Overcoming Challenges in Digital Leadership Recruiting
“To make war all you need is intelligence. But to win you need talent and material.” – Ernest Hemingway
The thought resonates deeply for all types of wars – political and non-political.
And when we think non-political, the first war that comes to mind is the one raging currently to hire the right digital leaders as digital transformation consumes one sector after another.
While the pandemic may have played out differently for each sector, with its impact still unfolding, digitalization as a business strategy is here to stay. According to PwC’s latest Pulse Survey of C-suite executives, including technology leaders, nearly 60% ranked digital transformation initiatives as highly crucial to their businesses in 2022, only second to hiring and retaining talent as a top priority (77%). Almost the same number had also said that their companies would invest significantly in digitalization in 2022. Now, as we near the end of 2022, considering the challenges ahead, we can reasonably conclude that the trend will likely continue in 2023 as well.
Digital leadership – Why do we need it?
Going by the data above, there are strong implications for leaders in digital roles, such as CIOs, CTOs and CDOs, across organizations. What it typically means is they will have to take a leading role in strategizing and drafting the company’s course, meet the growing demands of IT especially amid the increase in work from home or hybrid work environments, and collaborate effectively with the rest of the leadership in guiding investments in technological developments and enhancements.
Plus, the era of digitalization is characterized by uncertainty, volatility, and disruption. Executives in digital roles are required to address these situations and help the company find a way out. Also, digital transformation entails taking a re-look at the existing operations, culture and infrastructure, which cannot be done without the guidance of the right leadership in digital roles. Beyond technical skills, these executives need to be change agents.
Amid the growing significance of digital products and digital customer experience, it is equally important that the top digital roles be manned by candidates that know how to strengthen the digital brand of the company.
According to a research survey by US-based staffing agency Randstad USA, digital leadership is the common thread through organizations that are successful and profitable. It also shows that digital leaders, especially those coming from the C-suite, have the maximum impact on the organization. Of the organizations covered in the survey, nearly 34% in the proficient category had digital leaders at the helm, while only 10% in the developing category had digital leaders.
The survey also reveals that as influencers, digital leadership (for 72% of workers) and employment of digital tools (80%) played a key role in attracting the best talent and candidates. With technology increasing efficiency, facilitating innovation and serving as a hallmark of progressive thinking, digitalization and digital leadership are the riveting factors in hiring and retaining employees.
There are several risks of not having digital leadership in place. These include digital initiatives not reaching their full potential, ineffective (or absence of) digital innovation, and challenges in employee retention.
Therefore, the digital revolution, coupled with the disruption caused by the pandemic, has not just led to changes in existing roles and positions but also paved the way for new leadership positions. New technical, digital skills have emerged as essential attributes for leaders required to steer the company successfully amid the uncertainties associated with any transformation, digital or otherwise.
But is it easy to hire the right digital leadership talent?
As per a study by Capgemini Consulting, conducted in collaboration with the MIT Centre for Digital Business, close to 77% of companies see lack of digital talent posing a primary hurdle to the digital transformation of operations.
In the current digital environment, often we see an enormous gap and/or disparity between the level of digital expertise and knowledge required versus the requirement. It is therefore extremely important to identify the right digital talent, particularly for leadership positions. This is key to attracting leaders with the required skill-set and experience.
A cohesive digital strategy, right from hiring to implementation, needs to be executed from the top, typically by the CEO or Board. Hiring one or two digital leaders as a token gesture will not yield the desired results. It needs to be elaborate with the involvement of more people at the digital leadership level for a coordinated approach. Only then will the commitment to adapt and transform filter through to the entire organization.
Today, therefore, companies need to have an agile digital talent management strategy that can be scaled up to suit the changing requirements.
Challenges in hiring at digital leadership level
Hiring for digital leadership positions is outright difficult. Reason: both companies and candidates, according to Janco Associates, a US-based management consulting firm with expertise in management information systems, are becoming highly selective.
This has created several challenges related to attributes and logistics.
- Limited availability of talent with the right attributes
- Knowledge, experience and expertise: Given the changing business environment that is increasingly getting integrated globally, the first critical issue is to find a technology leader with experience in working across cultures. The individual should be able to comprehend how business operations are interconnected in terms of supplier and customer requirements. Only then will they be able to devise the right technology leadership strategy and contribute to the success of the organization.
