THE NEW AGILE ORGANISATION IMPLICATIONS FOR HR

INTRODUCTION

Many senior managers and executive teams have grown up with the concept that the organisational structure of any business is hierarchical; which means that power and authority flows vertically downward and where employees are departmentalised. This system was adopted from the military and the tenet is that employees must follow the chain of command and the reporting lines must be unambiguous. A vertical organisation structure is one that relies on managers commanding and controlling their employees' work- because they are the boss!

We all instantly recognise the following organogram:

New Organisation Implications for HR

This type of organisational structure, while relevant in its day, is fast becoming outdated. To be sufficiently agile to meet the fast-paced, ever changing innovations and disruptions of the new economy, organisations must be structured differently. Welcome to the new hierarchy:

New Organisation Implications for HR

 

The new organisation will consist of multiple teams (one of which is depicted above) which are quickly deployed and rapidly disbanded. These teams must be small, agile and most importantly, empowered. Jeff Bezos, the founder of Amazon, stated that “…if the team needs more than two pizzas for lunch, it’s too big”. The team must be co-ordinated by the best qualified person in the team rather than the traditional manager position in the old hierarchy.

BUSINESS IMPLICATIONS

Let’s be honest – the traditional hierarchy is ideal to formulate a plan and execute it efficiently. But given the fast-paced business environment, one must constantly question whether the plan is the correct one? Usually the plan, once formulated, cannot be tweaked in response to environmental changes observed on the ground or at the coal-face. Any change in strategy would require reversing the decree up the chain of command which will take an inordinate amount of time and senior management will probably not admit they were wrong and make a change.

New Organisation Implications for HRThe new teams based hierarchy may be more difficult to manage but it will be more agile, proactive and adaptive. The team will quickly solve problems or obstacles resultant from current market data – this may entail a complete change of the strategy. In the traditional top-down hierarchy, these problems would not have been foreseen. The new hierarchy will introduce what has been termed “bottom-up interventions” rather than blindly following “top-down instructions”.

GUIDELINES FOR HR

The traditional response of HR to the new hierarchy is often, “Yes, but what grade is E”, “Who approves business reimbursements” or “Will F be responsible for G’s annual salary increase”. Kjell Nordstrom and Jonas Ridderstrale summed up the attitude required from HR in their book Funky Business when they stated that, “Future success will be about challenging current wisdom and moving your pawn from A2 to E7 in one move”. If HR is to become/ remain a strategic partner in the new business environment, a radical mind shift is required where they must not doggedly persist with the current outdated HR policies, practices and thinking.

Embrace the change and introduce innovative HR policies which facilitate the new way of working.

Constantly raise objections and problems and you will become outdated and irrelevant, with your function chopped down from a strategic role to a transactional function.

Some guidelines or factors which HR professionals could consider would include, inter alia:

  • Revaluate the reward system. Annual bonusses will be replaced by team or project related bonusses with more frequent or ad hoc pay-outs.
  • Consider how performance management will be conducted. Clearly there is no reporting manager to complete this anymore. Does the team complete 360 degree reviews on completion of the project? And if so, is a digitised platform required? Remember that an added complication will probably occur- the team may not be on the same continent. Remote work is becoming more commonplace and concomitantly, different skill sets and strategies are required for the complexities of managing performance where teams are not located in the same place.
  • Annual forward-looking goal or objective setting will change radically. It is unknown which team the employee will be a member of during the year. Quarterly and/or team goals may be required, or perhaps a combination?
  • HR systems need to be recalibrated (or probably rewritten) and digitised to keep track of teams and their members.
  • Introduce learning programs to ensure that team coordinators are equipped to manage teams rather than their traditional “direct and command” management style. In addition, continued life learning is essential as it is axiomatic that the skills a 45-year-old executive learnt in college, are not the skills he will need to thrive in the New Agile organisation. When discussing older executives, Maria Flynn, the CEO of Jobs for the Future, stated that “Without highly effective education and workforce-development systems, these groups will fall further behind”. HR is undoubtable responsible for creating a mind-set shift; a company cannot expect executives to adapt and change their mind-set, if we do not assist them to learn.
  • One of the salient concerns of the new agile organisation is that it is difficult to scale, especially in large international organisations. This however, is where HR has a strategic part to play by providing the “glue” for the new hierarchy. This would include:
    • Defining the company culture with the management team and then evangelise it to ensure that the culture is inculcated in each individual team and the company as a whole. The importance of culture in the New Agile Organisation cannot be underestimated. A recent McKinsey survey found that,” …the biggest challenges during agile transformations are cultural- in particular, the misalignment between agile ways of working and the daily requirements of people’s jobs, a lack of collaboration across levels and units, and employee resistance to changes”. Should one wait for the culture to change organically to the new circumstances? No. HR must be proactive and examine ways to ensure that the culture is more responsive to the new agile dynamics of the organisation. Questions which should be examined:
      • Does the culture facilitate a quicker response to customers’ needs and shifting consumer trends? The digital age is forcing companies to become more client-centric - where swift response time, customisation of products, innovation and easy access to information is no longer a competitive advantage – it is a requirement to merely stay in the game. Is the culture aligned with these new requirements?
      • Does the culture encourage risk taking and experimentation?
      • Does the culture punish mistakes? If so, how can this be changed?
      • Does the culture encourage cross silo, department and business communication, interaction and the exchange of ideas?
    • Ensuring a free flow of performance information including feedback loops.
    • A clearly defined and appropriate reward structure where team members are rewarded for contribution and not seniority.
    • Systems which facilitate the collation of all HR related information which then provides executives with valuable strategic management information. According to the Mercer 2017 Global Talent Trends study, more than 90% of C-suite executives plan to redesign their organizations in 2017, but almost half DO NOT believe that their HR team provides actionable analytics to improve business leader decision making. Prove them wrong!
  • Ensure that all the above factors are holistically incorporated into a cohesive HR strategy which drives the attainment of the business strategy but simultaneously, improves the employee experience which expedites attracting and retaining talent.

CONCLUSION

The New Agile Organisation will be demanding for HR professionals however, if they are to play a strategic role in this new and exciting future, then current thinking must be redefined. Further, cognisance must be taken of the fact that there is no silver bullet, generic road map or panacea which will ensure that HR becomes a strategic partner – each company is different and the innovative solutions for each company will be atypical.

New Organisation Implications for HRHowever, this is an ideal opportunity for HR professionals to elevate their position from a transactional role to a strategic partner of the Exco, by becoming the thought leader on how best to facilitate the introduction of the New Agile Organisation.

Get this right and it will be HR who wears the crown.

 

Fore more information please contact Brett Hopkins on 011 305 1945 or brett@axiomatic.co.za