The importance of talent and culture in tech enabled transformations

The importance of talent and culture in tech-enabled transformations

The professionals with the jobs of carrying out, adopting, and sustainingtech-enabled transformations deserve as much attention as the technologicalsolutions they create and oversee. When an organization manages both itstalent and culture effectively, the interplay between them can create avirtuous cycle: attracting talent, sparking innovation, and creating impact.However, transforming organizations’ culture and talent in a tech-enabledtransformation is often more challenging than tackling the technical elements.Creating the right talent and culture for a tech-enabled transformation is noteasy. Respondents to a McKinsey survey of global executives said that cultureand talent occupy two of the top three slots for the most significantchallenges to tech-enabled transformations (Exhibit 1).Exhibit 1We strive to provide individuals with disabilities equal access to ourwebsite. If you would like information about this content we will be happy towork with you. Please email us at:McKinsey_Website_Accessibility@mckinsey.comAlthough leaders may already know that culture and talent are significantchallenges to tech-enabled transformations, they are often unsure what to doabout them. To overcome common hurdles and pitfalls such as defaulting tocreating parallel technology-focused organizations, industrial companies needto take a different approach to digital talent. This will affect where and howthey recruit, the career paths and development opportunities they offer, andthe workplace experiences they create. While these changes will not be easy,companies that tailor their talent strategies and cultures to what it takes tosucceed with digital are up to three times more likely to succeed than thosewho don’t.

The challenges of changing digital talent and culture

Industrial companies often approach recruiting in-demand technology talent thesame way they have approached nontechnology hiring. Furthermore, they often donot identify the kinds and number of new technology hires they will need inthe short and long term (see also sidebar, “Critical technology roles inindustrial companies”). Once they have filled their technical roles, companiesmight struggle to retain the people they hired, who often seek career pathsand incentives that are different from their nontechnologist colleagues. Forinstance, while many nontechnical workers aim to rise through the managementranks, technologists may aspire to spend their entire careers as practitionersadvancing their skills.If industrials’ talent strategies weren’t built for technologists, neitherwere their cultures. Technologists work best in an agile environment, withcross-functional teams that rapidly form and re-form to build the bestsolutions for end users. In fact, technologists expect to work in such anenvironment and may turn away from a company that cannot (or will not) workthat way.

Transforming talent and culture

Many industrial companies may assume that top technology talent is out ofreach and that their brand and even location might prevent them fromattracting the kind of people they need. But technology professionals are lessbiased against industrial companies than might be expected. Only 7.4 percentof the respondents to a 2018 survey of technology professionals consideredtheir employer’s industry important. Compensation, the work environment, andprofessional development—all factors within an industrial company’scontrol—were the factors that matter most to technology talent (Exhibit 2).Exhibit 2We strive to provide individuals with disabilities equal access to ourwebsite. If you would like information about this content we will be happy towork with you. Please email us at:McKinsey_Website_Accessibility@mckinsey.comIn this light, industrial companies’ prospects for attracting technologytalent look much brighter. But to find, hire, and retain these employees,companies must build their technology organizations around the right leaders,explore new ways of hiring, create career paths that fit technology talent,and transform their cultures to facilitate the work. Following is anexploration of several practices that industrial companies can consider toenhance the way they attract, hire, and retain top technology talent.

Acquiring companies for their talent

Large organizations might decide to acquire a smaller company—usually a start-up—for access to its technology workforce. This approach risks ignitingculture clashes between the larger acquiring company and the more nimblestart-up. Companies can mitigate this risk by having rotating teams from theacquiring company interact with the start-up team, exposing the new employeesto company culture while the acquiring organization learns from the newtalent, including absorbing the start-up’s more agile approach to work.

