The newly defined Core Competencies of the HR Function fully integrate the skill areas included in many previous definitions of the Organization Effectiveness, Organization Development and Organization Excellence skill bundles For many years these were viewed as separate and distinct skills which some have found difficult to reconcile, define or codify Actually, the HR Core Skills/Core Competencies for 0-2005 just that; these critical capability-building skill areas are defined in the context of the business and HR's new role - the 4-Quadrant Model - and are positioned in business units where they are used by HR practitioners with line leaders and their leadership teams to focus on building individual and organizational capability to enable delivery of business strategies What is Organization Effectiveness O.E and the 0-2005 Transformation O.E and the HR Core Competencies The O.E Toolbox Resource Materials This site is designed for those charged with/working to build individual and organizational capability to achieve results It includes tools and materials which may be useful to the practitioner If you are aware of other tools which you feel should be included, please let the site owner know under "Feedback" One last comment about the manner in which OE is managed in P&G We practice OE by developing practitioners in the business, not by employing internal or external consultants which aren't a part of our line businesses HR focuses on developing its own expertise, and the expertise of line leaders, by applications in doing the work and focusing on hard number results 4 Quadrant Model This diagram shows how the core competencies of HR integrate into the role of HR Organization Effectiveness or "OE" is a term used to describe the philosophies, tools and the skills important for developing individuals and organizations capable of competing more effectively The current technology has evolved over time with a number of "schools of thought" and became valued as important and useful in improving results It embraces working with teams and individuals to understand and improve the work as well as the social and interpersonal relationships and behaviors critical for ensuring that people and groups work together efficiently and effectively to achieve the objectives of the organization: the human side of the enterprise It also includes using group and organizational dynamics to design structures to aid in the achievement of objectives: the organizational side of the enterprise While there are many schools of thought and numerous approaches and techniques, the fundamental elements of OE technology are simple and common It's on those simple, business-centered approaches that we want to focus OE Defined Earlier in its evolution, this same body of knowledge and practice was generally referred to as "OD" or Organization Development, as it centered on developing people and organizations toward improving business numerics Later in P&G it became known as Organization Excellence This notion split it off from Human Resources (HR) processes focused on People Excellence the areas supporting traditional HR work: Compensation, Employee Relations, Labor Relations, etc There has long been a need to clarify and reconcile the concept and names of OE, since many practitioners recognize that there is no "one best" OE philosophy, and many professionals waste time debating which tools and approaches are best This distracts us as focus moves to process rather than the business Recognizing this debate, HR has identified the various tools, skills and competencies needed to bring this important technology to bear favorably on our business and incorporated them into HR's Core Competencies Click on HR Core Competencies Website for more detail Importance of OE The stakes for practitioners of OE work are high, whether the professional is counseling leadership or implementing and driving a change in support of leadership If the interventions are wrong focus is shifted, the business is disrupted, and people are distracted all costing time, money and a potential loss of competitiveness Costs we cannot well afford There are historically five fundamental technology bundles and a few, simple, supporting tools foundational in all our OE work These include: Organization Assessment and Design Change Management and work re-design Development of High Performing Teams/ Organizations Development and Deployment of Business Direction Consulting Leaders (Click on the OE toolbox FOR EXAMPLES) Where is OE Used All OE work should be focused solely on improving operating results in the business This means reduced costs, reduced cycle time, improvements in productivity or increased creativity and innovation which improve our odds for success via products or systems improvements or enabling market competitiveness OE Technologies are applied to gain individual and organizational improvements in a strategic manner in MDOs, GBUs, GBS or in corporate functions by skilled practitioners assigned to each Measuring OE Interventions All OE interventions should answer the question "what problem if addressed will improve operating results?" Once this is identified, clear, numerical measures should be selected to evaluate the outcome of OE work in the context of improving the business For example P&G is reorganizing itself into MDOs, GBUs and GBS to ensure growth to $70B in NOS by 2005 So, OE work to make changes in an MDO, for example, should measure whether NOS is favorably impacted by making the change If they can't be clearly quantified, OE interventions should not be made All OE interventions should have a measure stated like: "Improve NOS from "x" to "y" by 6/30/00 from completing "z" project/change." P&G has decided, based on an analysis of its results, future trends, changing consumers, and an ever changing global competitive environment, to re-invent or re-design itself OE tools and skills are a critical part of this work to ensure success This change will be accomplished by a series of OE interventions successfully managed across time HR's role is at the center of all of this, with every business team, in every business unit OE in the new age 0-2005 Moving the