Developing HR strategy: In line with customer needs

In our fourth article on the central planks of HR strategy, Keith Rodgers
looks at the four key issues HR has to face when dealing with organisational
design

Although much management theory about organisational structure is rooted in
the distant past, the emergence of the internet as a credible business
communications platform gave the subject far greater prominence in the 1990s.

Words such as ‘agility’ and ‘collaboration’ began to creep into the
mainstream corporate lexicon, and while they have been open to different interpretation,
the central message has been consistent. Organisational design – and in
particular, the ability of companies to react to changing customer demand – is
a major factor in building effective businesses.

For the HR function, this focus on structure presents both opportunities and
major headaches. Given how significantly structural change impacts individual
jobs, responsibilities and working practices, HR’s role in the change
management process is central.

1 Turning theory into practice

The first truism about organisational design is that the customer comes
first – not just in terms of paying lip service to a fluffy idea, but in
structural reality. It used to be sufficient for companies to organise
themselves around product sets – a bank, for example, might have separate
departments handling its different lending products, each treating the same
individual customer as a different entity.

Today, high-performing organisations aim to pool customer data and build a
‘single view’ of each client. In part, the aim is to improve customer service –
it clearly helps when each department knows what the others are doing. But just
as important, this approach lets companies build a full profile of customer
behaviour and spot opportunities for cross-selling.

However, while this customer-centric philosophy is excellent in theory, in
practice it is difficult to execute. Most organisations have evolved into a
series of inward-looking ‘silos’ that might work efficiently in their own
right, but rarely work well together because they tend to pursue departmental
goals without looking at the wider picture. A manufacturing plant, for example,
may carry on pursuing its production quota despite sales slowing and inventory
piling up.

The key to overcoming this kind of problem is to think in terms of
end-to-end processes rather than a series of departmental silos. These
processes start and end with the customer, beginning with demand forecasting
and ending with the supply of goods and ongoing customer service. It doesn’t matter
whether the organisation is selling physical goods or providing services – its
departments need to be aligned to meet customer goals.

2 Analysing the existing structure

To carry out this kind of structural change, organisations first need to
understand how effectively they currently operate and where the bottlenecks
are. In many cases, those problems will be glaringly obvious, particularly to
the HR department, which plays a central role in monitoring individual
performance and is privy to complaints about performance inhibitors. Typically,
structural problems will centre on issues such as:

– Lack of clarity in responsibilities, which often leads to managers blaming
one another for problems

– Conflicting goals within and between departments

– Resource shortages, or conversely, over-capacity

These issues need to be analysed in the context of corporate objectives –
there is not much point in HR arguing for resource investment in a department
that’s being wound down, for example. They also need to take account of market
needs. Some inefficiencies may be a result of geographical necessity (such as
the location of retail stores), while others may be dictated by the demands of
powerful trading partners. There is no ‘right’ structure – what works best for one
organisation might be unworkable for another.

3 How does HR influence change?

Although structural change can bring enormous challenges, HR can take
comfort from the fact that, in many instances, departments are adapting of
their own volition. Remote working and project-based team-working – where key
employees are temporarily seconded from different departments onto a joint
initiative – are two examples of how more flexible practices are gaining
ground.

Major design change, however, centres on several core criteria. To begin
with, accountability is critical – if an organisation is to work effectively,
individual responsibility for tackling problems and improving practices needs
to be clearly laid out. It is particularly important to get clarity at the hand-off
stage, where process responsibility shifts from one individual or department to
another.

Organisations also need to be committed to both the principle and
practicalities of change, because resistance is inevitable. Overcoming these
problems is a question of effective prioritising. Michael Hammer, credited as
the driving force behind the concept of business process re-engineering,
recommends companies follow a 20/60/20 rule. While 20 per cent of people will
embrace change and should be embraced as advocates, 20 per cent will resist it
and should be challenged, even if that means they quit. But the real battle is
not with the latter – it is won and lost with the 60 per cent in the middle.

Moreover, enterprise-wide performance management is critical. Companies must
be able to measure and manage departmental activity in the context of overall
corporate, rather than departmental, goals. Finally, organisational design is
heavily influenced by corporate culture. Although change here will inevitably
be slow, in even the most conservative operation, HR can play a role in
promoting the concept of a learning organisation, where improvement comes from
ongoing analysis of effectiveness in a relatively blame-free environment.

