Tuesday, 15 March 2016

#HCTrends - Networks of Teams and new Organisation Designs

Deloitte's Human Capital Trends for 2016 is interesting reading again this year (marred slightly by a few proofing errors such as referring to a third of the workforce being contingent even though the report is supposedly global in scope and the statistic only relates to the US workforce) and have prompted these thoughts, centred around the top trend: organisation design.

Firstly, I like the theme of the whole reports - different by design.  As people and organisation become more important so does its deliberate design, rather than just letting things happen, as has often been the case in the past.  But so does the need to create difference, rather than designing everything the same as other organisations.  And for this reason we do need to be careful about reports such as this - we can pull out common themes and possibly identify a single main journey of travel, but we also need to recognise that every organisation is different and should / must therefore do different things.

Secondly, I also like the increasing focus on experience, recognising the same shift in the importance of people, the creation of human capital, and therefore the positive management of the people who provide this.  But it's important we do't go to far - titles matter little but if an evolution from Chief Talent Officer to Chief Experience Officer marks a real shift in responsibility it isn't a positive one.  Experience isn't an end to itself.  Talent is - in the sense it can create value and lead to better business results.  Experience is only useful to the extent it informs improvement in talent, or directly in business results.

Moving on to organisation design itself, the report points to the rise of networks of teams.  And here I have a few more important criticisms of the thinking building on the research.

Firstly I'm not sure this type of organisation form is very new - to me it's just a continuation or maybe a partial resurrection of the well documented horizontal organisation form, with a newer focus on agile projects rather than end to end business processes.  The nature of the work and organisation is similar, it's just that people will move from team to team more rapidly and possibly work on more than one team at the same time.

This shift from waterfall to agile projects isn't a new organisation form, it's simply the introduction of new organisation principles (agile, decentralised, customer centred, empowered etc) and the consequent tailoring ('difference by design') around these principles.  Ie whether people are told what to do or set goals at the bottom depends upon these principles, not the organisation form.  So does the formality or informality of the structures in which ever form (functions or horizontal teams etc).

I'm not sure there's really a move from functional designs to 'networks of team's / horizontal designs (by the way we should never write or speak about moving away from a functional structure - it's the whole design including the structure but also the other elements of an organisation which need to change.  Anyway at least Deloitte doesn't refer to a move from hierarchies to networks which is very badly confused.  Changing the organisation chart isn't just a small part of the transition to a network of teams its pretty much inconsequential compared to the other changes which would be required.)

I agree there's a move from process to projects within horizontal forms.  The remaining trends are from functional forms to community and network based designs which I try to explain this in my organisation model below:

Also, despite Deloitte's findings (only 38% of companies are functionally organised) most organisations are still functional / divisional or a matrix based largely on functions and divisions with aspects of these other forms (and even if Deloitte believes matrices are unwieldly remnants of the 1960s they're clearly not).

This is the way McKinsey describe it:
"Agile organizations, by contrast, deliberately choose which dimension of their organizational structure will be what we call their “primary” one. This choice will dictate where individual employees work—in other words, where they are likely to receive coaching and training and where the infrastructure around their jobs is located. Day-to-day work, performance measurement, and the determination of rewards, on the other hand, are more likely to happen in teams that cut across formal structures. The primary home of employees remains an anchor along their career paths, while the crosscutting teams form, dissolve, and reform as resources shift in response to market demands. Sometimes these dynamic teams show up in the org chart, typically in the form of business lines, market segments, or product units. At other times, they don’t, notably in a holacracy or other start-up organizational forms."

The remaining prevalence of the matrix is why Deloitte find that most networks of teams are managed by expert team leaders not 'professional' / traditional managers.  It's because there's a functional (or possibly community based) organisation in the background where professional managers are still managing the development and the careers of their people (as in a professional services firm).  If this main matrix dimension wasn't there, project managers would take a more traditional set of responsibilities too.

Also note that a lot of the criticism of functional models is criticism of poor functional organisation, not of the organisation form itself.  Eg networks of teams apparently replace silos with co-ordination between teams.  Well well designed functional organisations avoid siloisation through co-ordinating mechanisms too.  And who ever said that leaders in a functional organisation could only operate out of corporate headquarters?  As for functional organisations focusing on making a manager happy rather than being someone whom the team would want back on the team that's just poor performance management.

It's interesting that Deloitte see the rise of digital technology as a key enabler for their networks of teams.  Actually it was largely the rise of ERP type systems which led to the decline of process based horizontal organisations as businesses found that ERP functionality meant they didn't need to take on the complexity of horizontal working.  It sounds as if digital is now making a further shift back to horizontal organisation (projects vs processes) more possible again.

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