The Retraining Conundrum: How Best to Transform a Workforce?

When it comes to digital transformations, WatersTechnology has traditionally broached the subject by detailing what banks and other financial institutions have told us about their own efforts and initiatives. This time, we spoke with Jay Finkelman, professor and chair of industrial-organizational business psychology at the Chicago School of Professional Psychology, about the effects digital transformations have on financial institutions’ very-much-still-human employees, who are often thrown for a loop during the process.

As far as transformations go, digital is one of the most difficult to pull off across industries. According to a McKinsey & Company survey from October 2018, less than 30% of the projects succeed across all industries—16% of respondents said their organizations’ digital transformations both improved performance and future-proofed them, while another 7% reported improved performance, but that improvements were not sustained. Further, the survey found that even digitally-native industries—such as high-tech, media, and telecom—were struggling, with a success rate hovering below 26%.

“Someone who has been working at an organization for 20-, 30-or-more years and hears about digital transformation, may begin thinking: ‘Do I really have the energy to be re-learning or learning new stuff? Is this a way that they’re trying to force me out?’” Finkelman says. “It’s referred to as a disruption because it is, and disruptions are not comfortable for anyone. They’re threatening to people and their livelihood.”

Having served as an executive vice president for various staffing companies over 12 years, Finkelman says it’s critical that company higher-ups are able to communicate downward that they’re investing in their employees, providing them with indispensable skills, and recession-proofing them—but those things are easier said than done. Though an exact ratio of how many people are appreciative of these projects versus worried might vary by industry, he estimates that “significantly more than half would be more worried.”

In the most successful examples, firms take a three-pronged approach. At the first level, business leaders have to anticipate the levels of resistance that can come from those with vested interests—employees, shareholders, and clients accustomed to their typical service. Second, is clearly defining what will be expected of individuals and teams going forward. The final step, as reflected in the McKinsey study, is the one most forgotten, says Finkelman: reinforcement.

“Part of that is taking corrective action, which will be necessary in a digital transformation because nothing goes quite the way you anticipate when you’re doing training. But it needs to be done in a very supportive way so people don’t feel like they’re being pushed out, or that all of the trepidation that they had going into the process is coming to fruition,” Finkelman says.

The greatest issue to keep in mind for behemoth financial firms, though, is the bigger the organization, the harder the project. Despite having vast resources on their side, global institutional banks have to contend with tougher logistics by coordinating across oceans, as well as navigate multiple levels of management from the front office to the back, in an industry that is heavily regulated.

“Looking at pockets of resistance is more complicated if you’re looking at them all over the country or all over the world,” Finkelman says. “Smart international companies know that already. Techniques that are being used in China are not necessarily going to work in New Jersey—no offense to New Jersey.”