Organization Design Evolution

Organization Design Evolution & Changing Demands on HR

Anand Narasimhan Shell Professor of Global Leadership

God is in the Design?

There be Gold in ‘em Bureaucrats!

Organization Design of the Future?

In the office of the future, There is no office

Organization Design of the Future

In the VACATION of the future, There is no VACATION

After this Presentation, You Will

Get a sense of how the economic cycle determines changes in organization design ethos Understand how changes in organization design ethos determine emergence of new HR responsibilities Reflect on which of the new emergent HR responsibilities you might be faced with

The Economic Cycle

Organization Design Ethos: “Closed Boundary”

Functional Structure

Divisional Structure

Matrix Structure

Closed Boundary Ethos: Design Architects

Ford Model T

Sloan, General Motors

Boeing

Functional Structure

Divisional Structure

Matrix Structure

Closed Design Ethos: New HR Responsibilities Sensitivity Training Human Relations

Employee Assistance Programs

Job Enrichment Organizational Culture

Organization Design Ethos: “Partially Open Boundary” CLOSED BOUNDARIES  Functional Structure

Divisional Structure

Matrix Structure

 OPEN BOUNDARIES Horizontal Organization

Partially Open Boundary Ethos: Design Architects

John Reed, Citibank

Jack Welch, GE

Dick Landgraf, Ford

The Paper Factory

Boundaryless Corporation

Concurrent Design

Partially Open Design Ethos: New HR Responsibilities Renewal Capability

Organizational Learning

Total Quality Management Employee Empowerment

Improved Commitment

Efficient Infrastructure

Ulrich’s HR Roles (1997)

METAPHOR

ACTIVITY

OUTCOME

What I Do

What I Deliver

Strategic Partner

Aligning HR and Business Strategy: “Organizational Diagnosis”

Executing strategy

Administrative Expert

Reengineering organization processes: “Shared services”

Building efficient infrastructure

Change Agent

Managing transformation and change: “Ensuring capacity for change”

Creating a renewed organization

Employee Champion

Responding to employee needs: “Providing resources to employees”

Increasing employee commitment and capability

Source. Dave Ulrich (1997). Human Resource Champions. Harvard Business School Press.

(ORG.) DEMAND SIDE

(LABOR) SUPPLY SIDE

But how has the organization design ethos changed since then?

As New Economic Hotspots Are Emerging‌

And Established Ones Fade‌

The World is Becoming More Connected and Open

Organization Design Waves: “Open Boundary” CLOSED BOUNDARIES  Functional Structure

Divisional Structure

Matrix Structure

 OPEN BOUNDARIES Horizontal Organization

Hollow Organization

Modular Organization

Virtual Organization

The Workforce is Re-Configuring

Valmed Automotive

Porsche Cayman

Hollow Organization: The Obvious Example

Source: New York Times, 2009

Hollow Organization

Outsourcing internal processes that support an organization’s mission Design Principles 1.

2.

3.

Determine core processes • Critical to business mission • Creates current or future competitive advantage • Drives growth or rejuvination For non-core processes, harness market forces: ‘make or buy’ Align incentives

Hollow Organization: The Less-Visible Example

Source: BusinessWeek, 2003

Hollow Organization: The India Example

Mumbai-based Tata Elxsi VCL cut out studio stunt shots, sent them back to Marvel/Sony Entertainment in Hollywood where they were fitted into urban landscapes where Spiderman appeared to swoop from one skyscraper to another Source: CBS News, 2009

Modular Organization: The Obvious Example

Modular Organization

Assembling decomposable product chunks (modules) provided by internal and external providers Design Principles 1.

2.

3.

4.

Break product into manageable modules Delete, spin-out, acquire, or merge modules Design interfaces to link up modules Focus on assembly

Modular Organization: The Less Obvious Example

Modular Organization: The Indian Example

Research

Document Discovery

Drafting Motion Papers

Litigation

Jane Doe sues the HBO, producers of the Da Ali G Show for libel. Mysore-based firm SDD global drafts the motion papers filed before L.A. County Superior Court. Jane Doe lost the case.

Had the modular option not been cheaper, HBO would have settled out of court.

Virtual Organization: The Obvious Example

+

=

Virtual Organization

Creating a company-outside-a-company to respond to an exceptional (often temporary) market opportunity Design Principles 1.

2.

3.

4.

Create a temporary organization with external partners Use technology to link people, assets, and ideas Each partner brings their own domain of excellence Disband or absorb once the market opportunity evaporates

Virtual Organization: The Less-Visible Example

+

=

Virtual Organization: The India Example SELL: FINANCIAL TRANSACTIONS

KEEP: GLOBAL SALES SUPPORT

Restructuring (Function/Divisional/Matrix) vs.

Reconfiguration (Hollow/Modular/Virtual)

Employee Expectations Continue to Be High ‌Even When Not an Employee!

Emerging HR Roles METAPHOR

Resource Manager

ACTIVITY

OUTCOME

What I Do

What I Deliver

Reconfiguring organizational (human) resources Include and assimilate external (human) resources Build “permanent-temporary� workforce Design flexible policies for new demographic realities

Executing strategy (by creating and supporting resource capability)

Assurance Provider

Maintain sustainable practices in reconfigured organization Provide expertise for local regime compliance

Contain reputational risk

Media Player

Use social media to create brand attraction in labor market Deploy social media for commitment, learning, and retention

Build employer brand

Human Capital Builder

Design career and assignment experiences that build human capital of all employees- permanent and temporary

Build human capital

(ORG.) DEMAND SIDE

(LABOR) SUPPLY SIDE

Questions for discussion: To what extent to do you see the “open era� organization design options (hollow, virtual, modular) in your organization?

What are the new HR demands that you had to deal with as a result of hollow, virtual, modular type designs?