Building organization design capability in HR

HR can have more ‘pivotal and interesting’ role as strategic partner
By Amanda Silliker
|Canadian HR Reporter|Last Updated: 08/14/2012

Organization design: Laura Stepp, former director of Americas at Intel’s consulting services, spoke at a recent Strategic Capability Network (SCNetwork) event in Toronto. She shared the story of how Intel’s HR leadership team built internal organization design capability within HR to increase business value and get a seat at the table. For more information, visit www.scnetwork.ca.


Align, don’t integrate, organizational design with HR (Strategic Capability)

3 steps to game-changing success (Leadership in Action)

Boosting effectiveness through joint action-learning (Organizational Effectiveness)

In 2009, Intel was coming out of a significant cost restructuring implemented in 2006-07 that cut the HR function by 40 per cent. While it enabled the department to focus on core HR services and deliver them really well, it pushed HR back from its position as a strategic business partner, said Laura Stepp, who held the position of director of Americas at Intel’s consulting services in Portland, Ore.

“In 2009, finally the dust had settled and there were some pretty nagging questions about whether we had actually given away our keys to the table,” she said. “We saw the business doing things where we felt we should have been players or realized we really had been missing in the discussion.”

This led the HR leadership team to assess the organization design capability within HR. It looked at how HR should be adding strategic value to help the business achieve its goals, whether or not it was doing that and what it needed to do to get there, said Stepp, speaking at a Strategic Capability Network (SCNetwork) event in Toronto in June.

“We said, ‘Let’s just talk about the problems the business has that we wish we could help them solve. Why do we think we need to be a part of that? What skills do we bring?’” said Stepp, now a senior consultant at Kates Kesler Organization Consulting. “It really shifted the dialogue to have us discuss where HR had a role to play in the strategic role of the business.”

4-part model developed

This conversation led to the development of a four-part model outlining the areas where HR felt it could really make a difference and add greater strategic value to the business.

The first item in the model is to help the business develop strategy. HR felt it could bring its overarching view of the organization to the table as well as its facilitative skills, said Stepp.

“We listen well, we ask questions well, we can assess, we know how to facilitate conversations across leadership teams — those skills were key in the strategy process,” she said. “We did feel we had a partnership opportunity for folks that do business strategic planning to bring HR skills to the table and make a more powerful combination.”

The second item in the model is to assist the business with designing the organization. This was a no-brainer for the HR team since it knew the other functions that supported the leadership team, such as finance or IT, wouldn’t be the ones to step forward and take this on — this was HR’s space, said Stepp.

“We realized, ‘Who else is going to be the first person to step to the table on this?’” she said. “Leaders are either doing this on the back of napkins in the bar after their big off-site, or we step forward and say, ‘There is a methodology to this madness. We have something to offer, let’s talk about it.’”

The third component of the model is change management. This is where HR can work with leaders to help them figure out how to effectively lead the organization through a change — which is familiar territory for HR, said Stepp.

And the final piece of the model is to assess, diagnose and improve, which is key to successfully completing the other three components of the model, she said.

The HR leaders at Intel put in place a learning program to educate their team on the new organization design model, including online tools, facilitative materials and mentoring relationships.

The new model not only taught HR professionals new skills but helped them work with business leaders in a different way than they had before, said Stepp.

“We were really looking for our line HR folks, in particular, to engage their business clients in different kinds of conversations than they had before; conversations about strategy, about organization design and ultimately, where it made sense, to engage business leaders in using the method to help design the organization,” said Stepp.

As a result, HR was able to play a more pivotal and interesting role as a partner to the business, she said.

“You often hear HR people talking about how to be more relevant, how to get a seat at the table, how to be influential — you bring some real ammo to the situation and they’ll want to talk to you, they’ll be inviting you in,” said Stepp. “It’s about creating pull from the business for you to be there versus trying to push your way in.”

The HR team also provided training and resources for the leadership team on their new organization design model.

“We wanted to move people to using this consistent method because we knew it worked, we knew it was quicker and we knew it would produce more aligned results in the end,” said Stepp.

