Crafting a Digital Organization: Strategies for success in the digital age
Everyone is a Tech Company
Digital business transformation is no longer an option, but a necessity for organizations to thrive in today's rapidly evolving landscape. In most organizations, digital transformation is now moving beyond initial experiments and becoming a mainstream strategy.
This POV paper outlines the strategies and best practices for crafting a digital organization, that organizations can adapt, innovate, and implement to succeed in the digital age.
Digital transformation is driven by one of the following factors:
Customer Service transformation – need to provide better customer service that can exceed expectations. Changes in business models to deliver better results – enriching or changing traditional business models to cater to a larger pool of customers. Focus on digital transformation and higher investments in technology – more investments in technology and tech solutions to deliver better user/customer experience. Emergence of new age tech skills – use of AL & ML technologies, to upgrade the existing digital offerings.
It is important for organizations to take steps to transform into a “Digital Organization” and craft a growth agenda, or else they will end up accepting the “Pervasive Digitization” and reacting to it.
What are Digital Organizations?
A digital organization is one that utilizes digital tools and technology to its advantage. Digital organizations are more productive and show better results. They bring together intelligent applications and collaborative work to deliver an agile customer experience. These organizations are characterized by:
Having an impact-driven Vision & Culture – Digital organizations tend to have a unifying vision around customer experience. They have formal & informal systems and embed new ways of working to achieve greater results.
Enabling digital workplaces – Digital organizations build a work environment with automated / semi-automated internal processes. They work on recent technologies and solutions to address business challenges. These organizations also enable digital workforce readiness and offer differentiated rewards for high performance.
Having flexible organizational architectures – Digital organizations have a clearly articulated career architecture for their digital workforce. They enable the fungibility of talent across skills and departments to promote talent growth. Flexible structures also help increase engagement and retention through autonomy and presenting employees with more opportunities to learn and grow.
Having inclusive people programs & processes - Digital organizations have market-aligned people programs that are inclusive. They offer an agile approach to rewards and people programs which are aligned with the overall people strategy. Inclusive people programs enable a positive work environment and a highly valued organizational culture.
Decoding the Tech Space: Mercer looked at three different types of organizations, first, are the Tech players looking at amplifying growth by investing more in digital & people practices, second the non-tech organizations building their digital set up to create value and better customer experience, third the global organizations trying to set up their Tech base/presence in India.
Mercer solutions are crafted around these three types of organizations and are explained below:
The Tech Players: Tech players are focused on driving productivity, building a culture of trust and equity, and strengthening their employee wellbeing.
This requires organizations to
a) build a career architecture encompassing roles & skills with career pathing for lateral movements.
b) build a flexible organizational structure with hyper-personalized compensation & benefits.
Career Architecture Encompassing Roles & Skills:
A role-skill-based career architecture framework drives speed, agility, and consistency across the organization. It brings all elements of work together to drive job design.
Work categories (Job families, subfamilies, and skill families) + Level Framework (career streams and levels) + accountabilities (responsibilities and tasks) + Skills & Proficiencies (knowledge and abilities) – All of these intersect to form the JOB.
Hyperpersonalization of Compensation & Benefits:
Role-skill-based career architecture helps drive the hyper-personalization of careers and rewards. Skill-based rewards offer a clear direction for the personalization of rewards. This would be a combination of specialization & skill premiums.
At the first level, the Role (Ex: Application Development) is mapped to the base specialization, or the Role + Sub-variant of the role (Ex: Application Development + Front End) is mapped to the base specialization. The skill premium is applied on top of this as appropriate.
The Role-skill level compensation benchmarks can be used to derive the pay ranges for salary changes and hiring.
Personalization of benefits can be achieved through flex benefits options. This allows employees to customize their coverage of benefits based on personal needs and curated options provided by their employers.
The Non-Tech Players: For non-tech organizations, offering digital solutions to their customers, helps in creating value and better customer experience. It can also help increase their customer base. For non-tech organizations, it will be important to establish a reputation & Brand as a digital/tech organization and be able to attract, engage, and retain tech talent.
Attracting & Retaining Tech Talent: Organizations need to look at matching tech profiles and prepare for hiring grids based on Tech. market benchmarks. Looking at the right mix of compensation and benefits elements from a tech market perspective will be key to hiring talent. Mercer's compensation design framework & benefits approach helps establish the right strategy for Attracting and retaining tech talent.
Benefits for tech talent will need to be reviewed from a market perspective alongside the existing benefits in the parent (non-tech business) organization.
Mercer can support this analysis (side-by-side analysis) and help with recommendations for the right set of benefits to be offered.
Other critical elements for non-tech organizations, will include alignment with Tech Industry Titles, Aligning with compensation structures that are prevalent, the pay mix offered, and defining pay ranges and pay bands as appropriate for the organization. Mercer can support the guiding principles of design, benchmarks, and implementation of all the above-mentioned aspects.
Nontech organizations building a digital side of the business or a tech support team will also need to look at establishing a career architecture for tech talent with appropriate pathways. This enables building meaningful careers, career movements, and better retention of tech talent.
Mercer’s framework on compensation and benefits, helps recruiters attract the right talent. This coupled with career patterns provides better role clarity and helps employees understand their roles with the expected skills and competencies required to be successful in the role.
The Global Players: The global players referred to here are non-India-based organizations trying to establish their Tech setup/presence in India. India as a country provides a large pool of tech talent at a much lower cost when compared to most other countries. Also, India is seen as one of the largest consumer markets in Southeast Asia.
This provides an exciting opportunity for global players to set up shop in India. According to Mercer, there are three key steps to setting up a digital organization.
Getting access to the digital talent pool: This step will include gathering knowledge about the digital talent landscape, locations to hire talent, skills availability by location, and price points to hire.
Mercer provides a curated solution to this which can help organizations start building their team in India. The solution also encompasses providing standard templates for offer letters, policy drafts, etc…
Defining Careers, EVP & Branding: The third step includes defining the career architecture, (career paths with relevant role-skills alongside career movements possible), defining the employee value proposition, employee messaging, communication, and branding.
Beyond rewards, employees value the need for career growth to be important. Hence organizations should show the career paths available and possibilities of role movements and progressions. This is similar to what is discussed in the earlier section (refer to Fig 2.4 – Tech career pathing)
EVP: EVP (Employee Value Proposition) brings together careers, compensation & benefits along with the purpose of the organization. When articulating the EVP, employee experience should be at the heart of the EVP. It should also consider the environment, life cycle events, and employee expectations. A clear sense of alignment between the employee expectations and the purpose of the organization should come out in the EVP.
Employee messaging, communication, and branding of EVP & people processes is an essential step. This will require leveraging all possible channels of communication within the organization. The branding should convey a story, communicate key messages, and create a visual brand for the organization.
Defining careers, EVP & branding will be critical for an organization to establish itself as an employer of choice differentiating from the competition. A compelling EVP and branding can move the brand sentiment in a positive direction.
The Mercer Value Proposition – Mercer is uniquely positioned to deliver value in designing people programs to suit the organization's requirements and also providing industry benchmarks in addition to bringing in outside-in-view of best practices.
Principal | Director - Compensation Consulting
Mercer