Technology-specific recruiting

Hiring technology talent can be challenging for industrial companies becausestrong candidates may not have conventional résumés, use mainstream careersites, or even be seeking new employment. To overcome these hurdles, companiesshould seek out technology talent in the in-person and digital communitieswhere technologists spend time. Companies must either retrain or hirerecruiters who have the technical fluency required to speak to candidates topromote the opportunities within the companies and evaluate candidate fit. Itcan be even more effective to enlist top technical talent already in theorganization to recruit other technologists.Organizations can also partner with technology-services vendors, includingagencies, to fill short-term gaps in their ranks. Engaging with a diversearray of vendors for short-term technology talent needs can help companiesdiscover technologists they may want to hire as full-time employees.

Reshaping career paths

After technology talent is on board, companies often find that traditionalcareer paths are not relevant to the new hires. For instance, technologistsare often more motivated by work on complex problems or prestigious projectsthan by the rewards of becoming managers.To effectively manage technologists in accordance with their motivations,companies must develop clearer criteria to identify high performers and lowperformers, ensure that managers are equipped to give technical feedback, andprioritize individual development. For instance, performance-managementcriteria may emphasize the principles of successful technologyorganizations—customer understanding, knowledge sharing, collaboration, andinnovation. Incentives should be a balance of compensation and opportunitiesto work on challenging problems. To facilitate on-the-the-job learning andproductivity, feedback should be delivered as close to real time as possible.Building the capabilities of both technologist and nontechnologist employeesis also a critical part of tech-enabled transformations.> While many nontechnical workers aim to rise through the management ranks,> technologists may aspire to spend their entire careers as practitioners> advancing their skills.

