Equipping and Empowering the Future-Ready Workforce

For the past six years we have been studying changes in the experience of employees as companies transform their business models to better leverage digital capabilities. We have seen companies redesigning their work environments to adapt to the changing needs of employees and to embed more collaborative work habits. Now, in 2020, the COVID-19 crisis has accelerated investment in workplace technologies and required employees to experiment with remote ways of working. Leadership teams are taking stock of the changes that have occurred and considering how they can better equip and empower employees for work now and in the future.

Companies increasingly need their people to solve complex problems. As companies adopt data analytics, robotics, AI, and other digital technologies, what they demand of their employees is changing. We call a workforce that is confident to solve problems and skilled to work effectively in a digital environment a future-ready workforce.

Developing a future-ready workforce pays off. Companies with a future-ready workforce outperform their competitors, delivering 19 percentage points higher revenue growth and 15 percentage points higher net margin compared to their industry average.[foot]MIT CISR 2019 Top Management Teams and Transformation Survey (N=1311). Self-reported net profit margin correlates significantly with actual profit margin at the p<.01 level. Net profit margin is compared to industry. Self-reported revenue growth correlates significantly with actual profit margin at the p<.01 level. Revenue growth is compared to industry.[/foot]

Two Dimensions to Make Your Workforce Future Ready

Using interview data from 41 companies[foot]Data sourced from 105 interviews, conducted from May to November 2019 and March to August 2020, with senior executives responsible for the employee experience at 41 companies from multiple industries and countries.[/foot] and survey data from 1311 respondents, we identified two distinct ways companies are changing their workforces (see figure 1, and the research methodology at the end of the article):

1. Digitization of Work: Equipping employees with the right digital tools to do their work of today and to redesign their work of tomorrow
2. Digital Fitness: Empowering and developing employees to work effectively in a company that is increasingly transforming to be digital

Digitization of Work describes the degree to which the workforce is equipped with technologies that help employees do their job and manage their working life. Job-related systems (e.g., customer relationship management, e-signature, dispatching) make it easier for employees to do their work. Working-life systems (e.g., email, videoconferencing, social media platforms, travel booking, expense management, scheduling) make it easier for employees to communicate, collaborate, and organize.

As companies move from left to right on the horizontal axis in the figure, they shift from equipping employees with applications that are standalone and monolithic to systems that are componentized and reconfigurable. Such systems provide the transparency to allow workers to adapt work routines or coordinate on the fly in response to current needs, without the involvement of the IT department. Employees can decide in which order to execute processes, independently modify rules managed by rules engines, and access data needed to make decisions.

Digital Fitness is the degree to which employees are empowered and capable of functioning productively in a digital business. As companies move up the vertical axis in the figure, business leaders shift their focus from ensuring that workers have the right skills for their role to empowering their workforce to work collaboratively to solve complex problems. That is, they become less focused on how people do their jobs and more focused on what they accomplish.

Solving problems in a digitally enabled company requires people to think in new ways, to leverage digital skills and knowledge, and to work effectively with others. Companies whose employees are higher in Digital Fitness expect their people to curate their own learning rather than telling them when to get training. Employees learn “just in time,” often by doing, and by learning from colleagues.

Digitally fit empowered workers have a clear understanding of their decision-making boundaries, they have the knowledge or required resources to solve problems they encounter, and they are held accountable for their results.

Five States of Workforce Readiness

Digitization of Work and Digital Fitness work together to create a future-ready workforce. Based on these dimensions, we defined five states of future readiness: Passive Recipients, Active Decision-Makers, Empowered Problem-Solvers, Hostage to Technology, and Hostage to Heroics. The workforce at each of the companies we studied aligned with one of five states.

Passive Recipients

Traditional large companies typically start their journey by automating processes and delivering sufficient skill training for employees to effectively use applications. Employees are passive users of these applications, which provide a uniform interface for anyone in their role. The applications are typically standalone and siloed, and possibly vendor-provided. The requisite skills for any particular role are determined by business leaders in areas such as HR or Learning and Development. Employees typically learn to use the technology by rote; learning may be acknowledged with competency credentials. Thei is like a musician presented with a score who learns the notes and cadences by rote, then performs the piece to the best of their abilities in the way designated by the composer.

