Too Darned Complex
Today's business environment rewards flatter, more nimble organizations. Yet many HR leaders report feeling overwhelmed by complexity.
By Andrew R. McIlvaine
As most of you can probably attest, the role of an HR leader isn't getting any easier. In fact, more than half (52 percent) of the 1,293 HR leaders in a recent survey "strongly agree" that their role has required them to manage increasing levels of complexity in recent years.
The survey, undertaken by Survey Shack and commissioned by Austin, Texas-based talent-management vendor Lumesse, also found that 61 percent reported feeling overwhelmed by complexity and 52 percent said they did not have the ability to full cope with it. Additionally, 60 percent said they did not have full confidence in their organizations' ability to manage complexity. Only 30 percent rated their leaders as "very able" to manage complexity, and the same number said their organizations included the ability to manage complexity as part of their leadership-selection and development processes.
Nazneen Razi says that when it comes to dealing with increased complexity, she understands where the survey respondents are coming from. Razi, the CHRO of Health Care Service Corp., a Chicago-based health-insurance company that administers Blue Cross/Blue Shield plans in five states, has been hard at work helping HCSC's 18,000 employees adjust to the changes that the Affordable Care Act is imposing on her industry -- and her organization's business model. HCSC is, as a result of the law, selling health plans directly to consumers via healthcare exchanges in addition to its traditional business of selling group plans to businesses.
"We really have no idea what the healthcare industry is going to look like next year and in the future -- the situation could not possibly be more complex," she says.
Other companies are struggling to become more nimble. Cisco recently announced it would trim 4,000 employees, or 5 percent of its workforce, from its organization in anticipation of a difficult next few quarters, CEO John Chambers said during a briefing for analysts.
"We've got to take out middle-level management," he said. "What I'm really after is not speed of decisions but speed of implementation."
Mike Salvarezza, a "corporate culture leader" at LRN, a New York-based firm that advises large companies on culture and ethics, says he sees many companies wrestling with similar issues.
"I think our clients are struggling with a sense of gridlock -- how can they transform their organizations and business model to meet the growth demands of this century?"
Many companies have organizational structures that may have worked well in the past but are no longer effective today, he says.
Salvarezza says LRN has worked with clients recently that have decided to strip away their old hierarchical structures in favor of flatter organizational models that promote collaboration.
"A lot of what people hold on to with these traditional structures is power, authority and control -- because there's a lack of trust that people are going to do the right thing in the absence of such structures," he says.
However, replacing rigid controls with a flatter model often requires having a "trust-based" culture within the organization, says Salvarezza. Although there's no magic formula to creating this, he says it often starts with a company's code of conduct.
"Historically, codes of conduct have been very rules-based -- 'Thou shalt not do this' and so on," he says. A code of conduct based on trust should instead emphasize the values the organization wants employees to uphold, says Salvarezza.
Next, HR should create corporate policies that promote trust, he says.
"Budgeting, performance reviews, time-off policies -- go deep on all the things that send a message to people on how they're trusted," he says. "By switching to an unlimited time-off policy, for example, you're emphasizing the importance of trust."
As companies move toward a flatter, less-formal organizational structure, they typically find that some employees adjust to the new structure better than others, says Stephen Townsend, director for global alliances and networks at Newtown Square, Pa.-based Project Management Institute, publisher of the recently released Managing Change in Organizations: A Practice Guide.
"In some cases you've got people who've been with the organization for many years, who've grown up with this hierarchical structure and aren't prepared to learn anything new or behave differently," he says. "Then you've got younger people who are used to everything being in a constant state of change, so they're more adaptable -- yet they're lacking in experience and capabilities."
A key part of effective change management -- which will make it more likely that both groups will accept the new structure -- is the ability of executives to translate the new strategy so employees understand what is critical and important, says Townsend.
At HCSC, Razi has brought in change-management consultants to help the organization prepare for the ACA and is working with business leaders to create new learning platforms to help employees master their new roles. She's also done some work around flattening HCSC's organizational structure. But one of her most important tasks amidst all the changes, she says, is reminding employees of the company's underlying mission.
"Our 'north star' is our purpose statement, which is 'To Do Everything In Our Power to Stand With Our Members in Sickness and in Health,' " says Razi, adding that a recent employee-engagement survey revealed that engagement numbers on "purpose" have gone from 68 percent in 2011 to 88 percent this year.
"If you can rally everything you do around that purpose, it gives people the energy they need."