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Welcome to the EY Think Ecosystem podcast, a series exploring the intersection of technology collaboration and innovation. In each episode, we orchestrate insights, stories, and perspectives from across the EY Partner Ecosystem, our client base, and our leadership team to address the important issues and challenges of today.

Markus Heinen

I'm your host, Markus Heinen, Europe West People Advisory Leader at EY. In this episode, we will discuss the biggest challenges in Workforce Transformation in 2023 and beyond and how organizations should respond to them. We all know that these fields represent significant challenges, particularly in the realms of technology, processes and people. At an organizational level, now is the time for companies to develop innovative employee engagement, retention, continuous learning, and development strategies. Implementing a digital transformation within the entire enterprise is a significant hurdle. All professionals, including our HR colleagues, will need to acquire new skills and adapt to cutting-edge technologies like automation and artificial intelligence. In this episode, we'll tackle the questions shaping the future workforce. What are the specific challenges flagging the HR function today? How can businesses navigate these challenges to achieve optimal productivity and performance, at the same time moving towards more innovativeness and contributing to an unprecedented level of transformative journeys? We'll also explore how organizations can unleash their potential through innovation and leverage the latest trends and emerging technology solutions to make sure that you understand what great opportunities are out there in the market. Before I introduce your panel, please remember conversations during EY podcasts should not be relied upon as accounting, tax, legal investment or other professional advice; listeners must consult their own advisors.

I'm very excited to introduce our guests today. Joining us from Dublin is Fiona Carney, Chief Marketing and Operations Officer, Western Europe at Microsoft.

Fiona Carney

Markus, thanks a lot for having me today. Great to be here. So, I lead our Marketing, our Go-to-Market, and Sales Operations organization for Western Europe at Microsoft. Organizational culture, and particularly how we can use technology to support in all of those areas. So looking forward to the conversation today.

Heinen  

It's so great to have you. Thank you, Fiona, and joining us from Munich is Detlef Krause, Vice President and General Manager of EMEA Central at ServiceNow.

Detlef Krause 

Hi Markus, thank you for inviting me. Good to be here again with you. Currently, I'm running EMEA Central. So Germany, Austria, Switzerland and Eastern Europe. And then, a week from now, Markus, I'm joining the APAC team as the President. So very happy to be here this week.

Heinen  

Oh, that's fantastic. And congratulations, a fantastic move and shows again, or confirms already, what we are about to talk about is the workforce transformation seems to be at an inflection point. And technology makes a significant impact and helps companies to move into that new era. So, let's start with a big question for both of you. What are the major challenges organizations face when implementing a digital transformation program within the company, especially regarding the workforce?

Carney  

I'll kick off Markus. Successful transformation is really all about people as much as it is about technology. Regardless of the business division, effectively transforming a business calls for being people first. We face challenges when we don't have people feeling that they're part of the journey when there is no clear sense of why at the outset to help people come along and to understand what are the business goals and make sure that we're transparent about what we're trying to achieve. We can also face challenges when we transform from a technology perspective. But we need to do the process and the cultural transformation hand in hand; that makes it difficult for adoption to happen. And making sure we have the right change management in place. And change management is really crucial. It's one of the biggest challenges I hear from customers about digital transformation. So having the right people in place, champions and people working on the processes that need to go hand in hand with the technology change. And then a couple of final things. When we don't get the right tone from the top and role modeling by people in the organization, it can be a challenge. Really making sure we've got the right awareness out there on what the transformation is, the benefits of it, what it can do for people, what it can do for our customers and our business. That's all really important and can cause challenges if we don't have it. And then, the last thing is really around capability building in the org. If we have situations where we are doing transformation, but we need to build the right skills and capabilities of our people to be able to work in that new world, then we can have a lot of downstream implications. Making sure that you've got, you know, training, change management programs, people and peer coaching, on-the-job learning, all of those strategies will be important to help alleviate some of those challenges.

Heinen  

That's a great answer, Fiona. And we will come back to a couple of the specifics later during the podcast, but Detlef, how about you? What do you think?

