OD can help the organisation become more agile.
We are currently staring the Fourth Industrial Revolution in the eye. We are at the brink of a technological revolution. This will fundamentally alter how human-beings interact, relate, exist and live. The complexity of this transformation is yet to be measured and quantified of its effects. It will eventually unfold itself and the magnitude will then be seen. The response to this transformation will see how people will integrate this new way of life in a global context.
How will Organisational Design then be transformed to accommodate the new world?
To remain intact and combat the effects of the new world, organisations need to gear up. At the heart of a functioning, well-equipped and progressing organisation, is Organisational Development.
Organisational Development is the systematic, comprehensive, planned process with the goal of advancing an organisation’s overall effectiveness. The system involves process, structure and culture intervention with strong emphasis on human resource development, organisational development and organisational change.
In an attempt to summarise some of the key points of the debate, we can say that Organisational Development was established in the early decades of the previous century (1930s onwards) based on the ‘soft sciences’ of sociology, psychology and industrial psychology. Although the original focus was on the ‘softer’ organisational elements including behaviour, culture, climate, leadership and values, some of the later pioneers (during the 1970s – 90s) attempted to migrate the original narrower view of ‘soft’ models to also include the ‘hard’ elements. This advance has led us to a point where the organisation is regarded as a holistic system which includes both the ‘soft’ and the ‘hard’ elements of strategy, structure, systems, staff, style, skills and shared values.
Organisational Development, from this perspective, implies bringing about design change to an organisation in an integrated fashion. It is a total transformation of the business. Changing one part, that is, strategy, impacts on other parts such as leadership, values, process and structure. Thus, Organisational Development implies a planned and systematic approach to bringing about change and improving effectiveness of the organisation as a whole.
Organisation Design then becomes a subset of Organisational Development and as such, also has its unique methodologies, tools and techniques. There is no silver bullet for designing organisational structures and there is also no one-size-fits-all approach. Ultimately, one must choose the best approach to suit the purpose, taking time and budget into account.
A mismatch between an organisation’s objectives and purpose can lead to failure for the organisation. The ultimate target of Organisational Design is to align the structure of the organisation with its objectives. Work tasks performed can be directed according to the various needs of the organisation.
What is the process of Organisational Design?
The activities below frame and outline the more detailed design steps required.
Ideally, the detailed design steps should be iterative and be developed with both external and internal stakeholders in mind. Once the detailed design plan and steps are complete, the important work begins in designing the new organisation.
Our first experience with organisational redesign was in the FMCG sector – a cereal manufacturer and a brewing company. Both had a similar set up with operators who only knew their piece of machinery and little understanding of what happened up and down the value chain. This led to quality issues, many small menial job descriptions and many levels in the job grading system. The new job design focused more on roles, for example, corn line operator, rice line operator, bran line operator – where the operator needs to know how every machine on the whole line works. Similarly, in the brewing company, menial jobs were transformed into process operator roles where operators needed to know the entire value chain.
This led to meaningful and better quality work and, of course, higher pay – which was worth it for the organisation. In some cases where operators retired or left, there was no need to replace them because of the surplus of skills available to operate the machines. In one case, skill-based pay was introduced along the lines of the following:
In this model, all tasks or skills that need doing are assigned points. These points often differ depending on how easy or difficult the tasks are, for example:
Easy = 1 point, Difficult = 5 points. As one acquires points, one earns more money, sometimes to a maximum of around 50 – 100% of starting salary:
Starting salary = 10 000
1 – 10 points = plus 20%
11 – 20 points = plus 20%
21 – 30 points = plus 20%
31 – 40 points = plus 20%
A process operator can earn up to 100% more than an entry level operator.
Both of these initiatives were done in consultation with the trade union. The objective was not retrenchment, but better quality output and higher skilled workers. In both instances, the worker, the company and the trade union came out on top.
There is a move to agile organisations
Seeing that an agile organisation is ultimately an ecosystem comprised of various sub-systems, agility must be incorporated into each of the systems such as the processes, technology systems and human resources. When each component is geared towards agility and each of these components interact to integrate change, only then will the organisation have successfully become agile.
Thus, the capacity for an organisation to become agile depends on the following areas:
1. Information Technology: Automation, discussed previously, ultimately reduces production time whilst increasing product quality and consistency, providing a better product that reaches the market more quickly. An agile information system thus has the ability to offer the best possible response when the organisation faces changes;
2. Processes: Controlling the processes of an organisation allows resources to be utilised where they can be most beneficial. When the process is closely followed and adapted according to changes consistently, the organisation can benefit from a strong competitive advantage;
3. Human Resources: Skills and a positive mind-set are two factors that contribute to the success of agility. Involving human resources ultimately capitalises on human potential and results in systematic improvement.
4. Leadership: Current leaders need to be able to embrace the concept of matrix design and that they are managing a river, not a dam. The leaders need to set a culture of agile thinking at every level of the organisation and have the ability to tolerate input and debate from all levels of employee.
In essence, agile management eliminates processes that are redundant and places its focus on constantly improving areas with a larger contribution potential to maximising efficiency (the above-mentioned, in fact). However, agility can only be ensured when all of these areas are combined. Thereafter, several criteria of management should be met.
The next article will cover some examples of how leading organisations have moved to becoming more agile.
Dr Mark Bussin is the Executive Chairperson at 21st Century Pay Solutions Group, a Professor at University of Johannesburg, Professor Extraordinaire at North West University, Chairperson and member of various boards and remuneration committees, immediate past President and EXCO member of SARA, and a former Commissioner in the Office of the Presidency. Daniela Christos is a Candidate Human Resources Practitioner at 21st Century Pay Solutions Group. Victor Bergh is the Director at MAC Consulting.
This article appeared in the August 2017 issue of HR Future magazine.