Digital & Analytics Practice

Digital transformations:
The five talent factors that
matter most
Setting up a winning digital and advanced-analytics organization is
hard. Decisions about talent and technology will often determine the
transformation’s success.
This article is a collaborative effort by Vincent Bérubé, Cyril Dujardin, Greg Kudar, Eric Lamarre, Lapo Mori,
Gérard Richter, Tamim Saleh, Alex Singla, Suman Thareja, and Rodney W. Zemmel, representing views from
McKinsey’s Digital & Analytics Practice.

© Westend61/Getty Images

December 2022
 Digital transformations—whether digitalizing tier talent to join the company after taking all other
an entire company or setting up a digital and elements of the organization into consideration—
advanced-analytics (DnA) start-up within the such as whether the brand and story make sense,
organization—are a significant challenge. We have whether there is adequate compensation, and
frequently seen these transformations stumble how the company addresses lifestyle issues. All
along the way, and leaders often have difficulty of these factors are critical to effective change
sustaining any improvements over time. management. The quality of reports to the CDO
will play a crucial role in achieving the initial wins
Across the transformation journey, talent and needed to gain traction, such as successfully
technology are critical to success, from planning developing digital products or setting up technical
and hiring to managing and developing. We infrastructure.
recently revisited more than 30 large-scale digital
transformations across a range of industry sectors, In general, organizations risk the overall reputation
each conducted within the past three years. Our and viability of their programs if they attempt
aim was to gain a greater understanding of the to take shortcuts with early hiring. In fact, our
talent and technology decisions that drove (or experience shows that taking shortcuts can
hindered) the success of these programs. From delay transformations by six months to a year or
this research, five core themes emerged (Exhibit 1). more. Thus, organizations should go further and
be proactive in setting up the digital leader for
success—ensuring that the CDO has influence and
1. Prioritize hiring senior digital a seat at the table and that the program is large
leaders to attract talent and sharpen enough to require commitment and conviction from
your value proposition the C-suite.
Ultimately, performance is defined by your talent
and technology strategies and the capabilities of the
senior leadership, such as lead data scientists, driving 2. Rethink your value proposition for
the transformation. Indeed, up to 50 percent of the digital talent
variability in group or unit performance is attributable Although the CDO is an important factor in shaping
to individual leaders.1 These people shape the future the organization’s value proposition as it relates
organization in multiple ways: screening and hiring to talent, there is only so much that leader can
candidates, establishing technical standards, and do alone. It is important to consider the local
setting the tone for ways of working (for example, hiring market and talent pool, as well as factors
collaborating, innovating, failing or learning quickly, specific to your industry sector, and strive to
and maintaining high quality). Selecting the right improve your own work environment in a local
individuals for these roles will define the success context. There is no need to assume that you will
of the digital transformation. Therefore, it is vital to always be competing for digital talent with big
invest the time needed to conduct a broad search. tech companies, such as Google and Amazon. In
fact, companies tend to compete with other local
Significantly, the right appointment also sets companies to attract key technical roles. For
the tone for subsequent hires: the chief digital instance, a mining company may be in a remote
officer (CDO) is a key contributor to the company’s area where big tech doesn’t operate, so the
employee value proposition to attract follow-on competition for digital talent would be primarily
talent. It is important to allow the CDO to hire from with other mining businesses and oil and gas
the top down, starting with senior roles and moving companies. That said, digital skills are not industry
to junior roles, to facilitate the search for the right specific, which means that local players from
lead data scientist, data engineers, software other sectors, such as financial services, may also
engineers, and technical architects. The CDO’s compete for the same digital talent.
experience and credibility will help convince top-

1
Tomas Chamorro-Premuzic and Becky Frankiewicz, “Digital transformation is about talent, not technology,” Harvard Business Review,
May 6, 2020.

2 Digital transformations: The five talent factors that matter most

Exhibit 1
Digital and advanced-analytics transformations center on five core
talent factors.
Digital and advanced-analytics transformations center on five core t alent factors.
The most important lessons learned from more than 30 large-scale digital and advanced-analytics (DnA)
transformations across sectors and geographies

Resource your organization to target areas of the business where DnA will make a big difference1;
worry about the rest later.
Build the team internally if DnA will be a long-term competitive advantage for you.
1. Plan Assemble cross-functional teams to solve business problems2; look beyond pure “tech” leaders for
the DnA transformation.
Revisit your compensation structures to be competitive and attract the best talent; understand
who your competition for digital talent is.