For HR, the challenges span the mundane to the highly advanced. At an
elementary level, before it addresses corporate structural issues, it needs to
ensure its own house is in order and that basic HR activities are being
executed effectively. At a more advanced level, it needs to recognise that its
influence could ultimately extend beyond the organisation itself –
collaboration is not just about internal interaction, it is also about the way
companies interact with suppliers and trading partners, and this too has
enormous people implications. And while the challenges may look tough, change
will often be driven by practical reality.

4 The IT framework

Providing the platform for collaboration is one of the biggest challenges
facing the IT industry. At one level, there are a number of collaborative tools
on the market that provide a platform for team working. But more fundamentally,
organisational effectiveness centres on how well information flows between
departments, and from a technology perspective, that typically requires a host
of incompatible IT systems to communicate with one another. Integration between
these systems is therefore a major issue for any organisation’s IT department.

While there is no silver bullet solution, companies can help themselves by
adopting flexible, internet-based software platforms built around industry
standards.

Case study Bexley council , Kent
Focusing on structure – how to move forward

Of the 120 senior managers employed
at Bexley Council in Kent, the majority will see their roles change significantly
in the coming year as the local authority embarks on a major restructuring
exercise. In an £8m programme spanning the next five years, significant changes
will be made to individual roles, organisational structure and culture – and
Bexley’s HR department is right in the thick of it.

At the heart of the makeover is a re-engineering of the
council’s four existing directorates into three units, comprising environmental
services, a newly-merged education and social services directorate, and a corporate
affairs centre.

As part of a shake-up in the way it communicates with its
‘customers’ – the local authority residents – it will also be opening call
centres and developing the roles of librarians, who are in the front-line of
customer service. Driven by the need to improve effectiveness and meet
e-government requirements, the restructuring is led by the head of customer
services working alongside senior directors, HR executives in corporate affairs
and the directorates’ individual HR managers.

According to Ann Millington, head of organisation and employee
development at the council, the first stage of the re-organisation has been to
standardise some core HR processes. The four existing directorates had evolved
their own cultures, so HR has worked to bring consistency in areas such as
appraisals and team-meeting protocols, in the process earning an Investors in
People award for each separate department. The appraisal process, for example,
had originally been designed purely for managers – as a result, non-manager
appraisals had evolved according to need. Now, every manager and employee is
assessed in the same way.

The council’s more strategic HR – defined a year ago as six
core goals – are now being weaved into the structural reorganisation, which
begins in earnest in January. Millington stresses that with a project of this
size, detailed planning can only take place one step at a time, in line with a
broad overall blueprint.

In practice, for example, this means that while the council has
already decided to merge the two directorates and agreed this will lead to the
creation of three new senior posts in 2003, it has not yet carried out detailed
assessment of how the two teams will finally be blended together. Although this
step-by-step approach to detailed planning is driven by pragmatism and would
not satisfy purists, it gives the council maximum flexibility as it works its
way through the lengthy change management process.

The initiative has been highly collaborative from the outset –
the emphasis has been on engaging people in the operational implementation,
using numerous workshops that incorporate representatives of every department
from finance to IT. One of the first priorities was to bring the council’s
senior managers onside and ensure they see themselves as change agents. That
process has involved new initiatives such as 360-degree appraisals and
mentoring – Millington prepared a portfolio of external executive coaches who
have been used by about 15 of the 120 managers.

As well as the directorate reorganisation, Bexley plans to put
a new ‘front-end’ to each of the three directorates, providing the public with
a single interface to its different departments through a small call centre.
Around 80 per cent of queries can be handled in these centres, with the
remainder being filtered through to expert professionals. Levels of service
will be monitored against customer care competencies that were co-designed with
staff in an existing contact centre at the council’s works department.

At the same time, the council will institute a technology
platform that centralises customer data, ensuring that residents only have to
enter their data once for all the services they want to use.

Above all the other changes, the HR impact of organisational
redesign will be most noticeable in the council’s library network. In effect,
staff in the libraries department will be at the front-line of customer
services. Tackling that change management process requires a mixture of system
improvement, training and recruitment – possibly of corporate librarians with
broader information experience. The librarians’ traditional role will evolve to
one of knowledge and information managers. This part of the change process
alone will take six to 12 months.

Take-home points…

1 All of an organisation’s departments need to be aligned to
meet customer goals

2 The ‘best’ structure is one that is built around the
corporate objectives

3 Accountability is critical if an organisation is to work
effectively

4 Companies can help communication by adopting flexible
internet-based software platforms.

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