HR departments should be thinking about what their role is as partners to the business, especially around designing the organization. If they have the capacity, there is no reason why they can’t play a bigger role, she said.

“Because we’re seen as the people people, it’s not too hard to jump over the bridge and say we’re also the organization people — we’re not just about the individuals or how individuals get along, we’re also about how the organizational system works.”

If an employer is trying to improve business processes, affect strategic shift, garner a new competitive advantage or be more agile, it should consider reassessing its organization design, said Stepp.

Employers should be making organization design a top priority because it allows companies to easily adapt — and the key differentiator of companies that are built to last is they can adapt, said Stepp.

“There’s huge benefit by really approaching organization design not as a back-of-the-napkin activity but as much of a disciplined business practice as financial budgeting or as developing a strategic marketing plan,” she said. “They should approach organizations with the same care and discipline as they do the other areas of the business.”

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SCNetwork’s panel of thought leaders brings decades of experience from the senior ranks of Canada’s business community. Their commentary puts HR management issues into context and looks at the practical implications of proposals and policies.

Align, don’t integrate, organizational design with HR (Strategic Capability)

By Matt Hemmingsen

Organizations need to be fast, fluid and flexible. Those that ignore this need for agility risk a loss of competitive advantage and sustainability over the long term.

The volatility in the global markets over the past several years isn’t going away in the foreseeable future. Greater government intervention, rapid technology developments, uncertainty in the capital markets and growing consumer demand will continue to challenge and test the mettle of any business.

What makes an organization agile? How does it prepare to respond to these uncertain market conditions? Intel opted to build an organization design capability within HR to increase business value. It implemented the concept of “architecting the organization” (ATO) as the cornerstone of its HR strategy, embedding the organization design function within its HR portfolio. But is the integration of these two functions over the longer term a viable option?

HR has grown and matured significantly over the past 25 years. HR leaders have realized the value organization design brings to organizational transformation. This, in turn, has resulted in the significant rise of the HR profile. But this HR “ownership” has undermined the potential contribution organization design can bring.

Let’s not forget HR is anchored in its legally mandated and regulatory role. The majority of its time, focus and resources are dedicated to the tactical and operational issues of talent management, employee engagement, policy administration, employee costs and compliance — requisite elements at any organization.

Organization design, on the other hand, is focused on the effectiveness of an organization, historically through the maximization of its human capital. This is achieved by aligning strategy, structure and processes within the context of an employer’s culture and values.

Organization design practitioners take a holistic approach — understanding the whole system — over an extended period of time, consistent with the organization’s longer-term business requirements. Intel found there is a significant difference between these two functions. Not all HR partners are able to bridge the gap between tactical operations and strategy development and facilitation, to go toe-to-toe with Intel’s business leaders.

Is an organization better served by having organization design established as a separate function? Yes. The evolution of organization design will require a stronger systemic business perspective and separation from an employee-centric focus — the domain of HR. To embrace agility, an organization will require organization design to be aligned with (but not integrated with) HR.

Matt Hemmingsen is a commentator on strategic capability for SCNetwork and managing partner at Toronto-based Personal Strengths Canada. He can be reached at mhemmingsen@personalstrengths.ca, (888) 927-7347 or visit www.personalstrengths.ca for more information.

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3 steps to game-changing success (Leadership in Action)

By Trish Maguire

In 2009, after Intel’s HR department was slashed by 40 per cent, the strategic question for Laura Stepp and the HR team was “How can HR be more relevant and valuable to the business?” They decided to introduce organizational design as a core strategic platform and HR game-changer.

How would your HR team respond to the concept it build an HR strategy by first taking into account the capability of current and potential talent to lead, work with and realize new possibilities and results?

Might HR consider it a little farfetched or would it be open to exploring the possibility? Alternatively, how would your executive leadership team respond?

Organizational development is not a new concept. However, when executed well, it does enable leaders to discover the organizational capabilities and resources deeply embedded in various systems.

The first challenge for any team is choosing and implementing the most appropriate organizational design model.

