5 ways Strategic Organization Design supports talent management
Or how to avoid “this is not the job I signed up for”
Talent is currently a priority for senior management, appearing annually at or near the top of CEO surveys. With this focus on talent, we have seen an increased frequency of articles and books about the use of talent development, retention, engagement, and empowerment as critical levers to ensure sustainability, growth, and value creation for organizations.
Talent management is especially challenging today, in a world where talent is highly mobile. People won’t stay in a job if it is not meeting their needs, which today extend beyond meeting basic income and social needs. People join organizations to apply their skills and interests—to do challenging work that provides them with opportunities for growth and advancement. Yet in most of our client organizations undergoing reorganization when we ask employees, at all levels, “what issues should this reorganization resolve?” The number one answer is “to create jobs that will actually utilize my capabilities and skills.”
The gap between senior management support for talent management and the experience of employees saying, “this is not the job I signed up for” demonstrates the rift between the stated intention of supporting and developing talent and the lived reality of employees. A critical success factor often absent in the talent discussion is how organization and role design can provide the foundation for creating a rich talent environment to meet the needs of both organizations and the people who work in them.
Here are 5 ways to design in a solid foundation for talent management in organizations to bridge the gap between intention and action.
1. Design the structure to the strategy
Aligning structure to strategy is the number one principle of organization design and it should be no surprise that it leads off this list. Designing roles aligned to the strategy ensures that the right work for the organization gets done. This is accomplished by grouping work in way that facilitates the delivery of the strategy. It also involves removing work that does not support the strategy. People want to contribute to the achievement of the organization’s strategy and mission. In a well-designed organization, every employee should understand how their role directly contributes to the strategy or supports roles that do.
A division of a global manufacturer developed a commercial strategy that it believed would create significant competitive advantage but after multiple attempts over several years, the new strategy was still not implemented—in spite of the fact that significant resources had been provided to support it. A symptom of this failure was the lack of cooperation between the commercial areas of the business and operational groups. A review showed that the current organization structure was getting in the way. The Executive Vice President of Commercial was nested at a level above other executives and ran the commercial marketing and sales activities independently of the rest of the organization, creating a “fortress” mentality of “them versus us”. The net result was an organization incapable of executing companywide initiatives. Once the President realised that directives to cooperate better were falling on deaf ears, he eliminated the EVP of Commercial role and the extra level it occupied, making the Vice Presidents of both Marketing and Sales direct reports thereby creating a senior management team encompassing executives from all major functions. The President then provided the VP of Marketing with resources and direction to align the Marketing organization’s structure to support the strategy. Once the redesign was complete the company was able to successfully implement the commercial strategy resulting in several successful years where it overachieved its business plan.
2. Design out the impediments that interfere with performance
Aligning structure to strategy will ensure you have identified the big buckets of work, but what often goes unaddressed is how work flows both vertically and horizontally throughout an organization. Too many or too few layers, or poor grouping of work interferes with speed of execution, growth and value creation. The manufacturing example above demonstrates how one extra level resulted in misaligned executive roles that were unable to carry out enterprise-wide work effectively. Clear definitions for levels of work and groupings of work will enable management to eliminate structural impediments to performance.
3. Create empowerment through role design
Building broad roles that create challenge and develop people will enable employees to more effectively support the achievement of strategic goals. Roles should be fully developed in ways that enable employees to complete their work in an effective and efficient manner without undue interference. When roles are designed to be too small or too narrow, work slows as employees must partner with other roles to get the work done. The phrase “too many cooks in the kitchen” exemplifies the problem.
An organization review for a financial products division of a large bank indicated that the entire executive team was focused on operational problem solving and not on strategic growth of the business. The Division President decided to retain the members of the senior leadership team but worked with them to redefine all of their roles to general management levels, pulling up not only their work, but the work of the rest of the organization as well. Senior management began to focus on general management and business growth including putting a greater focus on leadership and people development. This change also expanded operational roles and gave operational leaders the freedom to manage their parts of the business. Over a relatively short time period a profit slide was reversed, and revenue doubled in three years—two years ahead of goal.
