How to Make the Organization Redesign a Success

So, how does the technology actually work? I have worked in many technology projects within HR, and this is the most frequently asked question by HR practitioners before and after new technology is implemented in an HR department. HR practitioners are usually more interested to know how new technology will work in practice, in their HR processes and working practices. And they will often expect the new technology to be adapted to meet their needs and expectations.

I would also add that the HR and technology professions do not naturally go together. By this I mean, HR as an ‘intelligent customer’ is a developing capability and for good reason. Historically, the HR profession’s role and expertise has not included technology. However, things are changing. The role of the HR profession has widened to include an understanding of the impact of technology on people at work. HR data analysts are now one of the most sought-after skills in technology-driven HR departments.

The technology profession, on the other hand, typically does not speak the language of HR and therefore, HR practitioners do not always fully understand how technology can drive their service. Building a bridge between HR and technology practitioner ‘speak’ is perhaps one of the greatest challenges in successfully implementing HR technology.

It often takes somebody who has straddled both professions, for example, an HR practitioner who has worked in an HR operational environment and within an HR technology team, to build the bridge and leverage the functionality of technology to enable HR to have a greater focus on using data to generate business insight and support organizational decision-making.

The Chartered Institute of Personnel and Development (CIPD) sets out the following areas of knowledge which underpin the HR profession and required to drive change, create value, and make a positive impact in the world of work. The core knowledge areas set out everything an HR practitioner needs to know to be an effective practitioner, regardless of their role, sector or specialism.

People Practice – understanding the range of people practices needed to be an effective people professional.

Culture and Behaviour – understanding people’s behaviour and creating the right organisation culture.

Business Acumen – understanding your organisation, the commercial context and the wider world of work.

Evidence-based Practice – using evidence and data to create insight, problem solve and develop ideas and measure impact.

Change – understanding how to effectively enable change.

Technology and People – understanding the impact of technology on people at work.

Using the right technology, HR practitioners can drive their knowledge in the core areas to make a significant and valuable contribution to business success. There are many organisations using cutting-edge technology in their HR functions, but there are still many HR departments using IT systems mostly owned and driven by the Finance function. The latter arrangement means HR practitioners are not involved in long-term, strategic decision-making about technology in the organization and this is a missed opportunity to contribute to their organization’s success!

But the good news is that the HR profession itself is pivoting towards cutting-edge technology to make better decisions, act with confidence, and drive change in their organizations. The Chartered Institute of Personnel and Development (CIPD) defines the core area of technology and people as ‘understanding the role of technology and the impact it has on the people function and broader workforce’. The HR profession recognises that there is an important role for HR practitioners to know how technology can improve the agility and productivity of the workforces and organisations, and how it can enable more collaborative working. Ingentis’ org.manager is a tool that enables HR practitioners to do just that.

I find it is beneficial to demonstrate how new technology enables the work of the HR function by showing some practical examples which resonate with the HR practitioner. A demo is also particularly impactful at the early stages of a customer’s interest in new technology.

Context

A global company is facing a tough year. It is operating in a volatile external environment due to the cost of living crisis and rise of inflation in the markets in which it operates. The company’s response has been to look at how they can be sharper in their business operations.

As there will be continued economic volatility, spending will continue to be tight for their consumers in many of their markets. With less consumer spending, the company is focusing on delivering the best products and collaborative working to maintain market share.

The HR function is leading the drive to redesign the organization structure which maximizes revenues and enables greater collaborative working.

The company’s HR department purchased org.manager to visualize data from their SAP system. The implementation involved some configuration to org.manager to align the tool with the company’s HR processes and practices. Implementation is straightforward and immediately brings transparency to the company’s HR and organizational data held in SAP.

For the first time, HR was able to show hierarchical structures including functional org charts, positions, position holders, job titles, and grades. The tool’s access was limited to HR to allow for a period of time to cleanse the data before releasing the tool to managers.