Intel decided to create a blended model based on designs from notable consultants Amy Kates and Greg Kesler, and Jay Galbraith’s Star Model. Other well-acknowledged alternatives include McKinsey’s 7-S Model and Michael Goold and Andrew Campbell’s Nine Tests of Organisation Design model where the first critical factor is “the fit principle.”

Regardless of the model you choose, there are essentially three critical success factors experts agree on.

First, before launching the process, be sure to have the unreserved commitment to all changes from your leadership team. Second, ensure there is total transparency and mutual support with the implementation team on all design recommendations. Third, when redesigning the organization, remember if you make a change in one area it will impact other areas.

If your organization is planning on capturing tomorrow’s advantage in a relentlessly changing and highly competitive market, organizational design may be your forward-looking, game-changing strategy.

Trish Maguire is a commentator for SCNetwork on leadership in action and founding principal of Synergyx Solutions in Nobleton, Ont., focused on high-potential leadership development coaching. She has held senior leadership roles in HR and organizational development in education, manufacturing and entrepreneurial organizations and can be reached at synergyx@sympatico.ca.

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Boosting effectiveness through joint action-learning (Organizational Effectiveness)

By Edmond Mellina

In effective organizations, people learn together while moving forward. This point was reinforced when Laura Stepp presented the systemic approach Intel used to boost its organizational design capabilities: Sound action-learning principles were weaved throughout the process.

A couple of points stood out:

Benefits of a tough work challenge: There is nothing like a tough work challenge to re-open the learning mind of an experienced performer. Early in their careers, people are keen to attend traditional classroom-based development programs. Like goldfish rushing up to the surface to gulp down the trickling food, these rookies are eager to grab any kind of learning.

Fast-forward a few years. The rookies have become experienced performers. They are very busy and they know a lot — or at least they think they do. Not surprisingly, they would rather work on their ever-expanding workloads than “wasting their time” in a classroom.

This mindset remains unchanged until they come across a tough problem they are struggling to resolve. The pain and frustration creates an opportunity — our experienced performers are once again ready to learn new things, as long as they can keep making progress on the toughest challenge at the top of their to-do list.

Reconciling these two objectives is the essence of action learning.

Start with some learning to guide the actions: In theory, the participants in an action-learning program are supposed to extract learning from their problem-solving — for example, action first, learning second. But struggling performers need tools and guidance to help tackle their challenges. There is no point in adding to their misery by asking them to keep working on the problem and try to learn in the process. It seems Intel recognized this practical consideration — learning was the first step in its approach to organizational design.

Experience is the best teacher: This is true only if people take the time to reflect on their actions. Intel encouraged reflection by setting up a Wiki. The idea was for senior leaders and HR professionals to share their experience with organizational design projects. However, Intel should have gone one or even two steps further. It’s not enough to offer people opportunities to stop and reflect. You have to force them, regularly, off the day-to-day work treadmill. An effective way to do that is to insert facilitated group reflection sessions throughout the action-learning process.

Joint problem-solving breaks down silos and fosters collaboration: There is nothing like a common enemy to turn infighting into unity. When a group of people from different functions work together on a tough challenge, the problem they are trying to resolve becomes the common enemy. The shared tool kit and language they learn bridge their differences.

As they advise and support each other, they gain a better appreciation for their respective viewpoints and realities. Internal clashes and competition are replaced with mutual understanding, support and collaboration.

The process also encourages support functions to think business first and people, technology, finance or marketing second — that is one of the hallmarks of effective organizations.

All too often in a quest for effectiveness, organizations fail to leverage the power of action learning. Intel didn’t miss this opportunity and your organization shouldn’t either. Seek opportunities to help cross-functional teams learn together as they collaborate to tackle tough organizational challenges.

Edmond Mellina is a contributing commentator on organizational effectiveness for SCNetwork. He is president of Orchango in Toronto, a firm whose specialty is to help organizations adapt to change. He can be reached at emellina@orchango.com. For more information, visit www.orchango.com.

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