Organisational change is key to scale and grow – but don't fall prey to these common mistakes
New Zealand is in the fortunate position of relative normality thanks to the country’s fast-acting approach to COVID-19. Heralded as a country that has led the rest of the globe in its response, NZ has done a remarkable job of keepings its residents safe.
But while the rest of the world has been continuing to evolve and adapt in the face of lockdowns, is New Zealand at risk of being left behind? That’s the question posed by K3 Consulting Director Ken Brophy. As a world-leading expert in organisational change, Brophy said Kiwi business owners must not become complacent despite feeling it’s ‘business as usual’.
“A recent McKinsey article on CEO research found that only 11% of those surveyed believe their current business models will be economically viable through 2023,” he said. “Given I work in the growth and transformation space it is really encouraging to see many businesses tackling this challenge head on, with a significant number of meaningful design changes underway, that I think will make these organisations far more competitive.”
Talking to HRD, Brophy shared 10 key pitfalls businesses should be aware of when undertaking organisational change.
- Adopting a new model that the business isn’t ready for or doesn’t fully understand
It’s awesome that people are exploring the application of agile on their ways of doing business, but people need to be conscious of where they fall on the agile continuum of ‘agile ways of working’ vs ‘true agile organisational design. For most businesses, the former is a great way of re-invigorating communications and connections, but the latter is a fundamental change that for many is not needed, and certainly not right across the whole business.
- Force fitting existing people into a new model and expecting different results
When the labour market is tight it can be easy to retain the existing team, drop them into a new structure and expect them to be successful. Now with the right training and support, this might work out fine but equally sometimes we may have to make the tough decision to look for talent elsewhere. It’s never an easy decision but often the best call, as setting someone up for failure isn’t a great leadership call and it doesn’t benefit anyone.
Read more: Change management: How to navigate culture transformation
- Building a new model and realizing you don’t have the people capability to run it
Whenever I am working with a client, I ask them to design for the aspirational model they need by a chosen timeframe, such as 12 months or longer. This ensures they get out of the immediate challenges of today, but it also focuses attention on the fact that without significant investment in people – whether hiring new or developing existing staff – their aspiration will not become reality. Too many people are not thinking strategically about their workforce planning which is leaving massive capability gaps, especially in a labour constrained market.
- Initiating large-scale change when it isn’t warranted and/or failing to focus on continuous improvement to avoid periodic big-bangs
Organisations need to be continually ‘auditing’ how aligned or not the different parts of their business are to the strategy and iterating as you go. That way you avoid the massive change events, outside of significant strategic re-direction, and ensure that you have a myriad of people across the organisation focused on optimising what they do day-to-day.
- Focusing on step one rather than the full transformation journey
Leaders need to think about the whole transformation journey, which could easily take 12 plus months, and all the elements outside structure that change the nature of how work is done, such as process, systems and capabilities, if they want their transformation to be successful. Announcing the new structure is only the first step if that is your ‘go to’ solution.
- Functional teams focusing on the outputs of their work, not the business outcomes
Functional teams are being asked to show greater value, do things more efficiently and, all going to plan, have time to strategically support their business leaders. The challenge for many is that, if they are just focusing on what is right for their outputs, then it might not actually be of value for their customers. In a recent HR project I had exposure to, the team swapped out their recruitment system and were stoked by the internal efficiencies it gave them. But there was no improvement to the time to hire metric or people leader involvement from a business perspective. Was that really a successful change?
- Treating change as a cost out exercise and ignoring the impact on value creation/destruction
It might serve an immediate need but too often I see businesses strip out costs, often through headcount, but fail to change the nature of the work needing to be done. As such, you either burn out those who remain and/or hire people back into the business within six months. Quarterly reporting drives a short-term focus, and this creates a challenge. Businesses should go back to designing for the aspiration, plan out all the required steps and show where the sustainable cost savings will come.
- Designing in isolation without the input of key stakeholders
Recently, I was asked to support a review of a function that’s operational efficiency has been demonstrably impacted by changes that were made in isolation to other areas of the business. When reviewing your piece of the organisation, be conscious of the interdependencies with other areas. Seek their input or involvement where possible to ensure that, while you might only be redesigning your piece, it aligns with other teams.
Read more: How has the HR landscape changed in 2020?
- Outsourcing for cost savings but handing over the activities that are proprietary/ differentiating to an external organisation
When a partner is controlling proprietary activities that especially support how you differentiate yourself in the marketplace, you are putting yourself at risk. If there is a generic activity with a need to drive efficiencies, then focus any outsourcing opportunities there. I first saw this happening in the telco sector in the early 2000s, but twenty years on, I am seeing the same things happening again, albeit in different industries, in 2021.
- Failing to address the challenges of people leadership and technology leadership
With a desire to optimise structures, we can at times forget that some people excel at, or have a desire to grow into people leadership, whereas others just want to be a technical leader. How do we make sure we can support both these desires through how we hire, develop and promote people but equally how we create a structure that also supports this duality? I am not suggesting introducing a costly, in-efficient organisational design but just focusing on spans/layers can be a blunt instrument for creating an environment where both leadership paths are useful in driving business performance.
We still have half the year to go in 2021 and 2023 isn’t that far away. So, if you are one of the 89% who knows your business model needs to change then get on with it, but do it in a way that will drive longer term sustainable transformation.
