The team-friendly organizational structure
a paradigm shift
GLOBALIZATION, ALONG WITH the change in the United States to a service economy, has prompted organizations to transform themselves in order to maintain and achieve leadership and enterprise agility. The structure of an organization is the formal means by which it coordinates the activities of its workforce to accomplish its goals and objectives. Periodically, organizations must restructure in order to stay competitive and efficient. The new environment requires a fresh look at the strategic visions and assumptions that have historically driven the organization. The organizational structure should take its form from a firm's chosen strategy. This transformation requires new roles and responsibilities, with a new set of management practices. The challenge for organizations will be to prevail over inertia and people's fear of change, along with establishing new measures of success.
A changing business environment, increased customer demands, shorter turnaround times …it takes more than streamlining operations or refining processes to keep up. Let's get radical.
Twentieth Century Organizations: A Historical Perspective
At the beginning of the 20th century, the American industrial workforce, having recently shifted focus from its agrarian origins, saw the rise of trade associations made up of “craftsmen.” Consumer products were made by the singular endeavor of individuals. The entire development and delivery process of product design, production, testing, measurement of quality standards, delivery, and follow-on support was provided by a single individual. Along with great individual skill and pride of workmanship, there were hidden costs in this means of production, as later techniques would bear out.
The vision of early 20th century industrialists, most notably Henry Ford, ushered in the idea of specialization of labor and a new organizational structure was born. The assembly line brought about an organization structure in which many highly specialized “functions” performed their specific tasks in a sequential and repetitive fashion, allowing quick delivery of the product to the consumer for the lowest possible cost. In the evolution from the one-person project team, where one person did everything, we progressed to the division of labor structure where there were many functional specialists, each performing a highly skilled yet very narrow serial task.
Over time, these specialist areas grew more self-serving and limited parochial interests began to create artificial barriers between the functions. The ambition concerns of departmental functions became the primary focus, many times taking precedence over the needs of the consumer. As each specialized function gained in autonomy, they devised and worked to their own standards. Only when a function became sufficiently satisfied with its work did the end product get passed to the next serial function.
Sherryl G. Wilkins, PMP, an IBM Global Services project manager, is currently managing the development of technology-delivered education. Over the past two years she has developed several million dollars worth of Web-delivered education. She is a member of the Atlanta PMI Chapter.
Surprisingly, the process that had originally cut production time significantly was now responsible for significantly increasing product-to-market time. What eventually has become clear is that if the highly specialized and extensive functional knowledge silos could be tapped, and utilized in a synergistic and simultaneous fashion, new products might be more innovative while being brought to market more quickly.
Project teams are designed to work in this way. In a project-based organization, teams are formed by members from various functional areas to work in a complementary way toward a common objective. Many large firms have restructured operations such that work is defined as a portfolio of projects linked to the overall business strategy. Enterprisewide projects are prioritized according to key business drivers. Here, cross-functional project team members share mutual accountability. They form, disperse and reform, bringing the right talents, resources, and focus to get the job done in a compressed schedule for delivery [Fleming and Koppelman, 1997, Project Teams: The Role of the Project Office, Transactions of AACE Int’l., p. 157].
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The Impact of Change on Organizational Behavior
A key challenge is maintaining a delicate balance between forces that encourage or demand change and forces within organizations that resist it. A look at the behavioral impact of the change is filled with both pitfalls and opportunities. The transition impacts human behavior in two major ways: fear and resistance to change.
Fear in an organization precipitated by environmental change can be assessed in four dimensions.
Uncertainty. Uncertainty, always present in organizational life, can be debilitating for a workforce when the lack of clear information on the personal impact and needed response to change is prevalent. The scheduling of the communication feedback loop between upper management directives and its workforce needs to be frequent and responsive to allay unnecessary fear.
Instability. In this rapidly changing environment, organizations must be willing to adapt, change, and remain flexible. While organizational strategies and business processes are adapting, the new way of responding to the environment must be communicated throughout the organization. Old ways must be unlearned, and the new, fleet responsiveness to the marketplace made a part of the organizational culture. Continual organizational learning is paramount.
Complexity. Today we are dealing with an environment that is highly complex. According to Peter Senge, author of The Fifth Discipline [1990, New York: Doubleday], we're dealing with two types of complexity. “Detail complexity” is the traditional domain of most business analysis. Here we see the use of forecasting tools, strategic plans, and the like, to handle the many variables affecting business outcomes. Though the variables are prolific, the cause-and-effect relationships of detail complexity are somewhat predictable (especially when confined to functional knowledge stores) and manifest rather quickly.
The tougher challenge is what Senge calls “dynamic complexity.” In contrast, conventional business management tools are stymied by dynamic complexity. In situations that are dynamically complex, cause and effect are very subtle and the effects manifest over much longer time periods, and differ depending on time frame, location, populations, and so forth. Many times, “doing the obvious thing does not produce the obvious, desired outcome.” Cross-functional management exponentially increases variables like population, location, and even time frames in our current global workplace. In gaining a competitive edge, the organization's most potent leverage comes from mastery of dynamic complexity. The key here is to see not only the linear cause-and-effect links, but to see the interrelationships of the variables and the processes as a whole. The project-based organization will facilitate seeing the interrelationships more quickly as the cross-functional teams gain prominence. Critical to the success of this environment is the ability of team members to understand the value and be able to employ the holistic systems thinking required for handling the growing dynamic complexity of our global environment.
Beneficence. The level of beneficence, generosity, or helpfulness of the organization with regard to resources for its workforce during the period of transition bears a direct relationship on the level of fear that prevails and the learning that does or does not occur.