One of the benefits of org.manager is the transparency it brings to data held in HR systems. HR was able to visualize its own data, and then quickly identify errors. Data errors rarely come to anyone’s attention until somebody notices it. Usually an employee looking at their own data, or manager reviewing an HR report. With org.manager, you can analyze your HR data with or without stakeholders. I would recommend that HR includes a data cleansing strategy and action plan during an org.manager implementation that aims to increase the accuracy and reliability of data. This will bring stakeholder confidence in the tool, as often, managers will blame the tool, rather than the source of the data, for the inaccuracy. If your HR function uses employee or manager self-service then it is important to remind your people of the importance to input accurate data.

When discussing org design, we are referring to using data-driven evaluation methods to optimize the design of companies and organizations. This, in turn, forms the foundation of org development or development of organizations.

With Ingentis org.manager, you can analyze your organization in detail and identify areas of improvement and necessary changes. This allows you to create structures and processes that improve effectiveness and efficiency in the organization, thus making a meaningful contribution to achieving corporate objectives.

• Hierarchical levels – no more than 5 layers.
• Grades – reduction in the number of positions in middle management grades.
• Spans of control – each position to have no more than 5-8 direct reports.
• Salary costs – a calculation of total costs at an individual, team and departmental level by cost centre.

These high-level target KPIs translated into more detailed requirements below which were configured into the org.manager tool for both the current and future state of the company’s organization, and to simulate the structural changes based on the current state. This allowed HR and stakeholders to illustrate and evaluate potential future target states of the organization before implementation.

1. Spans of control
2. Number of layers or levels in the hierarchy
   
3. Total headcount
4. Total baseline salary costs
   
5. Target headcount reduction (as a calculation of As Is v To Be)
   
6. Target cost reduction, total baseline salaries (as a calculation of As Is v To Be)
   
7. Target number of layers or levels in the hierarchy (as a calculation of As Is v To Be)
   
8. Target spans of control (as a calculation of As Is v To Be)

1. Target headcount reduction (As Is v To Be)
2. Target spans of control (As Is v To Be)
3. Target cost reduction, total baseline salaries (As Is v To Be)

HR also summarized the evaluation criteria for assessing different organisation designs and/or selecting the optimal or preferred organisation design.

Achieving a target form of the organization
Ingentis org.manager offers various options for visualizing the future state of the organization, from classic organizational charts for a quick overview of the various units to an easy-to-understand representation of agile structures. It doesn’t always have to be a classic hierarchy. The company opted for an organizational chart where you can zoom in and out with the org.manager functionality to see if the proposed organizational structure is in the shape of a triangle. Visualizing the structure was an effective way to enable the HR department and managers to make decisions about different future states.

Target headcount = From 1000 to 750
The extent to which headcount reduction was achieved played a critical role in the decision making process to transform the organization. The org.manager tool was configured to provide a summary of the total headcount at individual, team, department and organizational level. This allowed the HR department and managers to view the headcount at the different levels of the organization by simply breaking down the organizational structure, and the extent to which headcount reduction was achieved played a critical role in the decision making process to transform the organization. The org.manager tool was configured to provide a summary of total headcount at individual, team, department and organizational level. This allowed the HR department and managers to view the headcount at the different levels of the organization by simply breaking down the organizational structure.

Target cost reduction = 20 %
The org.manager tool was configured to show basic salary costs at individual, team, department and organizational level. This allowed HR and managers to see the proposed cost reductions as a percentage and as a comparison between ‘actual’ and ‘target’ costs. In this way, areas that have achieved or partially achieved this target KPI in their future state could be quickly identified.

Maximum number of layers in the hierarchy = 5
The visualization rules in the org.manager tool allowed the HR team to quickly focus on the number of layers or levels in the future state.

Minimum span of control = 1:5 (maximum 7 or 8)
The visualization rules in the org.manager tool also allowed the HR team to quickly focus on the spans of control for each position in the future state.

For the future state, the source data was inputted into the org. manager after the org redesign workshops with the business led by HR. The data was captured in an excel template sheet to ensure consistency. Remember the HR team were not ready to share the tool with stakeholders. So we used an excel sheet to capture information at the workshop. You could cut out this manual step completely and use the org.manager tool at the workshop. Using data from the excel sheet, HR uses the simulation tool enabled to create the different future state organizations for comparison with the current state using the org redesign KPIs.