organization into the digital age has opened tremendous opportunities for HR professionals involved in making the changes needed to transform our businesses OE technologies are used to manage these changes involving such things as strategy development, organization re-design, transition management and downsizing or upsizing to name a few Tools for Making Change In P&G's O-2005 change effort, HR practitioners will apply the basic elements of OE outlined in the HR Core Competencies to varied degrees in most every HR assignment For example, those working in business units like MDOs and GBUs will use tools focused on team effectiveness, strategy development and managing cultural changes centered on aligning people with strategies to improve speed and competitiveness Practitioners operating in roles in the Administration Expert and Employee Champion components of the HR role, like GBS or the Core Functions, may use OE technologies to improve work processes and systems to reduce complexity and costs; thus streamlining cycle time to enhance company competitiveness OE and HR Core Competencies Re-balancing the role of HR for 0-2005 using the Quadrant role model has placed emphasis on the few core skills critical for supporting the delivery of hard number results in business units Each competency incorporates OE technologies in an action oriented, user friendly way to enhance personal and organizational growth to improve contributions OE has long been a separate skill area with little structure in P&G; yet we have had world class practitioners with pockets of excellence all over the Company Given the changes needed for competing in the new world of 0-2005, HR has successfully integrated the key OE technologies into the core work of business units for delivering P&G's business strategies New World HR Competencies The creation of these new "core" skill bundles integrates all of the "old"/traditional elements included in OE/OD and Organization Excellence Click on HR Core Competencies How OE is Used in Each Competency OE in Understanding the Business OE skills are at the heart of this core competency HR professionals must assist in the Development, Deployment, Review and Renewal of Business Strategies and have the organizational skills needed for focusing and aligning people and organizations with these strategies to improve operating results OE in Driving Change and Managing Transformation This competency incorporates planning, managing and measuring change efforts designed and initiated to close the "gaps" between where the organization is and where it needs to be to deliver business strategies It includes expertise in Organization Assessment, Organization Design and Change Management OE in Creating and Managing Culture This competency includes skills needed to create the "culture" to achieve Business Strategies This includes designing organizations, redesigning work processes and systems, creating structures, information, communication and decision making systems, the development and deployment of people, and the creation of reward and recognition systems to support achieving the business strategies OE in the Management of HR Practices/Delivering HR Basics This competency area focuses on providing employee support and the systems and processes involved in day-today operations of traditional HR programs, without disruption or distraction to operations It also includes developing High Performing Work Systems and effective management of costs OE tools/skills are used to link HR's work to the business and in managing constant change and improvement OE in Creating Personal Credibility and Influence This core skill is fundamental to HR's ability to successfully select and manage organizational interventions with leaders, their leadership teams, and their organizations HR's impact and influence its very ability to lead comes from the personal credibility of its practitioners to contribute successfully in these roles by favorably impacting hard number results via OE tools To ensure we have resources with the skills needed to create the necessary "fit" between our culture and our strategies, practitioners must be developed in the application of the Core Competencies of HR through training, networking, and actual work experience Applying these competencies holistically ensures the ability to develop capabilities needed for individuals and organizations to favorably impact hard number results The process for developing people is managed through the Leadership Learning and Development unit of the core HR Function and directly by practitioners in the Business Units In addition to creating Development Systems to operationalize these skill areas, HR has organized a network of global practitioners and "Mastery" level experts to ensure constancy of purpose and continual improvement This supports the stated mission of HR; Creating the Individual and Organizational Capabilities needed to achieve Business Results Both the Development System and the HR Network of Practitioners will ultimately link to the R&D for HR component in the Core Function of HR, and to practitioners in line business units OE Tools for Organization Assessment and Design These are overarching organizational models which guide practitioners in thinking about all aspects of a change, and the interventions to organize and manage each aspect holistically They involve steps or questions helpful in moving to action once the problem or opportunity statement for the change is developed Click here for examples OE Tools for Managing Change and Redesigning Work These tools are used to understand and manage the human side of change: the enrollment and empowerment of the organization Other tools focus on helping the practitioner develop and manage a comprehensive transition plan centered on moving a change effort forward Click here for examples OE Tools for Developing High Performing Teams and Organizations Understanding personal and organizational interdependencies and behaviors, and the skills needed to enroll, empower and focus people and groups to work together cross functionally to achieve objectives, is a critical competency Also included is information on