Many organizations are trying to be more joined up and integrated “horizontally” across the traditional vertical silos of function and geography. Some of them try to do this through virtual teamwork and collaboration; others introduce some kind of formal matrix or multidimensional organization structure.
The strategy and structure are clear that there is often a lag between the thinking in these areas and aligning the people systems to these new behaviours.
In my own career, when I was a manufacturing plant manager, I used to be measured very closely on manufacturing control costs which were primarily influenced by labour and scrap. The best way for me to meet my targets was to make a lot of product as most of my scrap came from product change over.
When we introduced supply chain systems and focus it quickly became clear that I could make a big impact on the optimization of the total supply chain by making smaller and more flexible production runs. It was exactly the right thing to do for the overall business and it was clear that this was the strategy.
Unfortunately my success continued to be measured on manufacturing costs alone for a period of nearly 2 years and every time I did the right thing for the overall business it reflected badly on me. My financial numbers suffered and these were an important factor in my appraisal.
It seems a simple point but many organizations fail to align their people processes quickly with their new more integrated way of working. People introducing global policies and practices may have a negative short-term impact on their local profit loss and lose bonus as a result.
It surprisingly many people in the short term will play the good corporate citizen do the right thing for the business, even though it costs them personally. In a medium to long term however this really can’t be the right thing to do.
When we work with the senior people leading the transformation to a more integrated international business we get them to think about the alignment of strategy, structure, systems and skills. As a general rule they tend to be over focused on structure and neglect systems and skills changes. Unfortunately if all four waves of change and completed successfully and the change fails then is a tendency to go back and change the structure again. This can lead to large organizations reorganizing every two years but never completing the change process.
In the area of “people systems”, it’s important to think through the implications for objective setting, appraisal, reward and career development in particular.
More generally we need to look at who and what do we reward and recognize. Who are the heroes and the stories we tell that carry the values of the organization, and do they reflect the new way of working, or the old?
If you are engaged in a major organizational change effort we would strongly recommend you have work streams in place to look at these areas systematically to check whether the behaviours that the legacy systems reinforce are the ones you want to have in place under the new way of working.
If you’d like to learn how this has worked in other organizations or how we can support you in this work please call us now.
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