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March 13, 2000
Traditional Companies Worried About E-Commerce: Lack of Skills
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Think Managers Don't Have the Right Skills to Help Them Succeed

Traditional companies, ones that have spent the last few years considering their e-business strategy and technology infrastructure, are about to enter the second phase of the e-business revolution. They will encounter tremendous organizational challenges along the way, particularly in finding and managing personnel with the new skill sets to allow them to succeed.

The results of a recent survey by Towers Perrin indicates that these companies will struggle with how to accomplish this revolution, according to Peter Bresler, head of its Organization Performance Practice. "In this next wave, we can expect e-commerce to uproot the traditional organization structure. We're now on the point of change for bigger companies."

Control an Issue

The vast majority of survey respondents are planning to keep e-commerce operations integrated within their main business and that no obvious home exists into which e-commerce operations report. Results also show that most organizations are determined to keep control and not outsource the components of customer relationships, such as order taking/tracking, order fulfillment, customer service and billing. "This runs counter to much of the organizational theory circulating among consultants and academics, as well as to the business models employed by many start-ups and dot coms," noted Bresler.

"Companies are entering the world of e-commerce mainly to increase brand equity, or deepen customer relationships," added Bresler. "But they face a huge challenge. Fundamental change lies ahead in how work and the people doing it are organized and managed, yet many employees lack the skills and capabilities to make e-commerce happen."

People, Not Strategy or Technology, Is Biggest Corporate Concern

While many companies have already made a large investment in e-business strategies and technology, most are unclear about how their organizations will evolve to leverage these investments. "Most respondents are focused on people and culture issues, not structure, technology or process challenges," said Brad Ivie, a Towers Perrin consultant. "A whole new relationship with the employee is developing, where money is not the most significant factor in attraction and retention of talent."

"Regardless of the company's e-commerce experience, a top respondent concern was that too few key managers are clear about their e-strategies," noted Ivie. "Eighty-seven percent agreed that too few key managers have e-commerce skills and insights, while 66 percent admitted that their organizations were struggling to attract the best people to take advantage of e-commerce opportunities."

Infrastructures hurting, not helping

Existing infrastructures of traditional businesses are also seen as impediments to effective employee behavior. Seventy-four percent said organizational structure tended to inhibit the pace of decision making, while 59 percent believe their corporate cultures present a barrier to getting things done. "It is interesting," added Ivie, "that companies with more e-commerce experience face many of the same challenges, indicating there is no built-in learning curve on these issues."

Most respondents were from large multinational companies, with a majority located in the United States, Canada or the United Kingdom; the remainder were in Asia, Australia or Continental Europe. Thirty-five percent were in organizations with more than 5,000 employees. Over half responded on-line. Nineteen percent have offered products via the Internet for more than two years, 29 percent between one and two years, 14 percent between six and 11 months and 38 percent for less than six months.

Copies of the survey may be obtained by calling 1-800-525-6741.

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