Hire senior digital leaders first to attract additional talent and sharpen your value proposition.
Rethink your value proposition for digital talent.
2. Hire Consider hiring digital talent internally from your existing workforce but keep a high bar for
technical skills.
Set up new HR processes to enable hiring much faster than for traditional roles; include a technical
competency assessment.

Develop a learning and development program specifically for digital talent.

Establish structured coaching and mentoring for your digital talent.
Talent
3. Train Encourage participation in conferences and networking communities to keep digital talent on the
leading edge of the industry.
Build a knowledge management system to store code repositories, learnings across use cases, and
best practices.

Establish a method for each digital discipline (including data science, data engineering, cloud, and
cyber) by defining standards, recipes, and tooling.
Evaluate trade-offs between immediate results and long-term capability building, leveraging
4. Deploy
external contractors to supplement delivery.
Set aspirational financial or strategic3 expectations for each digital team.
Reassign management personnel to critical DnA roles.

Continually reassess the pace of the transformation and adjust the replacement of contractors with
internal resources accordingly.
Assess the degree to which DnA should be embedded in your business units; determine the
timeline in which those units must be transformed.
5. Grow
Leverage or build on existing structures and processes where possible (eg, engage the
operational-excellence group to best integrate their new technologies).
Track the progress of capability building and talent retention with the same rigor with which you
track progress on financial targets.

1
Only 30 percent of organizations align their analytics strategy with their broader corporate strategy.
2
Sixty-two percent of companies realizing higher returns from AI and scaling it more broadly assembled cross-functional teams to solve business problems vs 23
percent of other companies.
3
For example, for environmental, social, and governance (ESG) goals that are not directly linked to financial impact.
Source: Tim Fountaine, Brian McCarthy, and Tamim Saleh, “Getting AI to scale,” Harvard Business Review, May 2021; McKinsey analysis; McKinsey Global
Institute analysis

Digital transformations: The five talent factors that matter most 3

 After meeting minimum requirements such as carefully considering the importance some
salary or respected tech leadership, consider employees attach to working with groups outside
how your industry can appeal to each individual of their own specialties, such as data engineers
candidate’s specific needs. To stand out, working with the business function. Based on the
companies need to be committed to a modern business problems that need to be solved and
technology stack. Understand the factors that the governance model that will steer the work,
motivate particular categories of candidates it is important to understand what individuals
and adjust your pitch—and work environment— experience on a day-to-day basis and to appeal to
accordingly. It is helpful to recognize that some them accordingly. Peer groups and the expected
industries can readily offer what a candidate level of responsibility are equally important. Make
may be looking for. For example, in automotive, sure you’re accurately pitching the level of a given
manufacturing, or energy sectors, there may be team. A colleague who signs up for a “tier one”
opportunities to address challenging or novel team and finds that they are working on less lofty
problems, such as the transition to a net-zero problems may lose interest and look for an exit.
economy, as well as to work with cutting-edge
technology. You may be able to offer development
opportunities, including top-tier training programs 3. Hire digital talent internally, but
or access to educational conferences. keep a high bar on technical skills, and
be realistic about reskilling
At one mining player, the company value Not all digital talent comes from outside the
proposition was revised to focus on what matters organization. In fact, companies often have untapped
to digital talent; at an airline player, the high levels pockets of digital talent. To begin, appraisal—and
of data available and solutions at stake were key hiring—processes for technical roles should include
components of an attractive value proposition for technical-competency assessments rather than just
top talent. That said, companies still have hurdles to résumé reviews and evaluations of leadership skills.
overcome when seeking to attract digital talent, such At the same time, not all digital products require
as remote work locations—but these are solvable. sophisticated skill sets. Companies with strong
nondigital talent can aspire to cover up to 70 percent
Beyond this, it is important to develop an accurate of their digital needs by upskilling some of their
picture of your tech culture: a mix of skills, current employees. Being able to spot these people is
mindsets, and work preferences is necessary to vital and can be achieved via techniques such as
build a successful organization and is preferable skill surveys.
even within a given technical role. In this context,
employers should hire for specific profiles as A decision to train an existing employee versus
part of the overall organizational mix, and a clear hire externally needs to be based on measurable
definition of expectations aligned to different criteria, such as the time for a candidate to become
profiles can minimize confusion. fully independent in a role. It is important to be
realistic about both the number of employees
Historically, culture has been the number-one who can be upskilled and the time required to
barrier to delivering impact from digital initiatives.2 undertake the training and development journey.
Organizations need to understand where they The first employees to upskill would be those with
are today, set the vision across both strategy and high data and technical readiness and who benefit
culture, and hire employees based on gaps and from strong business sponsorship.
culture fit.
Beyond this, companies should place internal hires
Finally, team dynamics within the cultural in positions where they can learn and grow while
landscape are important: employers should pay working alongside more experienced engineers,
close attention to their collaboration models, whether these are hired externally or staffed via

