Truly Leading Organizational Change?

Since our world and the workplace have changed through this terrible COVID-19 pandemic, the time is ripe for surviving businesses to re-group and refresh.

Common Design Challenges That All Organizations Face

Implementing Organizational Change (Spector, 2013), features the belief that even though every organization is unique in its own way, organizations often face common design challenges (Spector, 2013).

Spector's four over-arching design challenges:

1.     Task Differentiation

2.     Movement of Knowledge and Resources

3.     Control Mechanisms

4.     Allocation of Decision-Making

I believe there are five, and Mission, Vision, Goals & Expectations should rank #1.

Task Differentiation

 Most organizations require people with varying skill sets and brain function. There might be horizontal differences such as accountants, salespeople, R&D teams, and customer service departments. In other cases, the differentiation could be vertical such as different levels and functions of management.

Each category of specialty area can attract people with common mindsets, and one department’s key performance indicators (KPIs) might differ from another department’s KPIs. Personality types attracted into a certain specialty area might share a common way of seeing things and share values that differ slightly from other functional areas. Each differentiated functional unit should be allowed to develop its own sub-culture and goals. On the other hand, organizational culture is a set of shared assumptions, goals, and practices within an organization (Bateman, Snell, & Konopaske, 2016). Organizational Culture defines the overall framework that directs collective behaviors. The over-arching culture of an organization might be challenging to discern, but the measures of success of each functional unit may vary widely and be more easily identified. The best-managed companies put effort into clearly defining their organizational culture so each department or "silo" is working in harmony toward a common goal - with a collective sense of purpose, appreciation, and clarity. Once the collective is excited and signs onto things such as the company's updated mission, vision, culture, and goals, this sets the stage for driving change through departments in a way that is most ideally aligned with the idiosyncrasies of each department.

Cameron, & Quinn, (2011) Defines four distinct organizational cultures:

1.     Group culture - It tends to be based on the values, norms, and traditions associated with the overall company. It can be dependent on internal factors as well as external factors.

2.     Hierarchical culture – This is based on a formal line of control. Individuals expect and comply with mandates from the top-down. Roles, procedures, and expectations are formally defined.

3.     Rational culture – This is based on external control and the primary priorities are productivity, planning, and awards for safety and efficiency.

4.     Adhocracy - Is external-oriented and flexible. This culture is driven by growth and innovation. Organizational members can be risk-takers and perform in line with an overarching mission and goals. All members tend to be entrepreneurial (Dellana, & Hauser, 1999). 

Is it okay for each department to have its own unique personality and goals?

Paul Lawrence and Jay Lorsch’s study, Organization and Environment (1967) found that differentiation represents distinctive workflow and procedures. It also accounts for the way certain specialists think and feel compared to differing specialists. Highly differentiated units show that employees work differently and also behave differently when it comes to how problems are approached and solved within one department versus other departments. Their studies show that these differences should be embraced because these differences can help an organization generate creative solutions. These concepts of similar and different are common and benefit from a reality-based change-management approach. Could you imagine what would happen if you assigned sales quotas to your sales staff and assigned those same quotas to your R&D engineers?

What makes up a department's sub-culture?

1.     Goals

2.     Time Orientation

3.     Interpersonal Style

4.     Formality

Movement of Knowledge and Resources

Forming cross-functional teams and knowledge sharing are vital to any organization's success. It builds empathy and relationships. It also helps decision-making stay in a reality-based context. Most organizations are made up of departments that gravitate toward functioning as silos and procedures must be put in place to enable and encourage the sharing of knowledge. These siloed departments are interdependent despite how differentiated departments such as engineering, sales, customer service, accounting, and administration might be. These functional teams must communicate across departments to be most effective (Denton, 1991). The creation of cross-functional teams can effectively procure the best choices of data and the best practices for each department to functionally collaborate with one another. Each department can be positioned to help one another’s success and can act as an effective check-and-balance across silo lines (Lawler, III, 1988).

Cross-functional teams are often made up of representatives from multiple organizational functions and are cross-trained so they can orchestrate efforts in harmony across functional areas. They coordinate efforts in interrelated activities and help establish processes and goals that are mutually agreed upon between functional departments. This also creates checks and balances that enhance accountability and goal achievement (Bartlett, & Gloshal, 1989).