4. Build authority into roles
A fundamental component of role design is that the role holder must have decision-making authority commensurate to the role in order to successfully deliver their mandate.
Central to the matching of accountability and authority is the assumption that people are to be trusted to do their best. People will make mistakes and with the help of their managers, learn from them. When managers assume the authorities of their direct reports the learning does not occur, and the direct report role shrinks. Without the authority required to complete their work a role holder will not develop the capabilities to fully perform their current role and will not be prepared to take on larger roles.
The merchants of a large home improvement box store chain were underutilized and underproductive. Most merchants indicated they had a clear understanding of their role and the commensurate decision authority, but they were not permitted to exercise that authority. This mismatch of accountability and authority had not always existed. The COVID pandemic had created a need for executive leadership to get involved in the merchant work as supply chain disruptions and rotating store closures disrupted the overall business. Although COVID was (eventually) in the rearview mirror and business conditions had returned to normal, decision-making remained at the executive level. Senior merchants waited for decisions to be made by executives—decisions which should have been made by the merchants themselves. Mid-level merchant managers felt like meat in a sandwich with their bosses stepping into their work and buyers below them demanding freedom to exercise their roles. An initiative to push decision-making authority back into roles where it had originally resided was quickly followed by a return to growth.
5. Build accountability for talent management in managerial roles
Work of the manager in talent management
Managerial leadership is a key component of talent management and development. Effective talent management depends upon building managerial roles where managers are accountable for their leadership work. Formalizing consistent managerial leadership accountabilities for every people manager within an organization sets an expectation that all employees will receive effective leadership in carrying out their work. This managerial leadership work begins with building and sustaining an effective team capable of producing required outputs. It is about supporting development of employees in their current roles through work assignments while providing coaching, feedback and recognition.
Work of the manager-one-removed (MoR) in talent management
Managers-once-removed (sometimes referred to as MoRs or skip level managers) are managers of managers who have specific accountabilities to ensure that managers perform their leadership work well and that employees two levels down (EoRs, or employees-once-removed) are supported in their development and growth. To fulfill these accountabilities MoRs must ensure EoRs receive sound leadership and that managers are held to account to provide effective leadership. MoRs must ensure EoRs are treated fairly within the performance management, learning and development, compensation and benefits plans adopted by their organization. Finally, MoRs should know their EoR’s capabilities in order to support EoR development as well as succession for roles one level down. To do this MoRs must create opportunities (with support and involvement of direct managers) to see the EoRs in action and spend enough time to fairly assess the EoR’s current and future capability.
Through this work MoR’s develop a talent pool within their organization and provide mentoring opportunities for EoRs. This talent pool is a subset of the organization-wide talent pool. Instituting MoR practices in an organization provides a formal mechanism to encourage communication, openness, and trust across multiple levels, while ensuring that talent is available and ready to take on more senior roles.
Strategic organization design establishes the foundation for attracting and retaining talent by offering challenging work, development, growth, advancement, and engagement for all employees. Designing an organization that supports leaders in developing employees supports the future requirements of the organization while providing employees the opportunity to fulfill their potential while carrying out work they value.
This blog is part of our ongoing series Organizations that Work. To see all of the blogs in the series that have been posted so far, click here.
Every Tuesday over the next few months, we will be posting blogs that take you from the pain of poor organization design, to identifying the root causes, to the benefits of undertaking strategic organization review. We will discuss the steps needed to effectively align your structure and work with your strategy, and we’ll discuss the processes that take out the guess work and help you to get it done. Through it all we will discuss how to lead the change from start to finish.
If you’d like to speak with us about how we can help you on your journey to an organization that works, please follow us on LinkedIn or book a call directly with one of our partners.
Our approach draws on several bodies of work including Stratified Systems Theory, the work of Dr. Elliott Jaques. For more on Dr. Jaques and his work visit the Requisite Organization International Institute at ROII Requisite – ROII Requisite.