Krause 

HR leaders have invested in siloed solutions for years to drive employee growth and employment. This is what we see. However, this has created data silos that bear little relation to digitization and connected workflows, as Fiona said. And while a shift in thinking has now taken place, building a competency database is essential. Companies need to move beyond the boundaries of traditional HR. And for us, that's an observation and many customer conversations, bringing together disparate solutions to enable effective and efficient learning. It's a cultural topic, combined with the technology behind it.

Heinen  

That's great. Last year, EY released a study with Oxford; it's around the human at the center. And it talks about the different components and having a vision in place, which constantly needs to be infused in any transformational program. A lot of cultural impacts on the way of working and how we are going to drive for more effectiveness, but then comes at the same time a lot of technology in digitalization. And we have the rise of an unprecedented level of generative AI technologies, where everyone is now talking about ChatGPT or even GPT Four and what is happening. This is also related to a lot of noise in the market, what is happening to the individual knowledge workers, what is happening to the people and people fearing losing jobs. So how can we overcome this or any view you have in terms of how can technology be used purposefully and then also make it part of an emotional journey? Where are people getting engaged rather than being resistant? Maybe, Fiona, you have an idea or maybe an example also when it comes to one of these challenges?

Carney  

Any organization that is re-evaluating processes and systems is trying to ensure efficiency and alignment with the changing needs of the workforce. A lot of the things that need to be considered are similar. One of the things that we've been tracking is workplace trends through our global work trend index. And the latest research revealed some really great insight into what defines a successful workforce. And it's beyond just thinking about productivity as a leading measure of performance; we often would think productivity is the main thing; instead, and a little bit to Detlef's point, the data shows productivity with engagement is really what results in performance. So it's both productivity and ensuring that the organization and the teams are engaged. That is very helpful. It also finds that organizations that maintain a focus on employee engagement during times of uncertainty, which of course, we've all had a lot lately, performed twice as well financially compared to organizations that did not. And there are a few things that really set leading companies apart, Marcus. The first is they have a focus on great clarity. So I talked a bit before about making sure we're clear on the business goal; having that great clarity through intentional employee communications and goal setting is critical. And I think we've seen some really great examples of new communication methods that are being used all of the time, whether that's more video content, whether that's the ability to share across peer groups, team chats, just all of that connectedness and having that consistency is really important. And the second thing is that companies that are successful are really data-led when it comes to the workplace. So they are listening to their employees, they're looking at that data, they're analyzing it. They're then creating policies and processes that allow for that continuous feedback from team members. We call that a feedback flywheel, but again, many companies have a way of doing this. A couple of things are really important to ensure you know that there's a constant feedback loop and that we're using the data and having a continuous communications flow to the organization on what we are doing and why.

Heinen  

Detlef, how can HR professionals acquire the necessary skills to adapt to emerging technologies like automation and AI, and especially what challenges may arise during this transition?

Krause  

Fundamentally, if I look at HR professionals, they also need to break down barriers dealing with new technologies, such as you said it automation and generative AI. This requires training and learning. After all, HR managers have one thing above all, which is the human being and the employee. That's why good employee experience is crucial to them. However, many companies we know use multiple solutions for different teams, which sometimes cannot be brought together due to incompatibility. This makes the work and development of HR managers very difficult. And this has to change, definitely. 

Heinen  

In managing a multigenerational workforce, what strategies can companies develop to meet the different generations, expectations, and needs, especially as we discussed the engagement level and the expectations from the people?

Krause 

Really an important question because the world has changed dramatically, so companies should deploy their workforce adequately to match their respective capabilities globally. And that's the challenge. This, from many experiences we have with large enterprises, is leading to employees teaching each other the relevant know-how, whether it's through personal training in the [inaudible] online sessions or also mentoring methodologies like that. But it's mixed. It's a mixed bag. So this gets everyone involved and on board with digitization; there's no chance of not doing that. And for sure, that keeps the employee experience mostly very positive. But Fiona said we also have to take care of the older generation. It has to be a very positive employee experience.

Heinen 

That's so true. And we have to make sure that people belong to that entire journey. It's all the people and not individual groups. At the same time, we are moving towards at least also what we observe into a world of more enterprise agility. So the ability to adapt. And then is the question more about when you're having a very holistic and strategic approach to the workforce transformation, we need to also make sure in a world which is getting more agile and more distinct, how do we make sure that collaboration amongst all of the stakeholders are going to happen? Fiona, what is your view on that?

