Business leaders are looking to digitalization to create a higher-performing workforce, therefore digitalizing HR is the top-priority initiative for chief HR officers (CHROs) this year, according to Gartner, Inc. Digitalizing HR is ahead of other top priorities such as performance management and creating a people analytics team.

“CEOs are looking to the HR function to drive digital transformation efforts and increase innovation across the organization,” said Brian Kropp, group vice president of Gartner’s HR practice. “The organizations that get it right and are able to improve their innovative effectiveness can increase annual revenue by as much as $8,800 per employee.”

Talent strategies for the digital age

A frequent and important question being debated by HR and business leaders is whether it is best to “buy or build” digital talent. That is, should HR go outside the organization and find new candidates, or should the company develop current employees. Gartner research found that companies should continue to do both, however, these strategies alone will not help them achieve their digital transformation goals. Organizations must also change the company from within to allow digital innovation to occur.

Build a culture of network-based innovation

Leading organizations recognize that standard practices for attracting and retaining talent are not enough to promote a culture of innovation. Rather than strategies centered around building innovative individuals or innovative teams, Gartner’s research found a broader, more network-based approach to cultivating innovation achieves the best results.

“Individual or team-based innovation strategies improve innovative effectiveness only marginally as they typically involve too few actively engaged employees or there’s a lack of momentum for innovative ideas from leadership,” added Mr. Kropp.

To build a culture of network-based innovation, Gartner has identified three main strategies:

  1. Involve employees beyond the idea-generation stage. Giving employees more visibility into and ownership of which ideas to pursue ensures more employees are actively engaged in innovation at their company.
  2. Shift leadership mindset to shared, not individual, risk taking. HR should help functional leaders collaborate to gain a deeper understanding of how to take better digitally motivated risks and chances.
  3. Supply employees with more guidance, not more access, on using networks to innovate. HR leaders can gain traction and maintain momentum by considering how ideas move through their organization and equipping employees with a new outlook of who to work with — beyond the formal structure — and how to push ideas forward.