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People at the Center of Digital Transformation

Published 13th February 2020
Samir Bedi and Goh Jia Yong

Partner, ASEAN Workforce Advisory Leader 
Director, People Advisory Services,
Ernst & Young Advisory Pte. Ltd. 

Published 13th February 2020

Only when SMEs prioritize the people agenda and build a digital mindset, can they achieve the differentiating edge to succeed in the digital economy.

Amid globalization and technological advancements, small-and-medium enterprises (SMEs) are tapping into digital technologies to enhance their competitiveness and resilience to expand and create new sources of value.

In fact, in the EY study, Redesigning for the digital economy: A study of SMEs in Southeast Asia, close to 370 SME executives identified that their business priorities are to improve on customer service and leverage digital technologies. Experience tells us that such business strategies will only provide the desired differentiating edge when they are enabled by a workforce that is fit for the future. It is thus not surprising that having a modernized talent was also cited as an area of focus.

The critical role of talent in an organization’s digital transformation strategy can be illustrated as follows. To meet customers’ demand for greater personalization and convenience, SMEs need to deliver digitally enabled operations, targeted marketing and seamless customer interfaces. This is giving rise to the creation of digital roles such as automation engineers, data scientists and digital marketers. At the same time, current employees will experience disruption in their existing roles, where rule-based and repetitive tasks can now be performed by digital solutions that leverage robotics process automation and intelligent automation technologies. This means that employees will need to — and have opportunities to — evolve to focus on more value-adding and strategic tasks.

SME's top business strategy

Changing talent needs

While all businesses are discovering that transitioning their workforce to adapt to new and enhanced roles is no easy task, SMEs are lagging behind multinational corporations — and understandably so, given constraints in resource and capacity. Specifically, they lack access to digital talent and face challenges in up- or re-skilling existing staff, according to the same survey above.

The talent management challenge facing SMEs is multifaceted. For one, SMEs struggle to identify the skills and roles required to achieve their digital agenda, often filling digital roles with dual-hatting employees who may not have the relevant expertise nor bandwidth. At the same time, many SMEs struggle to prioritize and establish effective development programs to digitally upskill their current employees amid other competing business priorities. SMEs are also disadvantaged when jobseekers with the right digital skills typically perceive them as less attractive than their multinational counterparts, who have deeper pockets and are more established brands.

Prioritize the people agenda

Notwithstanding the challenges, the need remains for SMEs to be more proactive in bridging the gap between their current workforce and a workforce that can maximize productivity gains and insights from digital investments.

As a starting point, instead of blindly following hiring trends, SMEs will need to develop a clear view of the critical job roles and skills as part of their competency framework that is designed specifically to support their digital strategy. Taken as a whole, these roles and skills form the job families and career pathways of an organization. This not only defines the progression opportunities that are available (and attractive) to employees, it also allows the management team to conduct strategic workforce planning for future needs.

By clearly mapping out their talent needs, management teams are also able to deploy their limited talent pool into strategic roles, while addressing capability gaps in the workforce through targeted talent attraction and employee upskilling initiatives.

To effectively redesign jobs and processes, changes and decisions should be supported by insights derived from the analysis of people data. SMEs should also consider how they can incorporate technology solutions to be part of redesigned jobs and processes to improve efficiency, employee satisfaction and customer experience, while alleviating the pressure on talent shortages by creating more capacity within the workforce to take on new or enhanced roles.

SME's Top 5 Challenges with going Digital

Embrace a digital mindset

Beyond looking at technology solutions, SMEs will need to build a digital culture and mindset to drive innovation and develop agility. This requires organizations to review and transform their policies, processes and platforms to better support digital thinking.

As their organization and workforce undergoes transformation, SMEs will need to engage employees to minimize resistance and drive the behavioral changes that are needed to integrate digitalization into the business. Effective change management and reinforcement through employee recognition and performance-linked rewards can go a long way in nurturing a digital work culture.

Nurturing a digital and agile culture could be the key to navigating another megatrend that is disrupting the workforce – changing demographics. This is an age where four generations in the workforce – baby boomers, generation X, millennials and generation Z are now working side by side, each with varying incentives, preferences, attitudes and expectations. Employers will need to explore innovative solutions and ways to manage the complexities of designing and implementing compensation packages, HR policies, talent management plans and working arrangements for this diverse workforce.

Ultimately, SMEs should look to leverage transformative technologies as an enabler rather than a total replacement of their human workforce. As disruptive forces continue to challenge SMEs in the digital age, it is increasingly apparent that digitalization is not just a once-off project but a continuous journey that will impact the entire workforce.


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