Carney 

I lead our Diversity and Inclusion Council in Western Europe, and we have a very large focus on multigenerational because it's all about understanding where people are coming from. So I think anything that we can be doing in organizations, and Detlef mentioned mentoring there, I'm a big fan of the concept of reverse mentoring, where people can learn from each other; maybe it's people who've been in the organization for a longer period of time. And they can learn from new generations coming in; there's a great way of connecting people in a slightly more structured way sometimes where people don't have those natural connections. Anything where we can, first of all, understand each other, what's important to each other at different stages in the lifecycle that you're going through. And one thing that ties everything together, Markus, is people wanting a sense of purpose. We hear this all the time, and it's become more and more present from an academic perspective. People are really looking to try and understand, do they belong. Do they feel a sense of belonging? They sometimes look to work as part of their identity, mainly because we spend so much time on that, right? They want to have a positive experience. People feeling connected to the broader mission of the company, as well as then being able to understand what each kind of stakeholder group or audience needs within a company, is really important.

Heinen 

That's great, Fiona. Detlef, your view.

Krause

 It's most important to give people a purpose and working from the purpose to do what we just said, using technology, having reverse mentoring, as Fiona said, that's super, super important. But we learned the purpose is the center of everything. I know, Fiona, you have a purpose, a good purpose at Microsoft. I remember that we have that at ServiceNow. You have said that at EY, Markus, and that's very, very important to bring people to that position at the end of the day.

Carney  

And one other thing to add to this: people have been navigating through pretty turbulent times recently. It's been a tough market. Also, the pandemic has really led people to question, where am I spending my time? How am I spending it? And, I've been considering a few things: people taking a step back and asking themselves, why am I doing this job? What am I getting out of it? What am I learning? Will it help me lead myself to the next experience I want? People are spending more time on their own personal development and asking themselves those questions. Another thing that is really valuable for people at all stages in their careers is actually coaching. You know, I used to think it was impossible for everybody to have such a big culture of coaching. But it's something we've developed a lot in the last few years. And coaching can be used for people at all stages in their careers, having somebody to ask you the right questions to really get you thinking about what you're doing and why you're doing it. And you know, what it's bringing to you is really valuable. And I've seen that work very, very well. You know, we think about the identity piece and the belonging piece that I mentioned. And I know we hear this discussion around psychological safety and belonging, but more and more technology can actually help people to feel connected. I work at home, and most of the time, my team is all over, you know, Western Europe. There are only a few people in Ireland. And yet, at the same time, I could hop on to our virtual chat, almost like being beside people and feeling connected. So how we're using technology to help people feel like they belong is something that really needs to be focused on. And it helps. 

Heinen  

I'm glad that you are all referring to this purpose and the activation and the belonging. I mean, I was part of the journey almost more than 10 years ago, when we started to think about what is not only a new tagline but what is the deeper sense of purpose of EY, being part of a discussion team and created to build a better working world. But here's the point. It's not a vision statement. It's also then a question of how you're going to activate the purpose and make it real for any individual, and that is where we come a long way. And you're absolutely right, Fiona; technology plays a significant role here. And it's not against this; it can play and help people to find the way forward in identifying their purpose and getting more clear. That is also leading me to the fact that we have a midlife, midlife crisis known expression, now there is a rise of expression, which is called a quarter-life crisis. And what is this meant to be is especially to people between the age of 22 to 30, where they are because of the complexity of the world and multiple options, they can face uncertainty in their job roles as young adults, especially in terms of their work choices and finding their purpose and identity is getting more difficult. May I ask you both again, maybe Detlef, you can start first? What could be some effective strategies, as you mentioned already, Fiona one on, one or the other? Maybe Detlef, you have a couple of additional ideas?

