This is an extract from Chapter 2 of my new book Organization Design: Engaging with Change, published last week (November 21 2013). To find out more about the book and order a copy here.
When people are trying to decide the 'best' structure for their organization they often forget that work has to flow through it, and that different structures have different attributes. For example, that adaptability is poor in a traditional hierarchy but good in a network. Instead structure decisions are often made based on personalities, politics, and expediency. This is a mistake on two counts. First, failing to explicitly recognize that structure choices impact organizational capabilities, and second that getting work done efficiently in order to meet organizational goals is, or should be, the purpose of the organizing frameworks and structures.
The possibilities that technology now offers for charting the way work actually gets done in organizations and the advent of new business models raises some questions about who 'owns' the design of the organization and where should the 'owner' reside in the organization.
Identifying who owns the design is not always clear cut. Consider the business model of LiveOps, established in 2000. It deploys cloud computing to virtualize its business services. It is a cloud-based call centre service that manages a network of more than 20,000 independent at-home agents. Companies use the service on a pay-as-you-go model, either as a fully outsourced call center or to augment their own. The technology enables an on-demand, scalable service to subscribers. The relationship of the stakeholders – LiveOps, the independent agents, and the companies buying the services of the agents via Live Ops is not easily depicted in a standard chart.
Nevertheless the three parties together form an organization that delivers a service to a customer. In this instance who 'owns' the whole system design of LiveOps? Is it the CEO or leadership team, or the self-employed agents, or the purchasers of the services who, by nature of their requirements, have an implicit voice in the design of the organization, or others who are not so obvious like regulators, or possibly unions, or even more possibilities beyond these? Notice that so far none of the possible owners mentioned includes HR – a function which often sees itself as the guardian of organization design.
Listening to LiveOps founder and CEO, Marty Beard, speak it is obvious that the design of the organization is something he constantly thinks about. He is making continuous decisions of whether, in his words, to 'pivot or persevere'. As it says on the LiveOps website "He is responsible for all strategic and operational aspects of the company." He is using his sophisticated technology to keep a constant eye on operations, and specifically the at-home agents.
Beard says "I have this real time flow [of information] so that every day I can see what they're working on, what they're impacted by , what challenges they face. That's just input for me to figure out what products do I need to make, what changes do I need to make, what patterns am I seeing, where do I need to change my focus to provide better service?"
The LiveOps SVP of Human Resources, Norma Jean Lane, "manages the planning, direction and implementation of all human resources programs and policies and participates in the overall executive management of the company. Her team serves all LiveOps employees in the areas of human resource services, compensation, benefits, organizational development, training, EEO compliance, recruiting, staffing, and all other aspects of human capital management."
In this example you see a current trend. That the overall 'design' of it is 'owned' by the business people, as a part of a business strategy, and the 'development' of it is 'owned' by the HR team. But these are not independent but integrated pathways. There is a business strategy that can only be delivered with the support of a corresponding HR strategy. Here is what one HR manager said on the topic:
'Our business leaders are currently designing a Target Operating Model and a 5 year plan which will look at business development in emerging and existing markets. Therefore I see my [HR Manager] role as instrumental in being able to plan the 'future-state' including assess skills requirements, analyzing labour markets, and developing a future plan talent acquisition planning/internal mobility or other interventions for resource such as outsourcing and other flexible workforce solutions. I also aim to look at centres of competence for key skills in e-commerce and this could be on an international basis as my company has international span/growth plans. Thus my role is strategic in terms of the business strategy as I have to integrate the HR strategy with it.'
Although 'organization design' is often seen as vested in HR, and certainly required as an HR competence – it figures on the CIPDs HR Profession Map – a new design is typically initiated and driven by the business. HR, with its focus being primarily on the workforce, is only one of the parties that enable new organization design success. Other support service areas, among them IT, finance, facilities, and communications are also typically tagged as enablers of new design success, and often work alongside the business and HR in planning and implementing a (re)design piece of work.
Take a look at this extract from a request for proposal (RFP) from a telecoms company.
Over recent years, Telco has undergone significant change, much of which is the result of influences of the external environment. This change has taken many forms: merger activity, entry into new markets, new channels, a new CEO, an emerging strategy, etc. During this period of change the overarching structures, roles, policies and processes, etc. have remained largely unchanged.
The CEO and his leadership team are now commissioning a review of the current organisational design. The outcome of this will be a) an assessment of the current design's capability to achieve the new strategic priorities b) if it is found to be not capable, recommendations for achieving a more coherent and effective design that will deliver Telco's vision and strategy. The aim of this piece of work therefore is to ascertain whether the current organization design is robust enough to meet future demands including emerging strategy, external market pressures, employee engagement, etc.
In particular, the review should aim to answer the following questions:
1) To what extent does Teleco's current form support our stated purposes and vision?
2) What has changed over recent years (either internally or externally) that must now be attended to in terms of the overall design of the organisation?
3) What are the recommendations in determining next steps in achieving greater coherence and alignment (dependent upon findings)?
4) How can organizational agility be maintained in the light of on-going organization-development activity?
This RFP was initiated by the business leaders. In consulting terms the key business owner of the project is the 'client'. Now think about who might respond to the RFP: if it were external consultants what field of expertise would they demonstrate to qualify them: HR, business strategy, operations, organization development, change management, business analytics, or finance? If it were an internal request who would it flow to? It is not obvious that respondents would (or should) come from HR. In this RFP the only qualifier is that respondents should provide evidence of "Experience in this field and references of work previously carried out that are similar in nature to the proposal." ….
The discussion on this topic continues in Chapter Two of the book.
Who do you think is the owner of an organization's design and who in what functional or expertise area would be qualified to advise on the design? Let me know.