developing High Performing Organizations (HPO) Click here for examples OE Tools for Developing and Deploying Business Direction Numerous tools are available for direction setting These include development of a long term vision statements, and shorter term mission statements which focus on defining the unique contributions of organizations in moving toward the overall vision of a larger unit Also included are the two basic types of principles involved in OE work: Operating Principles which guide human/organizational interaction in the context of mission and vision achievement, and Design Principles which guide the design of organizations; allowing choices to be made between design options to ensure "fit" toward strategy, mission and vision achievement Strategy Development, Deployment, review and renewal is also a critical aspect of the role of HR practitioners in line units Click here for examples of each of these tools OE Tools for Consulting Leaders TQ tools have long enhanced business performance These tools enable leaders to drive a data based, analytical, problem solving approach with continual improvement Click here for tools useful in consulting leaders FROM THE GROUND UP by Edward Lawler, University of Southern California / Center for Effective Organizations Introduction: The New Realities of Business Competition • • Why is business competition so different today? Four major changes in the business environment: (1) A boundaryless economy and the globalization of business have brought new competitors with both new and different management styles and powerful competitive advantages into many markets; (2) Worldwide labor markets Because work forces in different countries have different skills and wages, organizations can now draw on a wider variety of workers and working conditions; (3) Instantly linked information and communication, enabling organizations to be designed and managed in dramatically different ways; and (4) Agile new companies, who've adopted new organizational approaches and reached to higher levels of performance The way organizations need to be: Focused on new organizational capabilities In order to be successful, organizations must have capabilities that allow them to coordinate and focus behavior in ways that are tuned to the marketplace and produce high levels of performance ways that differentiate them from their competitors Every organization must understand what capabilities it • needs to compete in its market and then develop them by creating the appropriate organizational designs and management systems A time for change: Creating order out of chaos One of the reasons that the traditional commandand-control approach has been so effective in the past and so hard to change in the present is precisely that its elements reinforce each other Leaders, for example, are trained and selected to behave in a hierarchical manner Status symbols reinforce their authority, pay plans reward them for moving up hierarchies, and staff support and information flows allow them to coordinate and make decisions more effectively than anyone else Movement away from this model requires not just a change in their behavior but a change in the whole logic of how the organization is designed, managed, and structured Chapter 1: Changing the Assumptions The New Logic Principles for Organizing • Old Logic Principle: Organization is a secondary source of competitive advantage New Logic Principle: Organization can be the ultimate competitive advantage Explanation: The new logic begins with the assumption that management systems, processes, and structures can be the keys to building a competitive advantage if they allow an organization to perform in a way that competitors cannot This contrasts with the traditional bureaucratic model in which the sources of competitive advantage are assumed to include superior financial, human, and natural resources, market access, technology • Old Logic Principle: Bureaucracy is the most effective source of control New Logic Principle: Involvement is the most effective source of control Explanation: The traditional logic (Theory X) argues that control can best be obtained through extrinsic rewards, close supervision, hierarchy, and careful delineation of responsibilities and accountabilities The new logic calls for replacing bureaucratic controls with the following four components of effective employee involvement: (1) Information about business strategy, processes, quality, customer feedback, events, and business results; (2) Knowledge of the work, the business, and the total work system; (3) Power to act and make decisions about the work in all of its aspects; and (4) Rewards tied to business results, individual growth, capability, and contribution When these four elements are appropriately positioned, involvement can be an effective source of control and organized action • • This does not mean that those at the top have any less knowledge, information, power, and rewards; it does mean that the organization becomes flatter (i.e., fewer levels) and that the information, power, knowledge, and rewards that were in the middle of the organization are pushed down so that they are spread throughout the organization This is what makes effective decision-making and involvement possible at lower levels in an organization Old Logic Principle: Top management and technical experts should add most of the value New Logic Principle: All employees must add significant value Explanation: The new logic turns the traditional equation of who adds value to the organization's products and services upside down It constantly pushes for individuals throughout the organization to add more value This is in sharp contrast to the traditional hierarchical organization where individuals at the lower levels carry out prescribed, routine, low-value-added tasks in a controlled manner while senior management adds major value through their work on organizational design, strategy, and the coordination of the work of different groups and functions Old Logic Principle: Hierarchical processes are the key to organizational effectiveness New Logic Principle: Lateral processes are the key to organizational effectiveness