Krause 

We have to combine a little bit of what's going on in the economy; we have a fundamental change in the economy. So from what we hear, and you spoke about that midlife crisis of the young generation, we need to reskill every second person in the organization by 25. And then that means that old people, young people, whatever, come into that situation, you just mentioned. Companies should therefore provide them with appropriate tools for upskilling and reskilling. This will be super, super important. So we cannot leave our employees alone, the biggest assets in the company. We spoke about the purpose; every company has a purpose. We spoke about technology; yes, technology is essential. But it has to be the key to open the door to have the right technology. You know, in the last years, we all have been part of deploying such multiple technologies to the people which are used in parallel. And that results in a little bit that now I'm coming to your young generation - 22 up to 30. My daughter is 21, and my son is 25. They are in a situation where they think; we have to do everything. And that's something which we have to give freedom to the people. They don't have to do everything. It is our responsibility to do that reskilling together with the new technology trends like machine learning and generative AI to help our people. I don't know whether we did that in the last 10 to 15 years.

Heinen 

It's so true. And again, a little bit coming back to the point Fiona mentioned in terms of coaching, that is ultimately our leadership responsibility, and we touched upon the criteria of our Human at the Center study, next to purpose and psychological safety. Leadership is at an inflection point, right? Leadership is something that we need to understand. It's not about doing more of the same as we did successfully over decades. Now, with the rise of unknown jobs and skills required, a lot of coaching, not only on the functional level but also on a personal level, is very, very much required. Therefore, the question would be a little bit, and again, come back to you, Detlef, what are the implications for rescaling and upskilling to prepare for unknown jobs and roles? Is there any specific advice you have? 

Krause  

Technology is in the middle of everything, but not as we did it in the past, like we say, decades, you know, we have to come out of the silos and give the right tools. And it's usability markers, you know, if you speak about digital transformation, for me, it's super important that with all the rescaling, with all the processes, which are in front of us, every second employee until 25, it has to be the suitable technology, we could say, there will be just some companies in the market, who will be the enterprise tech companies of the 21st century. And that will not be the status we have today. Second, it's all about culture. Again, I will underline that with reskilling and upskilling, managing the change in the companies and the economy. We have to give people the freedom to have time to absorb that. And third, I repeat what you said, Marcus, it's about us. It's about the leaders. I also want to repeat, Fiona, what you said: living leadership is a better form of intelligent coaching for my leadership. So not just do it, do it, do it. And then it happens, what happened last decades, we have to give freedom, and we have to coach our people to do the right thing. These are my three points. 

Carney 

I'll add one other point there. When we think about skills and everything we're talking about here, people go in through the questioning of what they're spending their time on, people keeping up with new technology, all of these things. There's one fundamental piece I often come back to. When we think about successful people and some of their skills, right, and we look at role models, there is this concept of core skills that might not necessarily be deep technology skills. There are skills like communication, being able to facilitate large groups of people, critical thinking, and problem-solving, all of these what we call soft skills, empathy, understanding, and listening. They are the foundation for people to succeed in whatever area they find themselves in, in whatever company they decide to do. We really need to make sure we've got that balance of having supports and mechanisms and programs and peer-to-peer coaching and all of the things we mentioned that actually focus on those skills as much as on the new innovative technology that's coming in.

Heinen

We can build on that because I think that's also super critical for a lot of very mature countries because the success was decades ago, is more or less for my observation with all of the clients I worked with, really doing more of the same in an industrial very efficient way. But as no one can predict this anymore, and this interrelated crisis, who has known for years ago that Corona would stop the world? Who knew that Ukraine was leading to an unprecedented level of an energy crisis, where we are now starting to question, I mean, even now, on the rise of generative AI, the energy consumption related to that is huge or blockchain discussions we are having in terms of technology that is supercritical. So, to keep and manage what you said, Fiona, the engagement level high, we need to make people feel part of that journey rather than just executing. We have educated people for decades around that. And we need more data or more information related to that to understand where we have to interact or where we have to put our focus on it because leaving the people alone and giving them some offer is probably not the only answer. It is something where we need to coach or guide them and help them find a new way. So Fiona, how can workforce analytics and data contribute to understanding the workforce's current state and predict future needs?