2
McKinsey’s 2016 digital survey of 2,000 chief experience officers (CXOs).

4 Digital transformations: The five talent factors that matter most

 a third party. In addition, a sometimes overlooked can provide powerful on-the-job learning. This
benefit of hiring from within is that internal hires push toward ongoing learning also applies to
can strengthen the link between development or senior employees, including executives and senior
product teams and operations. technical leadership. Ideally, they should spend
half to two-thirds of their time actively doing
Executives tend to overstate how quickly their day-to-day work. This way, everyone is involved
existing talent can be converted. If you choose to in developing the final product, improving both
upskill internally, you should consider the speed upskilling and retention.
with which you are trying to deliver on use cases.
Retraining people within IT is not easy, and some Notably, many successful organizations focus
roles are too specialized for reskilling (such as on creating the types of environments in which
cybersecurity engineers and system architects). In workers can teach themselves. For example, at
such cases, it’s better to hire specifically for that Google, the vast majority of tracked trainings
role from the marketplace. For example, it can happen via an employee-to-employee network
take up to or more than 100 hours of weekend called “g2g” (Googler-to-Googler). Members of the
work for an internal employee to complete the network, which includes more than 6,000 people,
online coursework to pass an Azure data engineer offer their time to help peers develop.4
certification. That approach won’t fill your teams
very quickly. Leading companies are much more inclined than
laggards to reward higher skill levels with better
If you decide to do most of it yourself, it makes compensation (67 percent versus 41 percent),
sense to convert internal talent, but don’t imagine greater benefits (64 percent versus 23 percent),
that a process engineer can be converted with and more responsibility (78 percent versus 58
two months of training. As an example, it can take percent).5 Employees understand that they
years to become a high-quality data scientist or must upgrade their skills continually, and there
technical architect. Unless you hire highly proficient are numerous ways to do so—especially online,
people initially, you are unlikely to obtain the early where free or affordable courses are available for
wins your program needs to gain traction. You risk certification in high-demand technical skills such
the overall reputation and viability of the program if as machine learning, Python, or R, which they can
you attempt to take shortcuts with early hiring. take at work or during personal time. For people
with potential, the key is to provide opportunities
and incentives, but they do not need to be spoon-
fed further education. Of course, structured
4. Build a learning and development learning helps round out new skill sets and fosters
program specifically for digital talent a longer-term learning journey.
Skills development needs to extend beyond
training because the sheer pace of technological It is essential that cohort- and role-specific
change can make setting up formal training learning journeys are in place across the
programs difficult.3 A combination of on-the-job enterprise from the top all the way down. Learning
training and structured learning programs to round journeys for different cohorts—for example, the
out skill sets can best foster the development chief experience officer’s team, data engineers,
and embedding of DnA skills. In this context, an translators, and those operating the products
apprenticeship model can work well, which is being developed—include components of online
why it’s important to hire senior leaders first. courses as well as in-person cases to achieve
When matched with more junior employees, who a mix of self-paced (fundamentals) and group
are often eager to work with senior employees, (interactive) learning.
flagship hires and expert temporary contractors

3
Gerald C. Kane, “Your digital talent needs may not be what you think they are,” MIT Sloan Management Review, December 6, 2016.
4
“Guide: Create an employee-to-employee learning program,” re:Work, accessed May 24, 2022.
5
Jeff Kavanaugh and Ravi Kumar, “How to develop a talent pipeline for your digital transformation,” Harvard Business Review, November 27, 2019.

