November 15, 2023 • 3 Min Read
Large companies have been under enormous pressure to transform for decades, and the urgency has intensified since the pandemic, as companies have had to continually reinvent their businesses to capitalize on digital technologies such as artificial intelligence, big data and analytics, and cloud computing. At the same time, it’s become dramatically more challenging to successfully execute those projects, as workforce dynamics have become ever more complex.
To better understand the key factors for success, RGP surveyed 1,001 senior executives of global companies with annual revenue of over $1 billion across four industry sectors, including technology, financial services, life sciences and healthcare. These companies had an average of 20 transformation efforts in play this year alone — and most predict an even greater number of transformation efforts by 2026. (Transformation efforts were defined as strategic initiatives costing at least $1 million, with many reaching into the multi-millions or billions.)
Amid this whirlwind of transformation, about four in 10 companies in our survey indicated they lacked the internal skills needed to make big operational changes. Forty-two percent said they did not have enough internal talent to staff their transformation initiatives in 2022.
“We realized we needed greater scalability and flexibility to quickly respond to evolving customer demands and market dynamics.”
-CFO, UK-based Healthcare Organization
Impact of the Internal Skills Shortage
What did the skills shortage cost them? Sixty percent of respondents said they suffered delays in starting transformation initiatives, and 53% said it pushed out completion dates. What’s more, 41% missed critical goals, while 37% said it increased the difficulty of making important operational changes.
A Reconceptualization of the Workforce
To address these skill shortages, the most successful companies at transformation are creating a very intentional ecosystem that includes an almost 50-50 split between full-time employees and outside talent. We call this the “Dynamic Workforce.”
It’s a transformational model that creates an enormous competitive advantage. The market capitalization of the best companies at executing transformation efforts rose an average of 54% over the last five years. (In contrast, the worst companies at executing transformation had an average market cap decline of 21% over that period.)
The leadership of these companies leans directly into what they learned during the pandemic: People can collaborate effectively regardless of where they are located or who employs them as long as they are experts in their field. They make extensive use of skilled outsiders and are able to artfully blend them with internal talent to create collaborative tiger teams for their transformation efforts.
These companies can pivot quickly without sacrificing project vision, mission, and strategy. In other words, creating a Dynamic Workforce allows them to build constant transformation into the core DNA of their businesses.
Shifting from Roles to Skills
Rather than laying out a transformation initiative in terms of necessary roles, companies that create a Dynamic Workforce start by determining the requisite skills. In our survey, the Transformation Leaders said scoping out the right skills was the top factor in the success of their initiatives.
Top 10 Success Factors for Leaders in Executing Strategic Initiatives
- Scoping out the right skills for the project
- Maintaining strong and continual communication among team members
- Finding skills and knowledge outside of the company
- Using the right project management process
- Getting a real-time understanding of project status
- Establishing and maintaining a strong team culture, camaraderie and positivity
- Evaluating team candidates effectively
- Having competent talent in project roles (other than the project manager)
- Having competent project managers
- Finding skills and knowledge inside of the company
A Dynamic Workforce works best when there is a strong mix of core employees and external talent on these initiatives — not mostly employees or, conversely, a team largely consisting of external talent. If their organization does not have top-notch skills for certain critical efforts, they tap those skills externally. In our survey, companies that excelled at finding capable outsiders for their initiatives achieved their goals more often. Fifty-three percent of the Transformation Leaders said they were strong or extremely strong at this, compared to only about a third (32%) of the weakest executors.
Explore more key findings from our research to learn more about the benefits and key success factors of the Dynamic Workforce model.
