Organization design is the number one topic on the mind of business and HR executives who responded to Deloitte’s 2016 Global Human Capital report. We are not surprised. Over the past 10 years, we have witnessed a tremendous increase in strategic complexity across the companies we work with. While good design decisions will reduce unrewarded organization complexity, it is just as important to enable mid-level leaders to successfully work across boundaries – business, function, geographic, and culture – if they are to bring sophisticated strategies to life.
We believe the root of the trend toward increased complexity in organizations is the desire to run diverse business portfolios as integrated companies. Even leaders of companies with loosely related business units, each competing in unique niches, are looking to find synergies around common customers, shared technology platforms, or core business processes. They are seeking to gain the benefits of size and scale, while staying nimble in industries being disrupted by upstarts bringing new technologies and business models. The result is an increased pressure on the broad band of mid-level managers and leaders to make faster decisions and high quality trade-offs.
This trend presents HR leaders with four opportunities.
- Provide robust design frameworks. The field of organization design is still young, but smart HR leaders are bringing their clients tools to execute on strategy. This includes clarity of direction and priorities, clear structures and roles to connect colleagues across boundaries, and the forums and processes in which managers can have the high impact conversations that drive faster, better decisions.
- Lead an inclusive design process. Organizational models are best built by the people who have to run them. Yes, the senior executive makes the ultimate design and staffing decisions, but those choices are best made when informed by having a broad group of leaders, who represent all the important nodes in the business, wrestle with options and find alignment on core ideas.
- Work the interfaces. Too often, leaders go from design to implementation and then stop. However, the real value from a new organization design only comes when new decisions are being made. We call this “activation” and it may take months or years after people are settled into new seats. HR’s work is to build teams at the critical interfaces – for example between the global product and local market managers – and ensure that decision accountability and processes are clear. In essence, practice, learn, and adjust.
- Hire and develop to the matrix profile. We know what kind of leaders thrive in complex organizations. Some characteristics (e.g., organizational curiosity and ability to build trust) are best hired for. Others, such as the ability to influence, create community and alignment, and architect good process, can be developed. Equally important is to help all levels of the organization understand the strategy, why organization changes have been made, the expectations of new roles, and how each person’s individual success aligns with the business goals.
Amy Kates and Greg Kesler are the managing partners of Kates Kesler Organization Consulting, a leading organization design firm.