Carney  

Today's most successful businesses are using data to help people work smarter and not just harder. The World Economic Forum actually estimates 70% of new economic value in the next ten years will come from digital business models. So that is a huge statistic for us to consider. When I think about workforce analytics, it can help us to understand so much. You know, everything from when are the best times for people to be doing focused work versus interactive work? When is the best time for customer engagement? When and how is the best time for the team to brainstorm all of these different elements of our work it can help us with. It can help us to understand when teams are communicating. And when are they not, you know, is it regular? Or are people having their one-to-ones scheduled correctly and having those meetings? We have some great technology that helps us keep on top of all of that, and I actually use it on a weekly basis myself; how many hours in a week are outside of regular working hours are people working so that we can keep an eye on if people are potentially getting burned out and doing too much? Analytics can really help us in a lot of that. We have an employee experience platform. And again, it shows those types of insights. I go into it, it helps me understand who I last talked to a while ago, and it helps me understand I am late to meetings. Am I working outside working hours? Am I actually connecting with my team enough, things like just saying thank you and sending praise? All of these things are helping both employee engagement and also helping us to make sure that from a well-being perspective, we're actually being intentional and making some decisions to try and help our teams be better every day and to be healthy.

Heinen  

Fiona, that's a great segue to a thing that is always in my mind. I'm talking to two companies who are providing almost large-scale global platforms in that regard, and you are capturing data almost everywhere. And, of course, we also have the information we are capturing on a regular basis by doing people pulses or surveys in that regard. But we have to move into a world where we have more frequent data, more updated data, and then manage this in a more agile manner. So Detlef, in that regard, what are some of the best practices for utilizing data effectively? In the consulting industry or professional services industry, there is a rise of OKRs. And it's going to be built in, in almost every technology, and OKRs have a huge advantage that you are building cross-silo teams following structures, not necessarily shifting people from one or the other area, and leading the people the opportunity to define their own targets. And then also with regard to a leading indicator rather than a lagging indicator KPIs, that is very promising. And I think the question is, we can then really use that to increase engagement level working cross silos, but also using and leveraging the data to enforce the collaboration.

Krause  

We are looking at our customers and best practices. First of all, as a statement, data analysis not only allows companies to measure the progress of OKRs accurately. If the data is used correctly, processes can be optimized and workflows permanently improved. That's the key. Data is only one of the important things to happen; it improves people's work. And they allow predictions to be made, enabling managers to make necessary adjustments and advance and take appropriate measures. That's what we hear from our customers. And using data effectively always means we have big projects with our customers before they implement our platform or make better use of the platform. There is another thing that they have to do, which data do they really need because it's the customer's data that we are trusting on and working on. We do things like process mining to really understand customers. Do you need that? And is that useful for your workforce?

Heinen  

That's great, Detlef. Fiona, anything to add?

Carney

Just one comment. We are in a world of data. There is data on every screen I can open, and every day of the week, I can be in, you know, business reviews and people review all that data, which is fantastic. We're very fortunate to have that. The key point that I always come back to, though, is data is only as good as how and what you use it for. And so I think particularly as it relates to company and employee engagement and workforce transformation and our people and this whole agenda, it needs to be getting used regularly by people on the ground. So every single manager every day or week to be taking a look at things, what is it telling them how do they need to, as you said, Detlef kind of move course, and actually make space for those conversations, because I think one of the things we're all challenged with this time, and often we tend to spend more time, obviously talking about business. And that's important. But you need to be really intentional about creating some space for people, whether that's just a quick coffee on a Friday to say, how are things going? Hey, what is telling us? Did you realize that you're actually spending 40% of your time in the last two weeks working at night? You know, it's actually looking at it and discussing it, which is important, and we don't always do that enough.

Heinen  

That's so true. And coming back to a point which I would like to introduce a little bit, because usually when I'm talking to clients, I refer to a great book and the theory behind it from Jeffrey Moore. It's called a zone to win. And that distinguishes between three horizons, which are decomposed into the following. Horizon one is the productivity and the performance zone, and you have mentioned it already, Detlef; you also, Fiona, if you're using data properly, you can improve productivity and performance very much, which is something that most companies rely on. Horizon two is the so-called transformation zone. This is where it gets tricky. You spoke about it, Fiona, the rise of new business models, the potential opportunity is different from what we did in the past; companies need to shift when it also especially comes in the light of ESG. And the opportunities of getting more contributions to a sustainable world, paying all of them into SDGs and the like. Every company has their own purpose. In that regard, we talked about it. So that's the transformation zone. But again, data and that's a tricky part of managing this transformation zone. But then there is a rise of Horizon Three, which is the so-called Innovation incubation zone. And that's fascinating because the pace of technology allowed a couple of key companies to scale to an unprecedented level we have never seen before. And a lot of companies, especially when we call them incumbents, do have difficulties managing all three horizons at the same time. And this is two faculties in the market. One of the faculty says, Okay, well, you cannot do this, from the incumbent's perspective, managing horizon three, that's too disruptive, it's too difficult. And the same time, there are a lot of people who are saying there's a second faculty; we need to go through that valley of pain in the transformation zone. And we have to incorporate also some disruptive ideas, the freedom to act. And that is something which I would like to spend a couple of minutes about. How do you see this? And how can organizations balance the level of innovation and maturity across all of these horizons?

