Business leaders who embrace digital practices perform better in the marketplace and have more engaged employees, according to a new study from Oxford Economics and SAP.
The Leaders 2020 study surveyed more than 4,100 executives and employees in 21 countries, and found that only 16% of all companies surveyed were fully taking advantage of the new digital economy.
These companies, in which leadership embraced digital business models, were 38% more likely to report strong revenue and profit growth, the survey stated. Digital leaders also had more mature strategies and programs for hiring skilled talent, and achieved an average of 87% employee satisfaction, versus 63% at other companies.
"The digitalization of our world has brought about massive changes to the workforce and workplace, and businesses need to rapidly transform to keep up," said Mike Ettling, president of SAP SuccessFactors, in a press release. "Our Leaders 2020 study revealed that many executives, both in Europe and other regions of the world, are not yet prepared to successfully lead in the digital age."
These "digital winners" shared the following four traits:
1. Embrace diversity and inclusion
Globally, digital winners were more likely to have increased workforce diversity in mid-level management. They were also more likely to have a slightly higher proportion of female employees than other companies.
Companies that reported higher revenue and profit growth were more likely to say that diversity has a positive impact on financial performance, and that leadership recognizes the value of diversity. However, diversity growth among mid-level and senior executives remains slow, compared with change among the general workforce, the report stated.
2. Develop millennial executives
Millennials are currently the largest age group in the workforce, and hold nearly 20% of executive positions. However, these younger executives are skeptical that mid-level and senior managers have the skills needed to drive digital transformation. They are also more focused on diversity than older executives.
"Listening to what young executives have to say may be a shortcut to digital leadership—as long as the experience of their older peers is not ignored in the process," the report stated.
3. Engage and train employees
Employees at companies that are digital winners are more likely to say they are loyal to their company, team, and manager. They are also more likely to say that their manager is critical to engagement, the study found. These employees are less likely to leave for new positions.
Of the digital winners, 88% of executives and employees said their leadership gives ample ongoing feedback to employees, 82% said the company culture places a high value on employee satisfaction, and 81% said highly talented people can advance quickly in the organization.
4. Leverage digital technologies for improved decision making
Across the globe, 78% of digital winners reported that they make decisions that are data-driven, compared to 55% of all companies. Digital leaders were also 50% more likely to say they map decisions to strategy, and can adapt to decisions made in real-time. These companies were also more likely to distribute decision making across the organization.
"As leaders, we must create an environment where people thrive by enabling them to make data-driven decisions quickly, reducing complexity and bureaucracy, and embracing diversity and inclusion," Ettling said in the press release. "Digital is not just about adopting technology—it's about creating a culture of innovation, where exponential outcomes are not just possible but demanded."
- Why CIOs must step up to lead digital transformation efforts (TechRepublic)
- 3 things you can learn from the NFL about digital transformation (ZDNet)
- The digital economy will steamroll your business if you don't adapt (TechRepublic)
- Effects of the Digital Transformation on Businesses - Helpful Use Cases (ZDNet)
- Innovate like Amazon: Put values and tactics ahead of strategy (TechRepublic)
Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.