Continuous Improvement, Strategic Services
Note: A version of this post first appeared on hrexecutive.com in April 2022.
Leaders facing transformation within their organizations are faced with a daunting task. Namely, how does one respond to a constant barrage of real-time demands WHILE maintaining the focus, capacity, and capability to fundamentally change the nature of work.
Newton’s first law of motion suggests that encouraging any object to change its current state can be tricky, and transformation encompasses all manner of objects – behavior, processes, systems, mindsets, skills, and so on. Focus too much on one area, and others may suffer. It takes a comprehensive approach to bend the laws of physics without collapsing your organizational universe.
Research continues to support the claim that up to 70% of transformation efforts launched by organizations fail, yet still they move forward with massive transformations all the time, willing to risk money, credibility and reputation to reap more than they sow.
Depending on how you choose to look at the data, some HR transformations do realize some success. Three out of four organizations that undertook HR transformation have successfully executed specific initiatives, such as implementation of cloud HR technology. Through this narrow lens, one could argue that transformations are worth the risk and effort. But that’s only if you define success as implementation. It’s more useful to consider what happens after a go-live date. Follow up surveys from the same KPMG study suggest that only 44% of those HR initiatives are meeting expectations – and a 56% failure rate is hardly cause for celebration.
So why do transformations fail?
There are a myriad of factors that contribute to transformation failure, but we’ve noticed a common thread through our work with organizations – sadly, most transformations fail at the very beginning.
There might be a lack of buy-in, with senior leadership supporting the transformation in words but not action. This is particularly acute when it comes to allocating sufficient budget and resources to complete the transformation the right way. Those who have watched change management get stripped away as a “nice to have” can certainly relate. Another early saboteur is a fundamental lack of self-awareness regarding internal capabilities, capacity, and prioritized commitments necessary to foundationally prepare the organization for what’s to come.
If you’ve ever participated in a transformation, you know that capacity planning is a preliminary activity prior to kickoff. You may have even completed an overly complicated spreadsheet that lists names, skills, anticipated capacity needs, and targeted dates of engagement and even a RACI (which is never used again). Populating that spreadsheet takes time, effort, and let’s be honest – a lot of guessing. You may not have full visibility into internal capabilities or even the required skills for each role to thrive. You most likely lack transparency into day-to-day demands, workloads, or even an enterprise-wide calendar for impact analysis. You may not even fully appreciate your organization’s current state, thereby severely underestimating the level of effort it will take to be successful.
Unfortunately, we have found that nearly all providers of HR technology and services grossly underestimate the contributions necessary from their employer clients. Some in our industry view this as a nefarious shell game meant to line the pockets of managed services and outsourced providers, and yet others point to the divide that often exists between the sales and delivery personnel of these same organizations. Perhaps in some cases that is true, but the truth often is that we all want transformation to be much easier, faster, cheaper, and more impactful than reality suggests. Regardless, all of this contributes to highly inaccurate estimates, cost overruns, schedule delays, and an increased likelihood that the transformation will struggle to achieve its intended goals.
Even when there is commitment and buy-in, well-intentioned leaders may struggle to gain traction due to competing priorities, brought upon either a lack of planning, a lack of governance to push back on lower prioritized initiatives, or both. It’s important to acknowledge that some of the lack of pushing back may be tied to fear – fear of failure, fear of change, fear of not moving fast enough to demonstrate value to key stakeholders. You may also lack the access or insight to protect some level of capacity for the relentless pace of operational change that the board, regulators, and/or corporate strategy have yet to unveil. We remember one meeting where the Chief People Officer walked in, dropped her laptop on the table and declared, “I guess we’re in Japan now!”
We’ve also seen transformations undermined by a “lift and shift” mentality, where HR fails to address the end-to-end process challenges they face and choose to only focus on one area – typically the technology. This failure to appreciate the need to address the ENTIRE process, and not just discrete portions, is a barrier to a continuous improvement mindset (and a topic we will tackle in a future column).
Perhaps the greatest driver of transformation failure is the lack of understanding of what transformation really is.
Setting your transformation up for success
As you might imagine, our best and first advice is to do the opposite of what we defined above. Apply relentless prioritization, embrace transparent and continuous alignment with the business, lead with a clear understanding of the magnitude and impact of change, and allow your designated and dedicated resources the time and space to create lift through the lifecycle of the transformational program.
Those items aside, one of our myth-busting goals when working with organizations is to challenge the equation of Technology + CapEx = Transformation. In the early days, moving from on-premise to cloud-based technology was new and exciting and most transformations focused on technology. After all, implementing a new system has upstream and downstream impacts that need to be addressed and building a new technological foundation is a massive catalyst for change. But purely technology-focused initiatives can mask deeper issues, and it’s easy for any organization to misinterpret activity as impact.
From the very beginning, it’s important for organizations to recognize that transformation can be technology enabled but is rarely technology led. Transformation encompasses culture, process, policy, operating model, service delivery, and more. It’s about how your organization thinks about the impact of transformation on all your populations, whether they are candidates, employees, contractors, alumnus, or retirees. It’s about examining your in-scope business processes end-to-end, and deeply and forensically understanding how people, policy, process, and technology combine to impact work at your organization.
In short, technology doesn’t drive transformation. Recognizing this simple truth completely shifts how you approach it. It becomes more about the complexities of how your business functions and how you want to change it, rather than simply updating to the latest release of your favorite SaaS toolkit. Case in point is that most organizations we work with still have yet to technologically enable device management and access rights to a huge portion of their hourly workforces, so leading with the killer app and a complex workflow falls short for those who are still hoping for a reliable Wi-Fi connection.
Organizations that approach transformations more holistically see greater success, whether it’s making changes to operating models alongside their implementation, building a business case with clear measure for success, or directly correlating transformation to strategic business value. Additionally, organizations that carve out capacity for key resources to focus primarily on the transformation rather than being forced to divide their attention between it and their day-to-day work tend to be more successful as well.
In our experience, there are two important approaches to ensuring the success of your transformation – adopt a continuous improvement mindset and lead with change management.
The best transformation is the one that you can either avoid entirely or handle in stride because you have established the appropriate governance structure to address change, exchanging heavy-lift transformations for ongoing improvements that incrementally benefit the entire organization.