“How to acquire digital transformation talent: M&A, JV, and team-based hiring”. In this third part of Acquiring and Organizing Talent to Drive Digital Transformation (DX) Success, we’ll talk about different ways to acquire talent for a dedicated digital transformation organization.
How to acquire digital transformation talent: M&A
If your company doesn’t have digital DNA, one way to build a DX organization is to acquire a company that is already digitally savvy and increase its capabilities in a short period of time. Often referred to as talent acquisitions, these deals are not done for financial gain or business synergies.
However, there are very few companies in Korea that have this option, especially in the U.S., where big tech companies have been able to take advantage of it. However, there are quite a few such mergers and acquisitions in the United States, mainly among big tech companies.
Digital Transformation Talent Acquisition Methods: Joint Ventures
The next option is to create a joint venture with a company that already has digital DNA. The benefit of creating a joint venture based on a financial investment is that you’re not bringing DX talent in-house, but you’re still partnering with people who have the expertise. You can also ensure business continuity and reap financial benefits as the other company or joint venture grows. Even if it’s not necessarily financially beneficial, it’s a viable option if you don’t have the internal manpower to execute DX, which can be quite costly. Again, there are examples of this from well-known global companies, and there are also recent attempts by domestic companies.
Analyzing digital transformation talent acquisition methods and practices in domestic companies
The first two methods are not yet practiced in Korea. Except for a few well-known IT companies, they are hard to find. In general, people only think of talent scouting, not the idea of acquiring an entire company to secure talent. In Korea, Naver’s acquisition of Sunun in 2006 to develop a search engine was a highly publicized M&A for talent acquisition.
Kakao has also acquired several startups to acquire talent, and in fact, they are contributing to the growth of Kakao. However, it is difficult to find such cases in traditional companies other than IT companies. The same goes for joint ventures. Most executives have a lot of control, and in many cases, they want to keep the new investment firm under their control. They are reluctant to create a separate joint venture with no control simply to add staff. While there have been some media reports about the joint venture between LG CNS and cloud provider MegaZone to create Cloud Gram, there have been few examples of joint ventures to acquire IT talent from traditional companies.
The importance of leadership in digital transformation organizations and where to look for talent
So what’s the right way to organize? We’ve already covered the answer above. Create a new dedicated DX organization with strong executive commitment and investment, and hire someone with DX experience to lead it. In short, empower the leaders of the DX organization and give them the power to shape and hire the team. Unlike other fields, IT is structured in such a way that no one person can produce results alone.
This is why there are so-called “gurus” who are recognized as experts in a particular technology. They act as influencers within the community of their peers. Hiring these candidates as DX leaders creates a pool of people who want to join the organization to work with them. It’s a unique hiring culture in the tech industry. Hiring a good leader, a good grunt, can go a long way in building your workforce.
can go a long way in shaping your workforce. Of course, in larger organizations, these people may not be the right fit when compared to internal standards. However, the most important thing to look for in a DX leader is someone who can actually execute DX and show results, so it’s important to look at hiring from a different perspective than the traditional talent requirements.
How to acquire digital transformation talent: Hiring by teams
The next hiring option is to hire in teams. At the risk of sounding like a broken record, the nature of the IT industry is such that you can’t work alone. As the saying goes, you can’t see the hand that feeds the tongue, and collaboration takes time to build trust. While it’s one thing to work toward a deliverable in a limited timeframe, such as an SI project, it’s another to hire in teams to ensure continuity. If the leaders of your DX organization are good enough at team building to bring their own crew, that’s fine, but if not, you’ll need to hire from the open market.
In this case, it’s a good idea to empower leaders to hire and allow them to select their own people. While there are benefits to this kind of leader-centric hiring, there is also a downside. That’s when they leave en masse. In fact, overseas companies often use M&A to acquire technology companies to eliminate this risk. Otherwise, there are ways to compensate them well. In addition to compensation, there is also the option of signing an employment contract with a mandatory service period and a lump sum payment upfront. This is called a retention bonus.
On average, it takes about three years for a DX project to succeed when hiring new IT talent, whether through M&A or general recruitment, who have never experienced the culture of an existing organization. During this time, you’re in it for the long haul, and you need to keep an eye on them to make sure they don’t drift away.
