The HR Connection To Small And Midsize Business Digital Success

Janet Wood

Part 12 of the “Leading Through Digital Transformation” series

Small and midsize businesses (SMBs) are redefining survival and growth in a marketplace of constant evolution. Some are turning personal obsessions into solutions that make our lives easier and safer. Others are providing buying experiences of unprecedented responsiveness, speed, and choice. More impressively, a growing segment of firms is bringing purpose to shopping by donating goods, services, and a portion of their profits to help improve our communities.

At the heart of these success stories is a truth that every human resource (HR) manager understands very well: It’s about the people behind the scenes who are powering it all.

Driving transformation depends on employee trust

No matter a company’s size, everyone in the business must believe in the approach, view leadership as competent partners, and visualize the benefits of the digital strategy. By engaging employees in honest, transparent discussion throughout the transformation process, managers can develop a level of trust that ignites change and innovative thinking.

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Oxford Economics’ recently released report, “Leaders 2020: The Next-Generation Executive – Leadership Matters for SMBs,” reveals that some SMBs (with between 100 and 1,000 employees) have gaps in leadership, which impact the level of trust employees have with their managers. Less than one-third of employees rate their mid-level management (30%) and senior management (29%) as highly proficient in inspiring and motivating the workforce.

With low engagement levels come lackluster levels of loyalty. The Oxford Economic survey results uncovered that only 51% of employees feel loyalty to their managers. This finding is significantly lower than that of the overall respondent base of companies with more than 1,000 employees, where 66% cited loyalty to their managers.

To bridge the gap between a disengaged or skeptical workforce and a culture of mutual trust, HR leaders should jump out of the confines of their organization to understand the opportunities, challenges, and transformations that are occurring inside and outside the business. This insight empowers HR with a better understanding of how to engender trust throughout the workplace culture.

SMBs that successfully embed trust into their culture to smooth the transition to a digitally driven business have three best practices in common:

  • Reorganize the business to support digital transformation: After understanding the market challenges and opportunities ahead, the HR organization is in a prime position to align the leadership team’s notion of digital transformation with the overall business model. HR can map the future of the digital operating model and aggregate the skill sets necessary to support it.
  • Embrace a digital mindset: HR should align its mindset, practices, and interactions with the company-wide digital transformation. For example, the organization can undergo a deliberate effort in filling the gap between current and future digital competencies. HR can also play a significant role in embedding technology in the entire talent lifecycle – from acquisition and development to succession and retention.
  • Empower digital leadership: The power of engagement and communication in paving the way for revolutionary change should never be underestimated. Stakeholders in every function and part of the business network should participate in the process of deciding, designing, and delivering the digital vision. Throughout the conversation, cost, acceptable risk, interventions, and expected benefits need to be clearly set. And don’t forget your millennial leaders: They are a powerful force in any company and expect to be heard. They have high expectations for ongoing feedback to employees and will lean in to help reduce complexity and bureaucracy. 

Evolving the leadership model to become the cornerstone of the digital vision

Change is never easy, but HR organizations in small and midsize companies can turn the journey into a simpler and more unifying experience for leadership, the workforce, and the entire business network. Whether exemplifying the benefits of data-driven decision making, upskilling leaders and employees, advocating organizational restructuring and a mindset shift, or inviting greater diversity into the workforce, HR can become the central figure in creating a culture of digital readiness. 

To learn how your business can better prepare for the digital economy, check out Oxford Economics’ recent report “Leaders 2020: The Next-Generation Executive – Leadership Matters for SMBs.” Be sure to check every Wednesday for new installments to our blog series “Leading Through Digital Transformation” to explore the various leadership roles in today’s growing small and midsize companies.

About Janet Wood

Janet Wood is Global Head of Talent and Leadership at SAP.