- Cultural fit: The job of digital leaders is not simple. They need to provide the right support at the C/Board-level, which can only happen depending on their understanding of the enterprise’s operational environment. They also need to be innovative/creative enough to conceptualize, implement and communicate the technological innovation to the rest of the people. A lot of this depends on the individual’s communication and interpersonal skills – the ability to understand the organization’s culture and adapt to it. This will help them report effectively and communicate efficiently with their reports.
- Suitability to plan for succession at C-level: With the rise of digital leaders, such as the CIO or CTO or CDO, following the development of digitalization as a key business function, digital leadership positions are increasingly being assessed from the perspective of succession planning. This means individuals with the right business acumen and skills are required, who understand the technological complexity of running a global enterprise, and can successfully contribute to succession planning at all levels.
- Ability for out-of-the-box thinking for success against competitors: This largely revolves around identifying the technology leader. Today, to beat competition, companies need to come up with unique applications or digital technologies. The requirement is for a CXO who can help them develop breakthrough technologies that will change the business dynamics. Some examples include US-based materials and manufacturing company Avery Dennison’s Advanced Planning System (APS) for Operational Production Planning and Detailed Scheduling project under IT LeaderNicholas Colisto, VP and CIO; or ceramics manufacturer CoorsTek’s Model Plant Implementation project under Matt Mehlbrech, VP of IT.
2. Skill assessment of “technology” decision-makers: Having the right technology leader at the helm could not be more important for businesses than now. With organizations working in a highly disruptive setup where new technologies are constantly and rapidly rendering existing technologies obsolete, having the right individual in the leadership position will help your company to move forward.
Interestingly, with digital competency becoming intrinsic to core competency, the roles of CIOs, CDOs, Chief Transformation Officer (CTO) or CDOs have blended significantly. While the degree of blending depends upon the objectives of a particular business, or its level of digital transformation, what is essential is the need to have a person who is both innovative (to come up with transformational initiatives) and can ensure smooth coordination or collaboration across levels in an organization. We continue to see the digital requirements expanding into the other CXO suites. For example, your CFO requirement would include finance transformation.
With CIOs and CTOs thus emerging as change agents, several major companies the world over have designated technology heads responsible for implementing game-changing initiatives. Some of the prominent names are Arthur Hu, SVP, Global CIO and Services & Solutions Group CTO at Lenovo (he is known for designing smart processes and mentoring/team-building skills); Ben McCormack, Technical Director, Office of the CTO at Google (credited with delivering cross-functional initiatives based on his expertise in business and technical functions); Claire Rutkowski, SVP, CIO at Bentley Systems (again, handles a wide range of functions from delivering thought leadership in IT to driving IT maturity initiatives); and Fidelma Russo, CTO at Hewlett-Packard Enterprise (another technology leader with experience in business services and infrastructure).
Given the significance of a leader who can drive transformation, you require a person who (i) understands the company’s priorities, the applications that would be required for smooth functioning, scope for innovation; (ii) connects with the staff regularly to understand the issues head-on and works with the approach of obtaining consent, rather than imposing things; (iii) ensures alignment with culture; (iv) influences all stakeholders in working toward the company’s strategic objectives and vision; and (iv) equally important, knows the customer well.
An article in Forbes sums it up well by saying that for a leader in a digital transformation or technology role, planning and implementation is rather easy—the catch lies in developing the empathy to get the different stakeholders aligned.
Therefore, evaluation of strengths presents a key challenge, especially since leaders at the CIO, CTO or CDO levels typically possess unique styles of leadership. It is difficult to understand how they will react to tricky situations or challenges merely based on how the candidates present themselves. Some candidates will be more generalists and try to present themselves as capable of handling every situation, while others will be more suitable for specific scenarios – transformational or strategic.
It is also necessary to have the right assessment frameworks to capture the sentiment or thinking of the candidate correctly.
Prioritizing quality over quantity: This typically presents a challenge when hard-pressed for time. Usually, to prevent a suitable candidate from getting snapped up, companies absorb the individual. This becomes a problem if the leadership style of that person is not in sync with the organization’s requirement. The result is a leadership style mismatch with the needs of the organization.
