Digital technologies push employers to dismantle the classic management pyramid

Companies are overhauling their organisational structure and shifting toward cross-functional networks of teams in an effort to become more agile, collaborative and customer-focused - Hamish Wilson, Deloitte

Digital technology, changing workforce demographics and speed of innovation are causing companies to redesign organisational structure, evolve leadership models, and drive an employee-centric culture and experience, according to Deloittes fourth annual human capital survey.

Sweeping global forces are reshaping the workplace, the workforce and work itself, with 92 per cent of business and human resources (HR) leaders having identified the critical need to redesign their organisation to meet global business demands, says the report.

Yet, only 14 percent of executives believe their company is ready to effectively redesign their organisation.

The Global Human Capital Trends Survey 2016: The new organisation, Different by design surveyed more than 7,000 HR and business leaders from 130 countries, including New Zealand.

With more than double the number of participants from last year, the survey is one of the largest ever global studies of workforce, leadership and HR challenges, says Deloitte.

In the first three years of the study, respondents placed a high priority on increasing employee engagement and retention, improving leadership, and building a meaningful culture.

The 2016 study found, for the first time, nearly half of respondent companies (45 percent) are either in the middle of a restructuring (39 percent) or planning one (6 percent).

Organisations need to keep pace and meet the demands of this rapidly-evolving business ecosystem, says Hamish Wilson, Deloitte New Zealand’s human capital consulting leader.

“By empowering teams, creating a new management model, and developing a younger and increasingly inclusive leadership structure, organisations are reinventing themselves to innovate, compete and thrive,” says Wilson.

“This year’s research clearly indicates that companies are overhauling their organisational structure and shifting toward cross-functional networks of teams in an effort to become more agile, collaborative and customer-focused.”

He distils the following survey insights that resonate with New Zealand firms:

Catering to the employee experience: The balance of power continues to shift in favour of the employee, causing business and HR leaders to focus on enhancing the employee experience to help attract and retain top talent. Nearly 9 in 10 respondents (86 per cent) rate challenges with corporate culture as “important” or “very important.”

People analytics is gaining speed: This year, the percentage of executives that believe they are fully capable of developing predictive models doubled from 4 per cent in 2015 to 8 per cent in 2016, indicating a growth in analytics as a core discipline within HR which will help to improve culture and engagement.

Forward-thinking organisations are putting the employee at the centre of learning: Even as spending on learning rose 10 per cent last year (to over $140 billion), only 37 per cent of companies believe their programmes are effective. Leading organisations are therefore adopting new, open learning technologies which put employees at the centre of the experience.

Companies are dismantling the classic management pyramid: The traditional leadership pyramid is not producing leaders fast enough. Fifty-six per cent of respondents report their companies are not ready to meet their leadership needs, and more than 1 in 5 respondents (22 per cent) report having no leadership programs for millennials.

As well, organisations should also consider the raft of factors behind the massive changes in the workplace, says Wilson.

These include:

Generational diversity – The workforce is simultaneously getting younger and older as millennials with high expectations for personal growth work side-by-side with baby boomers, many of whom are delaying their retirement.

The new digital world of work – Almost three-quarters of executives (74 percent) have identified digital HR, the complete redesign of HR tools and services around digital technology, as a top priority.

Design thinking – This is a developing new discipline focused on employee-centric strategies, that is transforming companies' approach to managing, supporting and training their workforce.

Signs of real innovative change and progress are evident throughout this year’s Global Human Capital Trends report, says Wilson.

“HR teams are learning to experiment with new ideas and they are making significant steps to upgrade skills. For those that get it right, all of this will lead to stronger, more competitive organisations.”

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Copyright © 2016 IDG Communications, Inc.

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