Explanation: New logic stresses that effective lateral relationships are the key to creating organizations that can perform well on speed, cost, quality, and innovation It's not that the traditional logic denies the importance of lateral relationships Quite to the contrary, it views them as so important that they must be closely controlled and monitored through a hierarchical management and information-system structure Two problems though with this approach: First, individuals tend to compete with each other to move up the hierarchy; thus, distracting energy and effort from concentrating on what's important Second, often lack of accountability for important organizational goals as employees are simply engaged in individual activities • Old Logic Principle: Organizations should be designed around functions New Logic Principle: Organizations should be designed around products and customers Explanation: The new logic does not say that there is little need for strong expertise in particularly critical functions But it does stress that it is possible to have strong functional expertise and not have a particularly effective organization, because traditional, functionally structured organizations have trouble developing the teamwork and coordination that lead to successful products and services The new logic argues that you have to organize around units that are focused on products and customers if you want employees with different specialties to work well together This ties directly to the idea of control coming from customers and the market, the importance of lateral processes, and the need for individuals at all levels to add significant value In order for these aspects of the new logic to work, all employees must be part of units in which everyone can see how their behavior affects organizational performance; they must have a line of sight to the business and its success • Old Logic Principle: Effective managers are the key to organizational effectiveness New Logic Principle: Effective leadership is the key to organizational effectiveness Explanation: At the core of the hierarchical approach is the belief that effective management means defining, evaluating, structuring, and coordinating the work of others At higher levels, management involves setting strategy, making critical business decisions, and defining accountabilities and responsibilities of others The old logic places little emphasis on leadership, because bureaucratic management systems are designed to operate as substitutes for leadership that tell employees what to and provide the motivation to it Leaders are not needed to make an organization successful In the new logic, effective leaders substitute for bureaucratic controls and structures They provide a sense of mission, vision, direction, and rationale In the new logic, it is critically important to have leadership throughout the organization, not only at or near the top Flatter, more lateral organizational structures and a decrease in the number of traditional means of control call for more, not less leadership from everyone Chapter 2: Achieving High Performance Turning Principles into Practice • Describes the Galbraith Star Model in terms of the critical elements for designing a High Performance Organization Uses the components of the Star to structure subsequent chapters Chapter 3: Business Strategy Creating the Winning Formula • • • • • The Old Way: Formal strategic planning In the old logic, a large corporate staff of strategic planners and futurists was responsible for developing and communicating corporate strategy to the rest of the organization These experts, who usually were not involved in producing the organization's services or products, carefully studied them and their positions in the market They then created one-year and longer-term strategic plans that were regularly updated with new numbers and new planning targets and objectives Organizations found this approach costly, and most attempts to predict future in terms of long-term trends were faulty In a high performance organization, effective leaders need to be able to create strategic goals that people want to head toward They add enormous value when they get individuals to take new types of actions and move in new directions And they this not by creating bureaucratic controls and procedures but by creating a view of what can be and should be that is attractive to individuals and that fits with their values and goals Senior managers need to take the lead in developing strategy, but they cannot and should not it by themselves The members of the organization need to be involved Strategies need to set high aspirations for the organization so that members, individually and collectively, will feel that they have challenging but reachable goals Strategies need to focus on how an organization will win in the future, what its outstanding products and services will be, and how those products and services will satisfy the customer It also needs to reflect the values that will guide how the organization accomplishes its goals and mission • • • Strategies must provide employees at all levels of the organization with a sense of what the company is trying to and where it is trying to go Strategies need to present a way to the future and provide emotional and intellectual energy for the journey It is up to the leaders in the organization to identify the kinds of capabilities that are needed, communicate them through mission and value statements, and develop commitment to them throughout the organization Chapter 4: Corporate Architecture Structuring for High Performance • • • • • Basic design in old logic organizations hierarchical arrangement of boxes connected with vertical lines; people grouped together by function; CEO is everyone's ultimate customer; Supervisors' main role is to control and to direct the behavior of individuals below him or her and to please managers at higher levels Staff support and service groups (e.g., finance, marketing) play key role because they're asked to review proposals and reco's from individuals throughout the organization They therefore tend to acquire veto power over what business managers