The challenges at digital leadership positions vary from industry to industry, size or age of the company. If it is a startup, the focus is on building the team, whereas for a growing company, the emphasis could be more on transformational changes. In an established business, on the other hand, the requirement would be more for operations-driven digital leaders.
It is important to correctly assess and define the mindset, skills, stage, or age of the enterprise to screen for “fit”.
Assessment of experience for IT-specific issues: Often, the approach is to club all digitalization-related requirements under one leadership role or designation, say CIO. Nothing could be more damaging while hiring for a senior position. The IT domain is marked by specialist knowledge; therefore, the expertise of the senior technology candidates will differ. Some could specialize in infrastructure, while another person may have expertise in IoT, or cloud, etc. Therefore, qualifying experience is important to assess candidature.
Validation of skill/experience: The usual trend is to vet experience based on the resume. However, this is tricky. Sometimes resumes could lead to a mediocre candidate, or could over-inflate what the candidate truly brings. Accomplishments, certifications or accolades have their limitations as indicators, and cannot be a substitute for clear, on-the-ground experience.
Small talent pool: Given the seniority of position, the size of the candidate market is small. Few people have the desired qualifications, which restricts the pool available for search. Another factor that contributes to this is resistance to relocation. In the US, for instance, executives tend to congregate around Bay Area, San Francisco. Given that they are established here and well-settled, they are resistant to accept offers from other regions in the country.
Meaningfulness of work vs salary: For several people in senior digital roles, meaningfulness of work takes a beating to salary negotiations. If they are overall satisfied with their job profile that also pays them well, they will think twice before moving to another assignment that may be more meaningful but could be financially less rewarding.
Yet another aspect is that not all companies have the deep pockets required to pay the compensation C-level executives in digital roles draw.
These factors also restrict the talent pool available for acquisition.
There are two ways to approaching the issue: either companies hire themselves or develop their internal high potential resources for leadership roles, or hire the services of a seasoned recruitment solutions provider with expertise in retained executive search.
If looking to hire yourself or develop resources internally, companies must be mindful of the following steps that will help them decide on the right candidate:
Identify your strategic objectives from the perspective of digitalization
Is it to bring about a transformation, or to improve customer experience, or to generate revenues, so on and so forth?
This will help you in indicating clearly to your digital leader what is expected of them.
Assess the traits you are looking for
Are you looking for an innovator or a facilitator of operational transformation?
More than anything else, a digital leader should be able to:
- Inspire and lead by influence
- Leverage technology
- Facilitate collaboration
- Manage risks
- Drive innovation
Based on these factors, decide on the match.
But if you are stuck in any of these steps, it is advisable to hire the services of an executive search firm with rich experience and expertise across talent search categories.
These firms will typically help you with talent and leadership assessment. This will enable you to identify the skill gaps across key competencies and effectively benchmark each leader against the area of expertise required. Some of these firms have been the trusted partners to companies worldwide, and have the digital knowledge and expertise required to facilitate digital transformation.
Moreover, they have access to a wide pool of talent, and use their proprietary frameworks, tools and techniques for assessment and talent acquisition. Leveraging these, you can access the required talent pool and benefit from the services they offer.
With the macroeconomic environment evolving rapidly, business dynamics are changing across sectors. Globalization of operations, increase in regulatory compliance, digitalization and rising competition – all denominators point toward the growing role and importance of digital leadership in organizations.
As the scope for impactful digital leadership, especially in the light of using IT and digital technologies to run operations smoothly and contribute to business growth, the war to acquire senior digital talent is intensifying.
And as they say, the more senior the role, the more challenging the hiring. With the role & responsibilities of CIOs, CTOs and CDOs growing, sourcing the right talent will play a key role in driving the success of an organization. The CXO minus one level continues to be a carousel of movement.
The demand for senior digital talent is growing, and so is the movement of such talent across industries. This means that opportunities for a company to draw top digital talent are increasing. Enterprises, therefore, need to know where they stand in terms of manning their digital leadership positions with the right candidates. This will help them not just address the hurdles but also assess their requirement effectively. Above all, only a targeted search going after game changers will provide the digital leader they need for the digital transformation of their business.