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The right organisational design is something of a holy grail. With it, your people are empowered to deliver seamless service to customers, in a cost-effective way, with perfect visibility and governance. Back in the real world, multiple layers and complex structures block strategic delivery.

With accountability for talent plans and a pivotal seat on the ExCo, the HRD is ideally placed to help design structures that enable the top team to deliver on their plans for the business. At Criticaleye’s Human Resources Director Retreat 2020, held in association with Accenture, leaders and experts discussed how they are doing this.

Andrew Minton, Managing Director at Criticaleye, said: “The HRD can be the voice of reason when a business falls into the trap of lurching from one structural extreme to another – matrix to hierarchical and back again – by identifying a middle way that will work better.

“Whatever structure you adopt, customers need to be at the forefront of your thinking. Too many layers and a reliance on centralised decision making mean intelligence from the frontline will be lost and your people will be less responsive,” he added.

Kevin Brady, Director of HR and Communications at Openreach, reflected on when he joined the business in 2016. “We were more focused on financial performance and had lost focus on the customer,” he admits. “The management team had been set the task of increasing efficiency and cashflow, but that message had become quite myopic and the cost savings focused on driving the productivity of frontline engineers – getting them to work harder, get the job done quickly – and the management team had lost focus.”

While driving through cost-savings, there can be the temptation to retrench to a centralised structure. At Openreach, Kevin wanted the engineers to be more empowered. "We did a lot of delayering and simplifying of structures. And as we got into years two and three of the transformation, we started to push accountability back to the frontline,” he said.

Another design tension arises when organisations attempt to integrate innovation hubs into a legacy business. The hub may have been ringfenced, to protect it from the governance and structures of the wider entity, but if it is successful then you will want to scale it – and that’s where this new challenge for leaders occurs.

Diana Barea, MD and Leader of Talent and Organisation Practice for UK&I at Accenture Strategy, explained: "When a digital hub comes back into the mothership is when the challenges often arise. People in the main business will have been looking at it with envy for years while it was getting extra funding and top talent. So, navigating how you bring it back in and have the main business ready to receive it is critical.”

Strong leadership is essential at this point and it helps if leaders have been rotated through that business and understand the difference and value it brings. “When the skunk works enters the organisation, it must maintain recognition from the top that it is valuable; that there’s something to learn from it; that the old mechanisms mustn’t be applied to it as they would slow it down; and that scaling up will be achieved by using ‘the new’ to change the main business,” Diana said.

Engaging your people on change

Any transformation is destined to fail unless your people are fully onboard. Diana Breeze, Group HRD at Bunzl, said: “When you are trying to effect change you need to work out where the ‘centre of gravity’ is in the organisation. Sometimes that can be quite surprising, but you need to engage with those people.”

She emphasised that having a purpose to act as a reference point and being able to articulate your culture are key. “Some kind of written framework for values and behaviours gives you the ability to call it out when you don’t see it. And it gives peers and colleagues the ability to call it out with each other too,” she explained.

This clarity of direction is particularly important if you’re trying to implement change after a crisis. "Successful transformation applies what we know from neuroscience about fight, flight and freeze,” Diana Barea said. “Freeze is the one people don’t tend to remember, but that is the most critical one in organisations, especially when you have had lots of previous attempts at transformation.

“People are often waiting to engage, waiting to see their boss look them in the eye and say, ‘We’re doing this, I’m committed to it, and I’ll be making sure we get there’. Leaders have to paint the path of how this transformation will make things better, how you will survive and thrive in the future with the new way of working.”

Business leaders today must accept that change is a constant. "Operating model change and organisation design should never be done with the belief that it’ll benefit the next generation,” Diana Barea said. “It can’t be that long range, as the market moves so much faster than that, and organisations need to keep adapting and reflecting on how they can create value for their customers. So, creating agility in the muscle and retaining that flexibility is key for changing your organisation.”

Kevin agrees: “You have to change even when you are performing. The best organisations transform when they are at the top of their game, not when they are in the valley of despair.”

Emma Carroll, Senior Editor, Criticaleye 

Next week's Community Update will examine Improving Business Performance Through Sustainability.