can Corporate staff can be quite large Multi-level wiring diagram The overall structure of an organization that fits the new logic has few levels of management relative to its size It is organized around the customer It puts as many individuals as possible in direct contact with the customer It groups individuals to operate laterally by making individuals or teams responsible for an entire product or customer service encounter; thus, groups are no longer formed primarily according to functional areas Staff functions have much more of a service or an advisory nature than a decision-making nature Indeed, these functions may be outsourced, since the services they offer can be purchased on the open market and used as needed Taken together, a flat structure and an emphasis on lateral processes can produce organizations that are simultaneously small and large People can feel part of and responsible for a small business unit, but they can count on the advantages of a large corporation when it comes to resources and support services Completing the architectural metaphor, the new logic approach suggests a series of low-rise buildings that have considerable open space and flexible, movable partitions The buildings should be grouped together in a campus-like environment or spread around the world and connected by information technology Individuals should be located in buildings according to the customers they serve or the products they create At the center should be a building smaller than the others but similar in layout to house senior management, leaders of corporate staff groups, and representative of key core competencies and organizational capabilities Chapter 5: Organization Design Matching the Organization to the Business • • • • The challenges in structuring an organization according to the new logic are clear: Corporations need to be like small businesses in how they involve individuals in the success of the business, and they need to be large when there is an advantage to being large In most cases, this can be done by using a business unit, network, front-back, or project approach to structure, because they all make business units their primary grouping Small business units are critical to providing individuals with a line of sight from their activities to the market and customer The front-back organization: serving internal and external markets In front-back structure, one part of the organization (the back) is responsible for developing and delivering the products or services of the organization The other half (the front end) is responsible for delivering the products or services to particular customer groups The front end is usually organized around customers with common interests who are likely to buy related sets of products or services It may also be organized around a particular geographical area The network organization: partnerships and alliances In network organizations, separate companies come together to produce and sell particular services or products (Calvin Klein, for example, is a network coordinator that does not manufacture but controls the design and marketing of its products.) The project organization: coming together for the short term Knowledgeable individuals brought together for a relatively short time often days or weeks, not years to work on the development and delivery of products or services Chapter 6: Work Design Moving Beyond the Limits of Jobs to Work and Involvement • • • • In the new logic approach, jobs are obsolete, at least with respect to its traditional meaning of a fixed set of tasks that are assigned to individuals and recorded through a job description First, the environment constantly forces organizations to change what they do, and thus individuals must change Second, the new logic argues for individuals to expand their activities constantly, to work outside of what might be encompassed in a traditional job description, and to more of their work in teams The beginnings of the new logic individual job enrichment If work is to be truly enriched, there must be three requirements: work must be meaningful, its design must allow individuals to control how it is done, and employees need to have feedback on how well they are performing Meeting these requirements usually means an organization has to expand the work of individuals both horizontally, to include more tasks, and vertically, so an individual does things that supervisors customarily have done The nature of supervision is a key factor that needs to change in order for job enrichment to be successful Research evidence shows that lack of decision-making power eliminates the possibility of intrinsic motivation and the kind of involvement that is critical to the new logic For employees to feel good about performing well and to be involved in their jobs, they need to be in control In many cases, giving individuals control means that supervisors give up substantial amounts of moment-tomoment control over how the work is done Five particularly important types of teams: problem-solving teams, work teams, project teams, overlay teams, and management teams They differ in purpose, duration, and membership, and each type of team is suited to a particular set of organizational circumstances and goals (Lawler cites P&G as one of the "leading practitioners of the work team approach", referencing our HPWS in plants He also mentions P&G's Wal-Mart team an example of an overlay team, coordinating activities with respect to a single large customer.) Chapter 7: Teams Keys to Making Them Successful • Goes on to describe effective and ineffective uses of teams Not much application for our specific work Chapter 8: Human Resources Managing People in New Logic Corporations • • • • • • The old logic of jobs meets the new world of competencies In the old logic, jobs are the tools that organizations use to assure themselves that their employees know what to do, know how to it, and are motivated to it The value an individual adds to the organization depends on how he or she fits the organization's jobs The employee selection tests are used to identify people who fit existing jobs; training programs are used to develop employees' skills