Agile transformation and the critical role of HR in creating positive, lasting change
Modern enterprises recognize that strategic agility is good for business. Agile transformations present a fundamental shift in how companies operate day to day. They change how people work, engage with customers and manage employees. The reasons why companies undergo these transformations vary. For many enterprises, the objective is two-fold: they want to deliver higher quality products to customers faster and they want to improve employee engagement, allowing employees to be more invested in the company’s success. During the transformation process, the former is often prioritized over the latter.
Successful Agile transformation recognizes the role of people in executing change
During an Agile transformation, teams tend to focus on technology and process. However, at its essence, creating the agile enterprise is a people-centric endeavor. It is people who are being asked to transform how they think, work and implement change. As a people-centered process, it pays to involve HR with leading the charge and helping people adjust to the changes.
My team recently worked with a company that had put much thought and effort into adopting an Agile way of working and restructuring their organization. They, like so many other companies, did not fully understand the human resources component of this work. They began their Agile journey by setting up a transformation squad. This dedicated team was asked to focus on creating a strategy and vision for Agile adoption and a plan to scale Agile practices to new business units. At the same time, this team was asked to create pilot squads in prioritized business areas to test the new way of working. The transformation squad did not include an HR representative on their team. Because they didn’t, they found it difficult to make decisions on pilot structure, job roles to include and other personnel-related questions because they constantly had to contact an HR representative and wait for a response before proceeding. Not including HR from the beginning greatly slowed down the process for setting up the squads and scaling to the rest of the organization.
As the months passed, the effect the transformation would have on HR policies became obvious to the transformation squad, such as changes in reporting lines and the need to adjust performance reviews so they are more team-based rather than individual-focused. Employees began to question what the Agile transformation really meant for them, their jobs and their future with the company. Because they had not engaged HR from the start, the transformation squad was not prepared to answer these questions. Failure to communicate about key issues affecting employees created uncertainty, fear of change and rumors of job insecurity, causing employees to be reluctant to embrace the changes. Because of this oversight, the company risked a stalled transformation and employees leaving the company because they no longer understood their place or career path in the changing organizational structure.
It’s important to engage HR early
As shown by this client’s experience, companies often pilot Agile ways of working in small groups before scaling. And even though this can be an effective strategy, parts of an organization are often wildly underprepared to handle the fallout from organizational changes because they failed to engage HR in the transition. Agile transformations are typically spearheaded by the CEO, CIO and COO. The CHRO may eventually be included but unfortunately it is usually long after many crucial decisions have been made.
One of the first issues that arises during an Agile transformation is an imbalance and shortage of new and necessary skill sets. Failing to address that imbalance leads to ineffective and poorly designed teams. Frustration caused by unproductive teams impedes adoption of the new methodology and causes teams to revert to old behaviors and processes. That ultimately leads to wasted investments in training, coaching and tooling. To prevent this, HR needs to be engaged early in the transformation to ensure proper workforce planning. Agile methods require skill sets that may not currently exist in the organization, particularly staff skilled in Agile coaching. HR teams need to know how transformation and pilot squads are being designed so they can extrapolate what that would mean for other teams as part of a broader scaling and upskilling strategy.
Uncertainty leads to dissatisfaction and employee turnover
Failing to include HR in the process creates employee anxiety about and resistance to the change. Change can be scary and all the more so when it creates uncertainty about job security. When Agile transformations fail to place employee experience (career path, skills development, etc.) at the forefront and there is not open and transparent communication during the process, it can adversely affect job satisfaction and retention. Turnover costs employers $15,000 per employee. The top reasons employees cite for leaving their jobs are tied to career development, manager behavior, changing job characteristics and a changing work environment. Unsurprisingly, an Agile transformation can bring all those issues to the forefront very quickly. By not placing enough emphasis on the employee experience, employees will be left to wonder how their new role fits within the organization and what a new career path looks like in an agile workplace. Transformation leaders therefore should work with HR to define and clarify how job roles will change, outlining what background and experiences are needed for roles and what personal characteristics would help someone succeed on an Agile squad. Finally, HR should partner with learning and coaching counterparts to define new career paths so employees can envision their future role in a changing landscape and develop the necessary skills to succeed.
Engaging HR in the transformation process can come at a cost. It may slow the speed of creating pilot squads since the team will need to consider the HR implications of moving different roles to a dedicated squad for an extended period of time. Also, many HR organizations are relatively lean and it may be difficult to get their time. However, it is worth these potential challenges to prevent the long-term costs of employee dissatisfaction and turnover.
Decide when, where and how to include HR
If you’re starting an Agile transformation, engage HR early, either from the beginning or after a pilot or two has been launched. Embed an HR employee in the transformation squad when possible so they are engaged in the process. Another great place for HR to participate is in conducting a talent audit of the organization to discover which skills are lacking. HR can then develop a hiring plan to fill the gaps and also project the pace of scaling so HR can fill needs as they occur. Adding skills and hiring new resources takes time. Auditing your talent and adjusting hiring plans before a full Agile adoption will allow you to staff and skill teams effectively. It is also beneficial to include HR in Agile training and learning opportunities so they fully understand the Agile methodology, as well as its impact on an employee’s career path and day to day working environment. HR can get a head start on imagining and redesigning career paths post-transformation so employees feel confident about their future prospects. Forty percent of departing employees cite lack of future career development as a reason for job dissatisfaction. Getting HR to map clearly defined career paths can aid retention following a large scale organizational change. HR can also effectively ensure that HR practices and decisions reinforce Agile values and principles, via performance assessments, and help change mindsets from an individual to a team focus. Finally, it is essential to clearly communicate HR-related decisions that are linked to the Agile transformation so employees feel comfortable that their concerns are being addressed.
Agile transformations create change within an organization that can dramatically shift organizational structure and job roles. It is important to ease the concerns and address the anxiety these changes can cause for employees by clearly laying out role requirements, organizational structure changes and future career paths. The part HR plays in managing this change and communicating with employees cannot be stressed enough. Their role is pivotal in ensuring the organization has staff skilled to execute the transformation, and that employees have a clear vision of the future and how to get there in a changing landscape. Most Agile transformations begin with CEOs, COOs and CIOs. But the CHRO is arguably just as key a player to engage in the process to ensure success.