Is there a secret to knowledge sharing and productivity?

Most companies experience the interdependence of activities across all areas of the company, and a critical part of a company’s success involves creating an environment of freedom to function in sub-cultures, as well as the ability to maintain cohesive goals and collaborations across each business unit. When cross-functional teams are empowered to determine the best ways to coordinate efforts, this can eliminate handoff problems, costs associated with oversights, and quality issues. This approach can create an interconnected web of activities that helps the company yield the best results for all stakeholders (Galbraith, 1994).

Control Mechanisms

Especially through change, leaders need to reduce fear and ambiguity. The movement of knowledge is interrelated with control mechanisms and hierarchy. An example of a control mechanism includes how decision-making is performed. Control mechanisms help shape “rules of conduct” and helps shape employee behaviors. Control systems should clearly define what is considered good behavior and what is considered bad behavior. If this is done intentionally, and employee trainings are performed well, this can reduce gray areas and pro-actively help avoid issues. Control systems of this nature can also enable employees to perform without fear. If expectations of behaviors are well-defined, employees will feel safer about taking risks that are within the control barriers. Risks taken by employees can yield productive innovations.

In some cases of organizations functioning across country borders, the definitions of good and bad behavior are particularly important as national cultures may differ in the definition of ethical standards. In this case, it helps if managers of each country operate with a reasonable level of autonomy. They can respond to unique challenges and opportunities regarding the allocation of decision-making within their business units and respond to issues case-by-case while also staying aligned with the corporate rules and definitions. The national managers naturally possess a greater understanding of their regional teams, the marketplace, and national issues. That way, they can respond to particular and unique challenges most productively, with “entrepreneurial zeal” (Lorsch, 1975, p.15).

Types of Control Mechanisms

           Clan control relies on employee empowerment and corporate culture. A typical day requires hundreds if not thousands of micro-decisions that employees must make to complete tasks. It would be unrealistic for employees to be told what to do every minute of the day, so it is important that guidelines are made clear so the workforce can produce results with a reasonable amount of independence. Additionally, jobs can be so specialized that managers are not equipped to make decisions on the employees’ behalf. Studies have shown that employees want to be more engaged in their work and actively contribute to decision-making and crafting solutions to unique challenges (Fullan, 2001).

An organizational culture that encourages the wrong behaviors will severely hinder an effort to impose effective controls. But if managers create and reinforce a strong culture that encourages correct behavior, one in which everyone understands management’s values and expectations, and is motivated to act in accordance with them, then clan control can be very effective (Fuchs, Mifflin, Miller, & Whitney, 2000). This goes back to clan control creating relationships built on mutual respect and encouraging each individual to take responsibility for his or her actions. If employees work within a clearly defined framework of values, they are provided guidelines that increase the probability that they are making decisions that best align with defined corporate values. 

Organic Controls rely less on specific rules and guidelines and are governed by shared values and the organization’s common understanding of the risks they can take and the performance outcomes expected of them. The more effort the executive team puts into clarifying factors such as what is good and bad, what is expected, and the overall corporate mission and vision, the more likely the organic controls will enable a company’s streamlined success (Walton, 1985).

           Technology can be considered another type of control. Technology can affect an organization’s ability to communicate with one another easily and timely. It can also affect their ability to respond to one another and thwart issues. The technology used in an organization should reflect the most ideal iteration of its desired workflow and can represent the company’s preferred methods and processes. Technology can also affect a manager’s ability to monitor activities and define and control the rules of approvals and decision-making. This happens to be my favorite type of control.