Building a culture that works for technology organizations

To maximize the impact of tech-enabled transformations, an organization’sculture also needs to adapt to support it. Our research shows that a healthyculture in any organization starts with several core practices: role andstrategic clarity, competitive insights, and personal ownership.Several additional practices become especially important in tech-enabledtransformations. Specifically, entire organizations—not justtechnologists—must have a clear view of their end users’ needs, overcomeorganizational silos, and embrace risk and experimentation. These may seemlike best practices for any organization, but they are crucial to fulfillingthe potential of tech-enabled transformations.To focus on end-user needs, a company must give its entire organization theindependence and resources needed to understand and respond to end users’needs and wants. Fulfilling this mission might involve importing ideas andpractices from outside the organization. Before developing its own products,for example, one industrial company looks for examples of solutions to similarproblems. The product team learned from a leading agriculture company’sdevelopment of a digital marketplace, which was similar to one the team wasconsidering for its products.Building the right capabilities to support a tech-enabled transformationConsistent with the spirit of continuous learning, organizations must alsodefeat silo mentalities so that knowledge is shared throughout theorganization and communication is continuous and candid. One industrialcompany set up “digital factories” of multiple teams whose members came fromdesign, engineering, finance, risk, legal, and every other function requiredto rapidly design, build, test, and launch a product.Executives seeking to lead technologically strong industrial companieseffectively also need to embrace risk and experimentation, because theirorganizations likely have never before completed a tech-enabledtransformation. Leaders can support such an environment by fostering teamharmony, mutual support, and genuine caring about the each other’s welfare.Leaders can also empower employees by communicating that they trust and valuetheir expertise and by consulting with them and delegating projects toemployee teams. Finally, leaders and organizations can create a safe place forteams to experiment by identifying and mitigating anticipated risks andresponding rapidly—and nonpunitively when possible—to unexpected problems asthey arise.For example, the digital product team at one industrial company was two monthsinto building a new product when it discovered that it lacked a market fit forthe product. Instead of pushing the team to proceed along its original path,withdrawing funding, or otherwise acting punitively, leaders promptly began toexplore next steps with the team. Team members were assigned to a new solutionand were even able to appropriate some of the features they had alreadydeveloped.As a partial result of an environment characterized by a focus on problemsolving, flexibility, and psychological safety, employees might develop newideas and business-improvement initiatives of their own. Such intrinsic driveis a boon to organizations, and leaders should recognize and reward employee-led innovation.* * *Building the talent and culture required to activate the benefits of tech-enabled transformations requires a fundamental change in whom industrialsrecruit, how they recruit, and how the recruits do the work. In parallel,companies need to shift their cultures to focus on the end user, collaborateacross silos, and foster experimentation. These modifications are critical forattracting and retaining the digital talent it takes for an industrial companyto launch and sustain a tech-enabled transformation and to thrive.Apple could bring growing pains to the Triangle’s tech scene | Raleigh News &ObserverRESEARCH TRIANGLE PARKAlmost as soon as Apple’s expansion to Research Triangle Park was madeofficial, the debate began over what the company’s, and Google’s, loomingarrival will mean for the region’s burgeoning tech scene.Will the two tech giants, both valued at more than $1 trillion, be a boon tothe region? Or will they harm it?“Ugh,” tweeted Robbie Allen, an artificial intelligence entrepreneur in theTriangle. “… I think it’s very bad news for the Triangle startup scene.”Allen, who founded and sold Durham-based Automated Insights for $80 million in2015, worried Apple and Google will make it even more difficult for youngcompanies to find talent, as the corporations can afford much higher salaries.And, he warned, the region’s quality of life — its relatively affordable homesand less traffic than larger cities — would be harmed, thus blunting one ofthe Triangle’s main advantages.The truth will likely fall somewhere in-between, with the Triangle sufferingsome near-term heartburn from the arrival of Apple and Google, as well as itpresenting an opportunity to significantly raise the profile of the region.“There is no doubt that in the short term it could be painful,” said TedZoller, a professor of entrepreneurship at UNC’s Kenan-Flagler School ofBusiness. “But in the long term, it could be the best thing to happen. We areno longer a flyover city anymore. This will make us a major player.”The arrival of Apple repeats a successful economic play North Carolina hasused for decades: attracting satellite campuses of successful tech companies.Many of the Triangle’s largest employers are satellite campuses, includingIBM, Cisco and Lenovo.But Google, Apple, and even Microsoft — which is adding hundreds of employeeshere as well — are at the top of their industry, with large amounts of moneyto spend on salaries and a brand that has a strong appeal.Apple plans to have an average wage at its RTP campus of $187,000 (though thatnumber could be skewed by large earners) for the expected 3,000 employees.Microsoft planned on an average wage of $125,000. Google, which did not getincentives from the state, has not revealed an average wage for its plannedDurham office, which is expected to eventually employ 1,000 people.“There will be a war for talent. There will be pressure going up on wages,”Zoller said. “But we are also going to retain more talent (from theuniversities) and we will attract more relocations.”

Competition for workers

Of course, the thousands of jobs from Google and Apple won’t be addedovernight. But employees with certain highly sought-after skills — likecomputer engineering, data analysis and machine learning — know they’recoming, and it could influence their expectations.The incentive package Apple is getting from the state could help it recruitagainst companies already based here, like homegrown analytics giant SASInstitute, for instance, said John Quinterno, a principal with South by NorthStrategies, an economic research consulting firm.“Given the size of the incentive package, maybe Apple has an unfair advantagebecause the state is subsidizing their costs,” he said in a telephoneinterview. “Are you really competing for labor or is one firm being favoredover all others?”Zoller said he believes Apple’s competition will be felt most intensely by thelarger and more established tech companies in the region.“The cost of attracting talent is going to go up for Red Hat, IBM and SAS,”Zoller said. “But you are also going to draw talent to the region because ofthese two new engineering centers. Eventually, the pie will get bigger.”By getting the seal of approval from Google and Apple, the region couldexperience a “halo effect,” in which other companies suddenly hold a betteropinion of the Triangle, said George Ratiu, senior economist at that might have considered the Triangle a rung below other tech-centriccities, like Seattle, Austin and Boulder, Colo., might have a change of heart.That validation could also sway more investors, too.“When you have someone like that signal they are willing to make a bet on alocation like Raleigh, it tells a host of other companies … that it is amarket that has the power to sustain that level of interaction andengagement,” Ratiu said. “So, that, in and of itself, brings a wholeconstellation of companies to the market that might not be there right now.”