Active Decision-Makers

As companies move toward utilizing cross-functional, customer-focused teams, employees begin to demand more from their tools and, at the same time, to experience a pressing need for more autonomy to make faster, better decisions. Demands begin to escalate for tools that equip the team to work more effectively with others, such as workflow systems, shared digital whiteboards, and Kanban boards. Employees clamor for better access to data or increased search capacity so they can fluidly work across silos, hierarchies, and even with partners outside the company. Work becomes more digitized.

Active decision-making requires that people have better digital skills. The company needs to empower employees to self-curate their learning about new digital tools. Opportunities to build skills where and when an employee needs it (typically through modern learning and development platforms) are common in these companies. Hackathons, peer-to-peer learning, cross-skilling opportunities, and other ways of learning by doing enhance skills beyond those needed in any particular role. Returning to the musician analogy, in this state mastery is about learning how to move from being able to play a score alone with great precision to being able to perform as part of an ensemble. Now the musician must be able to leverage their skills, listen and play with other musicians, and enhance the overall competencies of the entire group. The music is still performed based on the composer’s score, but now with some degree of interpretation by the musicians collectively.

Empowered Problem-Solvers (the Future-Ready Workforce)

Companies investing in more configurable digitized work are designing componentized technologies for both customers and employees. Employees’ knowledge and understanding of these components, together with the abilities to find, access, and use them, empowers non-IT specialists to work collaboratively with others to redesign where, how, and by whom work is done. Skills such as customer and employee journey mapping make it possible for teams to see where services can be improved by changing processes.

Empowered problem-solvers learn in fast cycles through experiments and rapid knowledge sharing. Enhancing their own digital skills and those of their workmates becomes innate. To support these collective attributes of the workforce, the company continually adjusts its performance metrics to ensure that they are focused on the right outcomes. Important metrics include effectiveness in applying new skills, teaching new skills, and identifying work problems.

We liken this state to improvisation in music. Improvisation requires the players to be very clear about their rules and boundaries, to be able to draw on well-honed skills, and to actively listen to those around them in order to create music together in unanticipated and unexpected ways. The score is no longer determining the outcome—rather, the players work together to delight their audience.

Hostage Traps

When companies strongly pursue either Digitization of Work or Digital Fitness but fail to invest much in the other dimension, the efforts are compromised. These companies find themselves either hostage to technology—the technology fails because people lack the competencies to unlock value—or hostage to heroics—people have high levels of digital competencies and problem-solving capabilities but use them to solve problems manually or create workarounds. In workplaces where people are not empowered or sufficiently skilled to wring value from the digitization on offer, IT leadership teams are frustrated by the lack of full exploitation of new technologies. Where employee empowerment and digital skills outpace the technologies on offer, we see high turnover of digitally fit people, power bases built around closely guarded bodies of knowledge, and pockets of innovation that cannot be scaled.

A Roadmap to the Future-Ready Workforce

Our research found that top-performing companies are 30 percent better than competitors at providing their employees with the direction, tools, and learning experiences to deal with redesigned work, giving them the ability to solve more complex problems.[foot]Top Performers are the top quartile of companies on net margin, adjusted for industry. Self reported net profit margin correlates significantly with actual profit margin at the p<.01 level.[/foot] It is not enough to focus on enhancing the digital fitness of your people, nor is it sufficient to invest heavily in digital tools for employees to work with. Transforming a traditional workforce into one that is future ready requires that leaders coordinate efforts to equip people with the technologies they need and give them the accountability and capabilities to fully exploit those tools.

Coordinating these efforts avoids the traps seen in both the hostage to heroics and hostage to technology states. Workforces become increasingly future ready as people develop the skills and mindset to leverage digital technologies. What is the state of your workforce? Now is the time to further accelerate the investments made during COVID-19 and make your people future ready. Your company’s continued success depends on it.