Allocation of Decision-Making

Deciding how and where to locate decision-making seems obvious, but it's often overlooked. The lack of information sharing can cause multiple departments to miss achieving goals. Could you imagine being assigned to hit goals that were outside of your department's control? Or, possibly performing without knowing what your mission and goals are? Above, I mentioned a decision-making phenomenon called reality-based context. This ties in with empathy. Harmony is far more probable if a person in one department understands and appreciates why someone else in another department answered yes or no to a particular question. Cross-training and understanding inter-departmental and cross-departmental workflows and goals helps close dangerous gaps. Knowledge gaps of this nature cause notable unrest and failures. The only way around these types of scenarios is to implement a knowledge-sharing program that encourages "support check-ins" and regular milestone meetings. In other words, similar to how free markets work, if two different departments are being measured and rewarded on interdependent criteria, if all parties are incentivized to communicate effectively, and the "whys" are clear, the departments surely figure out how to achieve successful outcomes together. This cannot necessarily work successfully if a company's mission, vision, goals, and over-arching expectations are not made clear by leadership.

This scenario describes Burt Spector’s sequential model of effective change implementation and organizational development (2013). This model begins with process-driven change which supports the theory that change will be more effective if all stakeholders are involved via shared diagnosis, and if a commitment is established. Efforts should be made to align employee tasks with the strategic direction of the organization.

How does Spector's Sequential Model work with change?

1. Task Alignment - Updating and redesigning roles, responsibilities, and relationships helps keep the "whys" and decision-making criteria relevant.

2. Training and Mentoring – Building knowledge across all departments and ecosystems. Teaching new behaviors, clarifying goals and expectations are key.

3. People Alignment – Establishing an overall functional structure that helps support the changes. This involves getting sign-on and assigning skillsets and personalities with the best choices of roles - then announcing the changes and expectations to the collective.

4. Systems and Structures - Aligning reporting relationships, compensation, information measurements, and controls such as technology in place that streamlines, tracks, and reinforces the desired behaviors.

To summarize it all:

The elements spelled out above defines the most ideal model for an organization, especially during high growth or times of change. The essentials of a high-commitment work system that can affect a most functional environment are:

1.     Clarity of organizational goals – The company's mission, vision, goals, and expectations are clear to all people and all levels within an organization.

2.     Influence mechanisms – Individuals appointed formally, as well as informal catalysts of cross-departmental communications know they are responsible for the sharing of knowledge throughout an enterprise.

3.     Teamwork – Unique teams are allowed but there are proven-capable "special operations" individuals in each team assigned to perform cross-functional tasks.

4.     Shared information – Communication of internal and external information that clarifies key performance indicators and needed action items are gathered and managed in the fashion each team has mutually agreed upon between each interdependent department.

5.     Organic controls – Actions motivated by natural organizational culture and norms.

6.     Individual developmental opportunities – Orientation and training activities that develop core competencies that are in line with company desires and goals.

While organizations engage in a wide variety of differing activities and differing vertical and horizontal functions, the human dynamics of an organization can commonly benefit from the same general elements that make up a high-commitment and successful work system.

Another article that may interest you: Six "Simple" Must-Dos for Your Company's Next Stages of Growth

Erika Feinberg, MA Human Dynamics

[email protected]

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References:

Bartlett, C.A., & Sumantra G. (1989). Managing across borders: The transnational solution. Boston, MA: Harvard Business School Press.

Bateman, T., Snell, S., & Konopaske, R. (2016). Management (4th ed.). New York, New York: McGraw-Hill Education.

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Dellana, S.A., & Hauser, R.D. (1999, June). Toward defining the quality culture. Engineering Management 11(2), 11–15.

Denton, K.D. (1991). Horizontal management: Beyond total customer satisfaction. New York, New York: Lexington Books.

Fuchs, P.H., Mifflin, K. E., Miller, D., & Whitney, J.O. (2000, Spring). Strategic integration: Competing in the age of capabilities, California Management Review 42(3), 118–47.

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Lawrence, P.R, & Lorsch, J.W. (1967). Organization and environment: Managing differentiation and integration. Harvard Graduate School of Business Administration Division of Research.

Lorsch, J.W. (1975). Not on organizational design. Boston, MA: Harvard Business School Publishing, p. 15.

D. Cohen and L. Prusak, In Good Company: How Social Capital Makes Organizations Work (Cambridge, MA: Harvard Business School Press, 2001).

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Spector, B. (2013). Implementing Organizational Change (3rd ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Walton, R.E. (1985, March-April 1985). From control to commitment in the workplace. Harvard Business Review, 5-12.

Erika Feinberg, MA Human Dynamics

[email protected]