Carney 

Look, it's a real challenge, right? How do we actually manage the short-term and the long-term at the same time? Managing incubation and innovation in a piloted way. So being able to take some calculated risks maybe, and also making sure that you're putting some dedicated resources aside to test, to try new things, maybe with a smaller group in the organization is a great way to balance with the longer term more stable and mature side of the business. You really need to be intentional about putting a smaller group and some resources behind that. The other thing is a lot of this is actually cultural, how people feel free to test and try new things without necessarily being penalized if it doesn't always go the right way. And also having part of the organization that is actually thinking longer term. Some of the people in my team are definitely longer term; they're looking at market trends, they're looking at shared data, they're looking at competitive data. They're thinking about what's around the corner and what do we need to be planning for. While there are others who are in core sales roles that are thinking week by week, you know, quarter by quarter? Having the delineation between people and what their roles are, and always giving people permission to think longer term and to be focused on that is another thing that I find to be quite useful.

Krause

I would add the following, Markus, what you said is great, Fiona, but we have a gap between, indeed, the short-term and the midterms, the same thing and the long-term thinking. If you look at these results, if I ask 99% of my enterprise customers, I would say oh, productivity, we can get that done. We have that under control. Transition. We have people for that we built that up, and we have some board now. So we get that done. But looking into the future and innovation and in the center of innovation, what happens in the market, and you said it, Markus, we have COVID, a war, a changing economy. We have shorter cycles. That is the problem of many, many organizations. It's more of a cultural problem. From our experience, you cannot change it by just consulting them to say you have to do it. What we do, and I want to give an example, we found roles in our company to get that to come so as to help to get that done. One role is the Chief Transformation Officer. It's not a Chief Transformation Officer for us. It's a Chief Transformation Officer which we give to our customers. So we look for people in the market who have worked with large enterprises where a lot of change happened with a huge experience and these people to our customers to help them. I think that's the way we have to guide them through the process. Because we are part of an industry that is very quick at adopting, learning and changing. And we have to help our customers with simple things, like I said, with roles in our organization which give to the customers to get that done, because it catches us if innovation is not ongoing because the next crisis is going to come, maybe the next pandemic.

Heinen 

Thank you very much for the answer. It was a fascinating conversation. Finally, what are your key lessons or takeaway from today's conversation to both of you?

Krause  

Let me make it short. I say digital transformation and the change in society are unstoppable and will change the foundations of the working world but also of our lives. To counteract the threat of labor shortages due to the lack of skill sets, companies must start training and helping the workforce with many things we discussed today. For me, and I said in the statements before, crises are there, and changing situations are there. There is no time left to do that. And again, thank you very much for my wonderful companions, Fiona and Markus, on this wonderful podcast.

Heinen 

Thank you, Detlef. Fiona?

Carney

Super. My takeaways from today - and thanks for the conversation - number one, the organization on any transformation journey is critical. So that is how we do that, how we bring it together, and the program around that. Number two is around the fact, as Detlef said, new technologies are inevitable. We didn't even get to go in-depth on AI, which can be another chapter. But how we learn and embrace all of that new technology and actually apply it to our business models to help disrupt things and really, ultimately, help serve our customers and our people best is going to be critical. And then the last point is making sure that we're not only looking at technology in isolation but also looking at people and processes in a connected way as we continue to transform. These are the three biggest takeaways for me.

Heinen 

Fiona and Detlef, fantastic, that was really great. Before we go, the views of the third parties set out in this podcast are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time in which they were made. I'm Markus Heinen, I hope you enjoyed the show. And you will join us again soon for the next edition of the EY Think Ecosystem podcast.

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