After so much discussion these last years in the HR community about talent, leadership and technology, is organisational design now benefiting from a long-overdue renaissance of interest? Last year, Deloitte’s Global Human Capital Trends Report highlighted “The Organization of the Future” as their top issue, while Dave Ulrich’s “Victory Through Organization” (2017) argued that organisational capability deserved far more attention given it has four times the impact on business results that talent has. Faced by key challenges such as growing competition, the speed of digital change, and the need for greater enterprise flexibility, organisational design is therefore becoming more critical than ever before for success.
The growing interest in this topic was reflected by the high attendance at two recent Corporate Research Forum (CRF) events that presented their latest research report on “Designing Adaptable Organisations for Tomorrow’s Challenges”. As a speaker at both events, together with Amy Kates (Kates Kesler Organization Consulting) and Gillian Pillans (CRF), it was a chance to hear how organisations in Europe are facing up to these challenges. Some key takeaways for me were:
1. Organisations often reported good progress with getting benefits of scale (e.g. shared services, centralized centres of expertise) but more difficulty in maintaining agility, especially due to over-complex matrix models, and problems delivering sales through an omnichannel approach combining digital and bricks-and-mortar retail.
2. Given these constraints, and the unpredictable impact of future trends such as digital transformation, fresh approaches are being taken to organisation design including:
– applying more experimentation, fast learning and rapid redesign (shown in a case study of ING) in order to capitalise on the latest technology trends and opportunities
– moving away from “one size fits all” and embracing more diversity of organisational models (such as in Nestlé, which ranges from global businesses such as Nespresso to more local models for country-specific products)
– leveraging networks, and also overall organisational culture (such as in the case of Aviva), as means of fostering alignment rather than depending purely on reporting lines and hierarchies
– capitalizing on the power of analytics to pinpoint where there are organisational design issues, and using technology to trial-and-error designs rapidly before moving to implementation.
3. At the same time, concepts like the Galbraith Star model remain an essential part of the organisational design toolbox, although it’s important they are then followed through (e.g. covering issues like metrics, rewards and capabilities) and not just stopping at determining governance and processes, and are underpinned by effective change management support.
4. Despite the increasing importance of this topic, only 39% of those surveyed by CRF felt they had strong organizational design capability in their HR functions. The risk then is that HR is bypassed in these decisions and is confined to an implementation role.
The challenge, then, is how can HR leaders play a more value-added role in such decisions? An obvious first step is to have a more informed point of view, leveraging the latest research and writing in this area, as well as networking with other practitioners grappling with such issues. Secondly, HR can bring a lot of insight as they are often more aware than top teams may be of the “rubbing points” in organisations, which can be invaluable input for future designs. Thirdly, it’s about HR being ready to ask pertinent questions and to challenge stakeholders’ assumptions. Finally, when the future direction is clearer, HR can play a facilitation role in enabling the co-creation of new designs by all the relevant stakeholders. By doing this, HR can be a more effective business partner and help build organisations that are more adaptable, future-ready and successful.