Flow State

People and machines

How does digital transformation impact employee culture?

The phrase “culture eats strategy for breakfast” has been a business cliché for decades. Variously attributed to management guru Peter Drucker and former Ford CEO Mark Fields, it basically means that employee buy-in determines the success or failure of any major business initiative.

This idea became popular during the late 1980s and early 1990s, during one of the business world’s periodic bouts of merger and acquisition fever. Research has consistently shown that 70-90% of M&A deals wind up destroying shareholder value, often due to problems relating to culture fit and change management. What’s true for M&A is also true for “digital transformation” programs designed to boost productivity while improving employee and customer satisfaction.

Change is hard, and organizational change is harder.

Global spending on technologies and services related to digital transformation—digital workflows, predictive analytics, natural language understanding, robotic manufacturing, self-healing systems and the like—will top $2.3 trillion by 2023, according to IDC. Yet research suggests most of this spending will be wasted.

That’s because change is hard, and organizational change is harder. In a 2018 McKinsey survey of business leaders, only 16% of respondents said their organizations’ digital transformation initiatives had improved performance in a sustainable manner. (Another 7% reported performance improvements that were not sustained.)

The odds of success are even lower in large organizations. McKinsey found organizations with fewer than 100 employees are 2.7 times more likely to report a successful digital transformation than those with more than 50,000 employees.

The ethnography of digitization

So how does digital transformation affect workers and employee cultures? How can leaders implement digital strategies in a way that maximizes both employee satisfaction and business impact? Recently, Workflow Quarterly set out to answer these questions through a study of two very different organizations: a healthcare system in Australasia and a state government agency in the U.S. (To encourage candor, we anonymized the identities of the organizations and their employees.)

We investigated how employee experiences change when humans and machines collaborate, and distilled learnings for business leaders who seek to maximize the ROI of digital transformation.

With help from Habitus Insight, we sent business ethnographers to interview and shadow about 20 research participants, collecting more than 80 hours of film footage and 60 hours of audio. Our informants ranged from hospital orderlies and administrators to customer service reps and chief digital officers. We asked them how workflow digitization impacted not just work practices and business outcomes but their attitudes toward work.

Transforming healthcare delivery

Both organizations had recently implemented digital solutions to address pressing business needs. The healthcare system has more than 10,000 staff and doctors serving 600,000-plus patients every year. In recent years, challenges have included limited budget, staff shortages and an acute need for additional beds, as well as a catastrophic earthquake and a terrorist attack that put enormous pressure on first responders and the system as a whole.

Management implemented a range of new technologies to address these issues, including a patient scheduling system for managing appointments and a new workflow management system for employees and managers. One application of the latter is a task-scheduling system that dispatches hospital orderlies via smartphone app, replacing the previous radio dispatch system.

The hospital system realized a range of hard business benefits from these technologies. They included a 12% increase in case volume from new services, a 20% reduction in average case duration, and total savings of 80,000 person-hours per year.

Customer service hits a wall

The state government agency has more than 4,200 employees who deliver social services (nutritional assistance, childcare support, vocational training and the like) to more than two million customers. In 2017, the agency experienced a customer service delivery crisis. It had instituted an early retirement/buyout program so that it could then hire younger employees.

Many of those who took buyouts were service reps working in call centers. Soon after they left, the state announced a hiring freeze, which meant that the agency couldn’t replace them. When the agency experienced a surge of new customers, a full-blown customer service crisis ensued. Peak phone-wait times reached two hours. Email response times hit an average of 1.5 days.

The agency implemented a CSM system that provided a consistent, omni-channel experience for customers. It combined automated direct email that reduced inquiry duplication and increased collaboration across program areas. The results were dramatic: Average inquiry assignment times dropped 99%, while inquiry resolution times fell by 70%. “We went from being the Fred Flintstone of customer service to being the James Bond,” says the customer service lead at the agency.

Culture matters

Given that most digital transformation initiatives fail, how did these two organizations succeed? Our research found that both were thoughtful about managing the cultural impact of technological change.

For example, both set up formal mechanisms to collect employee feedback on work challenges. Darris, a director of customer service at the agency, leads monthly videoconferences where employees talk about their challenges using new digital tools and provide feedback for further development. Darris hopes these groups, which he calls “modernization teams,” will become champions of change in the broader organization.

The healthcare system has a similar initiative called “co-design of the user experience.” The goal is to understand the needs and pain points of technology users. “It is not about the technology,” says Stella, the chief digital officer. “It is about engagement, understanding how the technology can support the improvements that people wanted to make.”

New workplace technologies inevitably cause anxiety among some workers. In the U.S. state agency, the new CSM system tracked the time it took workers to complete a task for customers. As a result, some employees feared they were being monitored for speed. Leaders had to explain that they weren’t trying to spy on employees. Instead, managers were examining customer service processes in order to measure and manage overall performance.

In the hospital system, similarly, some of the orderlies had never used a smartphone and had limited experience with computers. It was challenging to provide them with appropriate training. Some feared they might not be able to use the system properly, or that they would make mistakes and appear foolish. But once the orderlies overcame those initial concerns, they found that mastering the tools gave them new pride in their work.

Both the hospital system and the social services agency are mission-driven organizations. We found that despite initial misgivings, employees in both organizations embraced the new technologies because they helped minimize busywork and free up time to focus on their core missions: treating patients and providing critical services to people in need.

In both organizations, the digital transformations have had significant positive effects on the employee experience. They have reduced workloads and increased employee satisfaction. Many of our research participants also reported that the new tech helped the organization align its goals with the core values of the employees. In short, our fieldwork suggests that digital workflows can increase worker happiness when properly implemented with input from employees.

Check out Workflow Quarterly for the full study findings.