Organizational Design (OD): Core HRM Competency to Future proof organizations

1. ORGANIZATIONAL DESIGN (OD) – CORE HR
COMPETENCY TO FUTURE-PROOF
ORGANIZATIONS
CHARLES COTTER PhD, MBA, B.A (Hons), B.A
www.slideshare.net/CharlesCotter
INDABA HOTEL, FOURWAYS
23 AUGUST 2018

2. SCOPE OF THE PRESENTATION
• Defining Organizational Design (OD)
• The business case for OD – benefits and consequences
• Critical success factors of OD
• The 5 trademarks of agile organizations
• The role and contribution of HRM in OD – Strategic Performance
Advisor and IQCAP models
• The 5 star model of OD (Galbraith)
• The 5 milestone OD process (KatesKesler)

3. DEFINING ORGANIZATIONAL DESIGN (OD)
• OD is a step-by-step methodology which identifies dysfunctional aspects of work flow,
procedures, structures and systems, realigns them to fit current business realities/goals
and then develops plans to implement the new changes.
• OD is the integration of people with core business processes, technology and systems.
• A well-designed organization ensures that the form of the organization matches its purpose
or strategy, meets the challenges posed by business realities and significantly increases the
likelihood that the collective efforts of people will be successful.
• OD involves the creation of roles, processes and structures to ensure that the organization’s
goals can be realized.
• The field of organization design sits at the intersection of strategy, operations, law and HR.
• The OD process focuses on improving both the technical (mechanics) and people side
(dynamics) of the business.

4. MECHANICS AND DYNAMICS OF OD

5. ILLUSTRATION OF OD

6. THE BUSINESS CASE FOR OD – BENEFITS
• For most companies, the design process leads to a more effective
organization design, significantly improved results (profitability,
customer service, internal operations) and employees who are
empowered and committed to the business.
• The hallmark of the design process is a comprehensive and
holistic approach to organizational improvement that touches all
aspects of organizational life, to realize the following benefits:
❑Excellent customer service
❑Increased profitability
❑Reduced operating costs
❑Improved efficiency and cycle time
❑A culture of committed and engaged employees
❑A clear strategy for managing and growing your business

7. THE BUSINESS CASE FOR OD -
CONSEQUENCES
• As companies grow and the challenges in the external
environment become more complex, businesses processes,
structures and systems that once worked become barriers to
efficiency, customer service, employee morale and financial
profitability. Organizations that don’t periodically renew
themselves suffer from such symptoms as:
❑Inefficient workflow with breakdowns and non value-added steps
❑Redundancies in effort (“we don’t have time to do things right, but
do have time to do them over”)
❑Fragmented work with little regard for good of the whole
(Production ships bad parts to meet their quotas)
❑Lack of knowledge and focus on the customer
❑Silo mentality and turf battles
❑Lack of ownership (“It’s not my job”)

8. THE BUSINESS CASE FOR OD -
CONSEQUENCES
• Additional symptoms:
❑Cover up and blame rather than identifying and solving
problems
❑Delays in decision-making
❑People don’t have information or authority to solve problems
when and where they occur
❑Management, rather than the front line, is responsible for
solving problems when things go wrong
❑It takes a long time to get something done
❑Systems are ill-defined or reinforce wrong behaviours
❑Mistrust between workers and management

9. 6 CRITICAL SUCCESS FACTORS OF OD
(BCG)
• BCG has identified six key factors that distinguished the
successes from the failures.
• Companies that employed these factors have a
significantly higher chance of experiencing faster
growth and higher profits than their competitors.
❑A value-adding corporate center
❑Clearly delineated profit and loss (P&L) responsibilities
❑A flat management structure with a strong frontline focus
❑Effective use of shared services
❑Strong support for people and collaboration
❑Agile ways of working

11. THE FIVE TRADEMARKS OF AGILE
ORGANIZATIONS (MCKINSEY)
• #1: North Star embodied across the organization
• Mindset shift FROM: “In an environment of scarcity, we succeed by capturing value from competitors,
customers, and suppliers for our shareholders.” (SCARCITY)
• TO: “Recognizing the abundance of opportunities and resources available to us, we succeed by co-
creating value with and for all of our stakeholders.” (ABUNDANCE)
• #2: Network of empowered teams
• Mindset shift FROM: “People need to be directed and managed, otherwise they won’t know what to
do—and they’ll just look out for themselves. There will be chaos.” (AUTOCRACY)
• TO: “When given clear responsibility and authority, people will be highly engaged, will take care of
each other, will figure out ingenious solutions, and will deliver exceptional results.” (AUTONOMY)
• #3: Rapid decision and learning cycles
• Mindset shift FROM: “To deliver the right outcome, the most senior and experienced individuals must
define where we’re going, the detailed plans needed to get there, and how to minimize risk along the
way.” (STATIC)
• TO: “We live in a constantly evolving environment and cannot know exactly what the future holds.
The best way to minimize risk and succeed is to embrace uncertainty and be the quickest and most
productive in trying new things.” (DYNAMIC)