Many times to an outside observer an individual's or an organization's stubborn resistance to change seems incomprehensible, and downright self-defeating. Signals for change are ignored, or even though plans are made, they never get translated into the correct actions. Three sources for resistance to change are habit, resource limitations, and threats to power and influence.
Interpretation of Weisbord Theory
Habit. Inertia is a natural physical law. So it is not surprising that people and organizations tend to resist change. Group rules or norms for behavior many times represent accumulated organizational experience and learning. The comfort in employing these behaviors along with their high payoff in the past is not easily replaced. Most importantly, the workforce is smart enough to know that the change is not going to be cost-free. It will require considerable new learning on their part, along with the discomfort of giving up the familiar, comfortable and workable though inefficient. Be aware that functional areas, as well as external suppliers and distributors not a part of this organization change, may be uncooperative and push back. A strategy to gain their buy-in is critical to success.
Resource Limitations. The resource costs to functional managers in the short-term is not insignificant. Retraining department personnel in conjunction with making sure the current work gets done can place an enormous drain on resources. Even if the long-term benefits look good, the long-term is only potential. Resistance to change may be traced to a short-term need to survive.
Threats to Power and Influence. While changes in structural relationships and resource responsibilities may affect the formal power structure, informal power is still very much attached to individuals based on their personal assets of knowledge, credibility and expertise.
Change often undermines power arising from expertise. The transition from a manufacturing economy to a service economy, a product provider to a solution provider, calls for different skills and demands new expertise. The threat of rearrangement of power relationships can create barriers, even sabotage, to protect self-interest and the status quo.
Organizational structure can be more durable and powerful than market strategies, and much more difficult to change and refocus. Psychologist Kurt Lewin developed a model of organizational change that provides a framework for understanding the change process. The Lewin framework is made up of four phases: Diagnosis—Finding the problem and selecting a solution; Unfreezing—Preparing for change and generating ownership; Movement—Making the changes; and Refreezing—Institutionalizing the changes [in Neal and Northcraft, 1990, Organizational Behavior: A Management Challenge, Dryden Press].
Building Blocks for Change
Problem diagnosis and recognition of the need for change is critical to the evolution of the organizational structure. M.R. Weisbord [1976, Organizational Diagnosis: Six Places to Look for Trouble With or Without a Theory, Group and Organizational Studies 1, pp. 430-447] expanded on the Lewin model's diagnosis phase. Weisbord's model provides a means for isolating problems, finding the root causes, and defining an effective solution, as shown in Exhibit 1.
Purposes. The changes required to transition from responding to a manufacturing economy to a service economy will involve some alteration in a company's mission. As the organization moves from being simply a provider of products to a business solutions provider, the organization must ask itself, as well as communicate to its workforce, “What business are we in?”
Leadership. Leadership throughout the management ranks is of primary importance in recognizing the necessary changes in knowledge, skills, and attitudes of the organization at large. Management must understand and buy into the fact that:
This will require substantial commitments in education and training to successfully implement these changes. Leaders must positively challenge people by making them aware that team success will require a continuous journey of self-improvement on everyone's part.
Education, both formal and informal, must derive from the new paradigm in order to support the new strategic vision.
The new strategy must be communicated again and again to keep everyone on the message, and to eventually help the message become internalized by everyone.
During the transition period, performance progress must be monitored, and feedback given with respect to successful implementation of the new strategy.
Individual performance must serve the team performance. Development of a team culture will facilitate this change in attitude. A sound set of reward plans must support the business strategy and culture change. In the case of a project-based organization, rewards must be focused on both team and individual contribution. Team awards/rewards must do more than just give lip service to the team approach. Behaviors that get rewarded are the behaviors that are repeated.
To minimize confusion and uncertainty among employees there must be clear distinctions concerning individual and collective roles. Distribution of work and performance standards should be clear and aligned with the business strategies.
Rather than managers, empowered teams need leaders to motivate, coach, facilitate, teach and create the vision for how the team will produce the outcomes necessary for success.
Lewin's model for organizational change—diagnosis, unfreezing, movement, and refreezing—imply stated, encompasses a need for change, a vision, preparation for change, change, and the institutionalization of change. If we simplify successful change into its most basic components, we might find the basic building blocks of change, shown in Exhibit 2.
What happens when any of the key ingredients for a successful transition are missing?
Without pressure for change, there is a tendency to procrastinate and push requirements to the “bottom of the inbox.”
Without a commonly understood shared vision, there's a lack of momentum, and a fast start fizzles.
Without the necessary resources (capacity for change), inability to properly execute results in anxiety and frustration.
Without a clear plan of action, haphazard efforts and false starts leave you at the starting block.
Without sustained reinforcement (followthrough) and continued learning incorporated into the change process, there is erosion of results and a lack of momentum.
Clearly, the omission of any of the critical building blocks to change will derail your strategy.
Thus far, we have looked at organizational behavior and change from the top down. Even more important is the assimilation of the change from the bottom up. Everyone must recognize the individual demands this organizational change imposes. Workers need to establish a new orientation toward leadership. This leadership is not hierarchical, but refers to the span of influence an individual commands. We are in control of our creations, not someone else. The danger is that workers may suddenly find themselves thrown into highly autonomous situations without the self-leadership skills to cope. The team environment demands self-leadership on the part of every team member. Individuals must recognize the tremendous personal stake they have in taking responsibility for their personal growth and development. The need to constantly sell yourself for the next project requires an entrepreneurial view of your skills, competencies and talents.
WITHOUT A DOUBT, it is more difficult to change people than processes. However, when all is said and done, the business is its people. The people are the primary change agents that will determine the successful outcome of our business strategies and mission.
August 1999 PM Network