Related stories from Raleigh News & Observer

May 03, 2021 5:30 AMApril 29, 2021 6:47 PMApril 28, 2021 12:00 AMApril 30, 2021 12:00 AM* * *Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and TheHerald-Sun. He covers technology, startups and main street businesses,biotechnology, and education issues related to those areas.Coronavirus: The pandemic’s impact on tech jobs, now and in the futureAt the beginning of the coronavirus outbreak, people were plunged intouncertainty – firms weren’t sure if they could financially survive lockdown,and people didn’t know what that meant for their jobs.Life is now beginning to return to normal for some as offices and publicspaces reopen, but the uncertainty remains.On 31 October 2020, the government’s coronavirus job retention scheme willend, meaning firms will either have to allow furloughed employees back full orpart time or they’ll have to let them go.And with students collecting their results across the summer, in many casesdecided on predictive grading, a new dimension has been added to the anxietyfelt when collecting grades and deciding their future careers.“The pandemic has triggered uncertainty and a severe recession has added riskand stalled growth, so organisations are naturally cautious about hiring atthe moment,” said Alan Warr, chair of the BCS Consultancy Specialist Group.“CIOs will struggle to get hiring approved while other staff are furloughedand business-side jobs and business units are at risk.”

How has the outbreak affected tech hiring?

Every day there seems to be another story about a well-known brand beingforced to cut jobs as a result of the coronavirus pandemic, including bignames such as Natwest, British Airways and Centrica.The uncertainty and recession brought about by the outbreak has meant manycompanies are being more frugal with their budgets, with some having to reduceemployee numbers or stop looking for new hires, and research by UK job boardCV-Library found that 64.7% of IT professionals are worried about losing theirjob during the coronavirus pandemic.CV-Library also found that a significant number of IT professionals believethe company they work for will suffer as a result of the pandemic, and many ofthose furloughed are concerned there won’t be a job for them once the furloughscheme is over.Through discussions with IT workers, Warr has found that “core” ITprofessionals in organisations have seen increased workloads while trying tocope with huge numbers of home workers, but this “increased demand for ITcapacity seems to not be translating into hiring”.While the number of jobs adverts have dropped, with research by CV-Libraryfinding a 43.9% year-on-year (YoY) drop in advertised tech roles on its sitein July 2020, Warr believes there are certain roles firms are still lookingfor, such as in cloud, data science and artificial intelligence (AI), but arestruggling to fill due to pre-existing talent gaps.“Demand for IT talent has been affected but opportunities remain,” Warr added.“The pandemic and associated recession have affected IT hiring massively forsure, but the picture is very mixed and IT professionals are faring betterthan most overall.”

New hires, job searchers and contractors

Depending on the roles people are searching for, the picture looks bleak forthose in the process of looking for jobs in the technology sector.Research at the beginning of the outbreak, performed by technology careerboard CWJobs, found that around half of the people in the UK had their jobsearches affected by the pandemic and were not confident they would find aposition.Some people have had interviews put on hold or cancelled, with 37% saying theywere asked for an interview which then could not happen, and 15% having beenoffered a job which was put on hold or withdrawn because of the pandemic.Dominic Harvey, director at CWJobs, said: “It’s certainly hit people withinthe pipeline badly. But I think in the first two weeks [of lockdown], it cameto a shuddering halt, and then typically for the tech community withinbusinesses, they’ve looked at what they can be getting on with in themeantime.”CWJobs found that some people have stopped searching for roles altogether, butHarvey believes IT departments will go back to projects they’ve had to shelveas things start to look normal again.Claiming the outbreak has shone a light on the IT department’s importance,Harvey said: “[Tech is] the solution to getting out of this as soon aspossible, so there will be a lot of money thrown at it.”But while budgets are still tight, IT contractors may be negatively affectedas firms do what they can to rein in spending and play it safe.Warr from the BCS said that the current low levels of hiring new IT staff andcontractors would have previously been “unthinkable”, but that IT departmentsare not necessarily letting go of “valued contractors”.“IT contractors are essential to the mix of IT talent that an effective ITdepartment needs and for the flexible delivery of services by IT firms,” saidWarr. “IT leaders need core talent on the payroll, contractor talent todeliver short-term needs and consultancy supplied talent for specialistcompetences. This is unlikely to change.”