12. THE FIVE TRADEMARKS OF AGILE
ORGANIZATIONS (MCKINSEY)
• #4: Dynamic people model that ignites passion
• Mindset shift FROM: “To achieve desired outcomes, leaders need to control
and direct work by constantly specifying tasks and steering the work of
employees.” (CONTROL)
• TO: “Effective leaders empower employees to take full ownership,
confident they will drive the organization toward fulfilling its purpose and
vision.” (COMMITMENT)
• #5: Next generation enabling technology
• Mindset shift FROM: “Technology is a supporting capability that delivers
specific services, platforms, or tools to the rest of the organization as
defined by priorities, resourcing, and budget” (SUPPLEMENTATION)
• TO: “Technology is seamlessly integrated and core to every aspect of the
organization as a means to unlock value and enable quick reactions to
business and stakeholder needs” (AUGMENTATION)

15. THE ROLE OF HRM IN OD
• Business Managers are turning to their human resource
functions to provide them with organization design
frameworks and tools and to guide them through the
process of involvement, decision‐making and
implementation.
• Organization design is rapidly becoming a core and expected
offering for HR.
• In order to deliver this sophisticated work effectively, the
function needs a common methodology and toolkit that is
shared by skilled business partners in the field and
specialists in the center, working together to deliver high
value decision support.

16. STRATEGIC
PERFORMANCE
ADVISOR (SPA) –
3 PIVOTAL
POINTS
(COTTER, 2017)

17. STRATEGIC PERFORMANCE ADVISOR (SPA) –
3 PIVOTAL POINTS (COTTER, 2017)
• Strategy (e.g. embedding HR strategy into business
strategy; the use of strategy maps; adopting a strategic
mindset and applying strategic management principles
and processes);
• Governance (e.g. HR policies and procedures;
HR/people risk management, compliance with ethics
and King IV corporate governance principles and -
Human Capital reporting and HR Auditing) and
• Business Intelligence (e.g. competitive predictive HR
metrics and analytics and trouble-shooting solutions
architects)

18. CHANGE MESSAGE TO HR MANAGERS
(Cotter, 2018)
"HRM must be instrumental in and at the
forefront of the I-Q-C-A-P drivers of business
performance, namely: Innovation; Quality;
Compliance; Agility and Processes (to optimize
productivity), in their quest to transform and
actualize to become strategic performance
advisors."

20. STAR MODEL OF ORGANIZATIONAL
DESIGN (GALBRAITH)

21. STAR MODEL OF ORGANIZATIONAL
DESIGN (GALBRAITH)
❑Strategy
• Capabilities – 4 levers
❑Structure
❑Processes
❑Rewards
❑People

22. FIVE MILESTONE OD DESIGN PROCESS
(KATESKESLER)

23. #1: BUSINESS CASE AND DISCOVERY
• Clarity on the problem to be solved
• Assess the gap between the expectations and
perceptions of the organization
• Place this assessment in the context of the business
strategy as well other successful companies
(benchmarking)
• Create a well‐defined problem statement and set of
design criteria

24. #2: STRATEGIC GROUPING
• Make a basic structure choice that supports the
strategy
• Make framework decisions about the new
organization – structure, matrix, governance, spans
and layers
• Engage the broader management team in
developing and evaluating options

25. #3:
INTEGRATION
Tie the pieces
together ‐ design the
points of linkage
across boundaries
Define power
relationships

26. #4: TALENT AND LEADERSHIP
• Staff the critical roles to carry out the work and build
talent for the future
• Design the leadership team
• Make the difficult decisions about pivot point roles –
what’s required and where will the talent be sourced
• Set the rules for staffing open positions
• Begin to create a shared view of talent across the
leadership team

27. #5: TRANSITION
• Prepare to measure, learn and adjust
• Determine the implementation approach, staging and
sequencing
• Create a project plan and appoint a transition
manager
• Launch work streams for detailed design
• Monitor, solicit feedback and adjust course (of action)

28. SUMMARY: 9 KEY OD QUESTIONS TO ASK
(KATESKESLER)
• #1: Are we clear on the strategic growth choices?
• #2: What new capabilities are needed?
• #3: Have we agreed on the problem to be solved (diagnosis)?
• #4: Have we explored organizational options and aligned on
the core architecture (organizational model)?
• #5: Have we identified the contributions of each layer,
including leadership team (organizational chart and roles)?

29. SUMMARY: 9 KEY OD QUESTIONS TO ASK
(KATESKESLER)
• #6: What are critical points of integration and for
what purpose (business handshake)?
• #7: How do we resolve tension points?
• #8: What oversight forums need to be configured
and/or re-configured (governance)?
• #9: What do we need to do to enable people in
new or critical roles to succeed in the new model?

30. KATESKESLER
CONSULTING APPROACH
• Organization design toolkit
for HR (Amy Kates)
• https://www.youtube.co
m/watch?v=6P0hw3Q1imI
• What is Organization
Design?
• https://www.youtube.co
m/watch?v=41v3PENTEXw

31. CONCLUSION
• Key points
• Summary
• Questions

32. LIST OF SOURCES
• https://www.bcg.com/en-za/capabilities/people-
organization/organization-design.aspx
• http://www.centerod.com/2012/02/what-is-organizational-
design/
• http://kateskesler.com/wp-
content/uploads/2014/01/Kates_Kesler_HR_Org_Design_Pro
gram_Overview_2012.pdf
• http://www.organizationdesign.net/whatisorganizationdesign
• https://www.the-digital-insurer.com/the-five-trademarks-of-
agile-organizations/

33. CONTACT DETAILS
• Dr. Charles Cotter
• (+27) 84 562 9446
• charlescot@polka.co.za
• LinkedIn
• Twitter: @Charles_Cotter
• https://www.facebook.com/CharlesACotter/
• http://www.slideshare.net/CharlesCotter