Digital transformations: The five talent factors that matter most 5

 Finally, it is important to be realistic. Best-in-class — Ensure early product ownership by internal
data scientists spend many years in school and teams—for example, by allocating product
then more years in a working role before being ownership internally very early in the transition
hired by leading firms. It is not possible to re-create process (even if teams are not ready yet) and by
this with an internal six-month training program. looking to full-time external experts for coaching.

— Involve employees on teams from the start. One

5. Evaluate trade-offs between transformation leader at a mining company
immediate results and long-term explained that the organization never had teams
capability building, leveraging that were 100 percent external. For the first six
temporary contractors to months, 70 percent of staffing was external; six
months later, it was 50 percent; and six months
supplement delivery
after that, it was 20 percent. Though you can
Embedding the new skills and culture is vital for the
expect a higher proportion of external to internal
success of any transformation. However, there are
talent early on, aim for the ideal scenario of 60 to
trade-offs to be considered between quick wins
80 percent internal talent.
and sustainability (Exhibit 2). All companies need
these skills; the question is how much and when.
— Encourage employees to get out of their
Contractors can help expedite the early pace of the comfort zones. Internal team members
transformation, but a strong transition plan must need be encouraged to take ownership. But
ensure successful capability transfer and ownership. expectations need to be adjusted: top external
A number of actions can help achieve this: talent can be up to twice as productive as

Exhibit 2

Making the right trade-offs can help you find the right balance for 
Making the right trade-offs can help you find the right balance for
your organization.
your organization.

Emphasis • Aiming for faster impact can generate higher short-term cash flows while potentially neglecting
on quick long-term sustainability and product quality
impact • Being dependent on temporary subject matter experts can force companies to fill roles with
extremely short lead times

Speed of
impact

Emphasis on • Addressing low-hanging fruits initially can leave items with larger impact for later
sustainability • Emphasize capability building, organizational setup, and continuous improvement

Long-term
sustainability

Emphasis on • Using contractors to build highly innovative products could jeopardize long-term sustainability
innovation and lead to a higher risk of failure, eroding trust and short-term impact
• Investing more heavily in IT and building completely new infrastructure will require early
investment in more senior subject matter experts

Degree of
innovation

6 Digital transformations: The five talent factors that matter most

 internal talent who are still learning the ropes. Hiring strong senior leadership will serve as
This performance gap needs to be factored into a catalyst for growth. Carefully crafted value
expectations of pace, especially as external staff propositions, key performance indicators, and
begin transitioning the work to their internal career pathways will attract, motivate, grow, and
counterparts. retain talent. A crucial scale-up consideration is
to regularly revisit key trade-off decisions, such
— Finally, seek to establish strong norms from as achieving the right blend of training for your
the start. To do this, you will need to establish employees and the optimal mix of talent sources to
protocols and solid ways of working. For one balance culture, pace, and quality. Thinking about
mining company, the first six months were all these themes and iterating on them will help your
about codifying ways of working in a playbook DnA organization grow to its full potential.
in collaboration with the external consultant.
This approach paid off: as new people joined,
the onboarding process and working patterns
were clear.
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In general, balancing speed, sustainability, and

degree of innovation requires trade-offs. Successful
iteration necessitates a culture that can fail fast and
learn from those failures.6 Without this, it’s important
to ensure that plans work out in the long term.

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6
“Digital transformation,” May 6, 2020.

Vincent Bérubé is a senior partner in McKinsey’s Montreal office, where Cyril Dujardin is a consultant; Greg Kudar is a
senior partner in the Calgary office; Eric Lamarre is a senior partner in the Boston office; Lapo Mori is a partner in the
Denver office; Gérard Richter is a senior partner in the Frankfurt office; Tamim Saleh is a senior partner in the London
office; Alex Singla is a senior partner in the Chicago office; Suman Thareja is a partner in the New Jersey office; and
Rodney W. Zemmel is a senior partner in the New York office.

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Digital transformations: The five talent factors that matter most 7