What does the future look like?

It’s clear that even when we can return to work, things won’t be the same aswe left them – health and safety firm has said 60% of Londonstaff may not be able to return to work because of the need for socialdistancing in offices, for example, which might not be possible in some cases.Social media giant Twitter went in the opposite direction and told itsemployees they can work from home forever if that’s what they prefer, andSpinks’s Beattie believes firms are warming to the idea of increased homeworking.“Many clients felt pre-lockdown that they needed their tech teams onsite withthem,” said Beattie. “The pandemic and subsequent lockdown has – on the whole– shown that isn’t the case. Businesses have worked just as efficiently withtheir engineering teams working remotely.”He added that recruitment processes might also change as people get used toremote digital interviewing and on-boarding.CWJobs found that almost 60% of people said they would feel confident takingpart in a video job interview and think the outcome would be the same as aface-to-face interview.This emphasis on home working might even lead to an increase in diverse talentcoming into organisations in the future, said George Brasher, HP Inc’s UK andIreland managing director, adding that a 2019 HP Inc survey of women in UKtechnology showed that work-life balance, flexible working and family allfactor heavily into their career decisions.“These insights only further the belief that more flexible working optionswould aid the technology industry in its mission to improve gender diversitynumbers by attracting more women,” said Brasher.> There is a strong sense that companies won’t go back to the old ways of> working and thinking, but instead try to distil the opportunity that the> pandemic has brought us Debbie Forster, Tech Talent CharterAs well as a lack of gender diversity, at the moment there is also a lack ofgeographical diversity in the technology sector, with an overwhelming emphasison the industry’s “London bubble” – almost 40% of technology talent resides inthe London area.But with more remote working, this might start to change, with talent.iodiscovering earlier this year that as lockdown was in full swing , London sawa 57% drop in new technology jobs listings created by companies.“Remote working practices might allow businesses to more easily considertalent from different geographical locations, rather than a traditionalcatchment area based roughly around an office’s location, in turn helpingissues like the north-south divide,” said Brasher.The coronavirus pandemic has created a turbulent time, and tech companies bothlarge and small have decided to proceed with caution.But individuals have also reacted to this uncertainty in positive ways –TechUK found that 58% of people want to work on developing their digitalskills, which the industry body’s associate director of policy, Vinous Ali,believes companies can use to their advantage.“Digital transformations that previously took years in the making happenedover the course of a few weeks. TechUK’s own polling showed that 71% ofbusiness leaders thought business would become more dependent on technology inthe future as a result of Covid-19, driving demand for talent,” she said.“Similarly, our polling showed 58% of the general public were interested ingaining more digital skills in the next 12 months. This is a huge opportunityfor employers to look at their current workforce to see how they can upskilland retrain them to meet future needs.”While there is no doubt that the technology sector has been affected by thecoronavirus outbreak, Debbie Forster, CEO of Tech Talent Charter, believes itwill adapt and learn.“The opportunities are exciting – companies that were reluctant to trialflexible and remote working are finding not only that it works, but that it isa great tool to attract and retain talent,” she said.“Companies are also waking up to the potential of internal training. There isa strong sense that companies won’t go back to the old ways of working andthinking, but instead try to distil the opportunity that the pandemic hasbrought us, and build a new normal around that.”

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