. It didn’t have an axis talking about employee experience.
Right and we have been wondering about this on those four pathways and wondering what the employee experience looks like on each one of those pathways and whether in fact some of those explosions could have something to do with the fact that the culture of heroics is no longer carrying the organization along that pathway and they need to do something about investing in how easy it is for people to do their jobs. We hypothesized that the most difficult pathway would be the step pathway where you were changing direction constantly, that seemed to be, to us, a more difficult place for employees to play.
Most of Australian organizations replied that was the journey they were on. Over 50% said that was their path.
Right, right. I think in the broader study it’s about 41%.
Globally number one as well.
Absolutely, it’s a pathway that a lot of companies are in fact having to go on because they can’t just focus on building operational excellence, they have to keep focusing on some of the innovations they’re doing around customers. Interesting enough, the pathway that was most problematic around employee experience is in fact pathway two, which is the pathway where companies are moving very fast up that access around creating more customer focus innovation. That makes sense now that we think about it a little more and we’ve run that past a number of large companies to say, “How do we understand some of this data?” In that pathway, companies are so focused on investing everything in market share and MPS. They really rely on that culture of heroics until it gets to a certain point where they can no longer consistently deliver those levels of service to the customer because they simply haven’t invested in the systems, capabilities, and the behaviors-
..And the cost of serving increases as well.
Exactly, costs go up, they’re no longer delivering a consistent service. Therefore, they have to invest in order to start shifting that needle and move further across. Interesting enough, our pathway one was by far the best pathway on employee experience.
Which is the operational excellence efficiency pathway.
Yeah, what we suspect is happening and we’re doing more work around this, but what we suspect is happening is as companies invest in their platforms and their systems, they are also by default addressing a lot of the things that are essential to employees. They are integrating a lot of capabilities-
And system efficiencies.
And system efficiencies, right. They’re creating the efficiencies and the integration, they’re not addressing some of the things perhaps around the work habits. They’re not addressing some of the things around the wider scope of building this more adaptive work environment. As they start to turn about the pathway starts to shift up into a more customer focused environment, that’s where we see an explosion happening around ways of working and the employee experience is no longer inadequate to enable them further on the pathway. We’re trying to understand a lot more about these pathways and employee experience, we’ve done an initial cut of the data that is giving us those insights, but that’s certainly the focus of a lot of our work for our 2018.
That’s same CIO edge data set, the questions that we asked for PDL, for the other side of MIT was around where you are on your transformational journey. It’s certainly showed Australia sadly lacking compared to our global counterparts and quite significantly. When it comes to employee experience, you’re at the crawlspace speaking to a lot of organizations, are we doing a little better there at least?
I think there’s a lot of companies that are more focused, certainly in the last two years, I’ve seen a huge lift in the number of organizations that are talking about this where it’s becoming almost a natural part of their vocabulary when they talk about digital transformation, also talk about the employee experience. Our data around talent showed that Australia was very similar to the rest of the world, perhaps with a slightly higher focus on the FTE focused capabilities around talent, but moving across, some companies are starting to take bets on moving across into this more curated experience. To do that, organizations need to invest in five key things. They’ve got to be much better at knowledge management, much better on onboarding, much better at off boarding, much better at cultural fit, and much better at finding and connecting freelancers with people and ideas.
What we do see is Australian companies, just as other companies in the rest of the world are experiencing, that they’re capabilities in each of those five things are way behind their need for them as they move into these more curated work spaces.
Generally, it’s pretty clear from all of the C-Level conversations we have every week, it’s not about the technology, it’s clearly about the people and it’s about the culture. They’ve reached an impasse with their transformation projects, mainly because the employee experience or the systems aren’t. Naturally we’re seeing a gravitation. I think it’s going to be quite big year or two.
I absolutely think so too and I think what we have to keep on reinforcing is this is both about building this adaptive work environment and when we say adaptive work environment, we use that term very carefully.
“This is about the workplace adapting to the work that people need to do, not the other way around.”
That requires a lot of focus, continual focus. There’s a strong argument to suggest that at least in the next two or three years as we start to invest more in this area, we need a chief employee experience officer. I think I can really understand why that could well be the case. We’ve got to be gathering the data from anywhere and everywhere and we have to both build the adaptive work environment and change collective work habits in order to really create this environment where we can engage with talent differently and enable our organization to deliver on some of these digital transformations.
We’re going to continue running your questions and MIT survey data across with ours and sharing this information and knowledge I think is quite important for Australia. We’re also going to welcome you to speak again at our CIO Edge event in Sydney, where we’ll take our final most recent cut of this data and I think we’re going to do some interesting things on site around work shopping that in a closed door environment, as well as keynote for some of delegates which will be exciting.
I’m very excited about that. There’s some great questions that we’re asking at the moment. We need to be solving some of these things together and we need to be really understanding how research can help us think about this differently, but also how we take the research and enable practices that add value for organizations.
Wonderful, well Kristine Dery at MIT, thank you very much for joining me today for this ADAPTAsks session and I look forward to seeing you at CIO.
Thank you, Jim. Thanks so much for having me.