But a new study shows just how difficult change can be. Only 12 percent of business transformations actually achieve the goals they originally set out for, according to a survey of more than 400 executives and senior executives by consulting giant Bain. And an important reason for the failure to make a change was that companies did not properly invest in their own workers.
“Talent is a critical factor in getting it really right,” says Melissa Burke, executive vice president of Bain’s change management and implementation practice Wealth. “There are some pain points that are critical for us.”
The Bain study identified three key mistakes that companies make that hinder their transformation efforts:
Failure to identify critical roles required to successfully implement change
While CEOs and senior executives may have a broader understanding of which roles will be most important to business transformation, they often don’t do the work to determine what responsibilities and skills will be required for each role.
About 76 percent of survey respondents who had successful transformations said they understood which roles were important, compared to 58 percent of underperformers who reported the same.
In addition to matching skills to job titles, Burke says CEOs and HR leaders need to create a cohort of critical roles needed to drive transformation and make sure they work closely with the executive team. CEOs should also consider creating a centralized office led by a chief transformation officer (CTO) to help orchestrate initiatives. Companies that deployed a CTO role or something similar saw a 25% higher success rate, according to the study.
“It’s critical for CHROs and CTOs to create a really good working relationship, recognizing that this talent issue is going to be tough and they’re going to have to overcome it to succeed in the transformation,” says Burke.
Overworked “star player” employees.
It can be tempting to put your best employees in charge of leading big transformation initiatives, but this can also lead to burnout among these key workers.
About 56% of leaders at companies with successful transformations avoid overburdening their senior executives, while only 44% of those with poor transformation results report the same. And about two-thirds of those surveyed with successful transformations ensure that the people deployed in these initiatives are either completely reassigned or relieved of at least half of their other tasks.
“It’s not just putting the right people in the seats, but then what do you take off their plate to make room for that?” Burke says. “Because often it’s just added to everybody’s day job and there just aren’t enough hours in the day to really do it justice.”
Lack of integration of talent strategy with larger business goals
While CHROs are responsible for overseeing a company’s long-term talent strategy, companies have historically disconnected talent management from the broader business strategy, leaving the HR function in isolation.
It’s important that CHROs are involved in transformation strategy conversations early on, which helps identify what skills and talent the company needs over the next five to 10 years.
Burke also recommends that organizations divide their talent strategy into short-term, medium-term and long-term plans. Identifying key critical roles should be a short-term priority, while medium-term initiatives would involve engaging the rest of the company’s leaders and senior staff in the transformation. In the long term, leaders need to look at their entire workforce, determine what skills will be required of them in the future, and begin planning how workers will achieve those capabilities.
“You don’t have to decide everything from the beginning,” says Burke. “But breaking it down and getting the top management, the CTO and the CEO to pull together on that journey is extremely critical.”