for specific jobs The new logic questions the usefulness of focusing on jobs and job-related approaches to human resource management systems It argues that it is time to move toward a focus on people and their skills and competencies, just as it is important to focus on core competencies and organizational capabilities Selection: Organizations must choose individuals for how they fit the organization, not for jobs They must offer applicants realistic work previews, obtain input from employees, and create an extensive process that focuses on leadership and management style fit Training: There must be a strong organizational commitment to training employees in business skills, leadership skills, and team skills This involves continued skill assessment for everyone Careers: Organizations must provide information and training, but individuals must take responsibility for their own careers in an environment where there will be fewer job changes and more lateral moves Stability of employment: There are no employment guarantees, only stability that is based on skills and performance Chapter 9: Reward Systems Paying for Teamwork, Competencies, and Performance • • • • • • • • • Job-based pay systems fit the traditional logic of organizing They support designs in which large amounts of power, information, knowledge, and rewards are at the top of an organization They tend to motivate individuals to develop skills that help them move up the hierarchy rather than other skills that may be critical to the organization's success This is a problem if the pay system does not also reward people for working and managing laterally behaviors that are central to a highperformance, team-based organization Reward system practices in traditional organizations are very hierarchical At the bottom level of the organization, individuals are paid for the number of hours they work, have time cards, and are rarely paid for their performance At the top, managers are paid, at least to a certain degree, for the performance of the firm; receive extensive benefits and perks; and are rewarded with compensation that reinforces their hierarchical position Traditional pay systems are too rigid, too seniority driven, too individually oriented, too expensive, and too secret The challenge for high-performance organizations is to design reward systems that both attract and develop the right individuals and motivate the right performance Reward systems must be able to motivate effective team performance and motivate individuals to develop the kinds of skills that support key organizational capabilities and competencies As a rule, reward systems can accomplish these objectives if they: focus on an individual's skills and competencies (rather than his or her job); are tied to the organization's performance in ways that support its strategy and structure; and support the organization's architecture Person-based pay: the alternative to job-based pay Pay employees according to the market value of their skills, knowledge, and competencies in short, what they can References P&G plants' skill block systems Organizations can use the following approaches to create a pay system that is based on skills, knowledge, and competencies: (a) They can tie specific pay raises to learning identified skills This is the approach that is taken in most of the new high-involvement plants (b) They can create broad pay bands that allow individuals to receive significant pay increases, as they learn additional skills That is, instead of putting people in a pay range in which the top is about 50% higher than the bottom, they can use a pay range in which the top is almost double the bottom This leaves a great deal of room for pay to rise as employees continue to learn (c) They can give employees one-time lump-sum payments when they develop new skills This is particularly appropriate where the use of the skills is temporary or short-term, or where pay is already high and it is difficult for the organization to afford an ongoing extra cost (d) They can tie promotions or changes in pay grades to increases in skills This is the approach that is taken with technical ladders and some competencybased plans for managers Individuals in high-performance work systems with skill-based pay are often paid more than their counterparts in traditional organizations But because of leaner staffing and a flatter hierarchy, the total labor cost for the organization is lower Pay for performance: creating a motivator Individuals respond to extrinsic rewards only when those rewards are important to them How is it possible to identify the rewards that employees value most? The best way is to let individuals choose their rewards In some reward-for-performance systems, individuals can choose between stock and cash or between trips and the cash equivalent, or they can choose how they want to invest their profit-sharing funds Connecting rewards and desired behaviors: line of sight Line of sight means that employees believe that there is a direct connection between their performance and the desired reward Ironically, despite their label, traditional merit-pay salary systems are probably the worst offenders with respect to paying for performance and providing motivation The biggest problem is that even though organizations often say they base merit raises on performance, they administer these programs in a way that creates no clear connection between performance and reward They suffer from a reliance on subjective performance appraisals and are further damaged by the use of "secret processes" that translate a performance rating into a certain percentage of extra pay Study after study has found that such merit pay systems are not motivational As a result, many organizations end up using an enormous amount of time to allocate small amounts of money to individuals based on an uncertain assessment of performance in the hope that performance will improve Certain perquisite and benefit programs can also create dysfunctional seams in an organization Examples include tiered benefit plans and corporate perks such as parking and country club memberships, based on hierarchical levels This has no place in a high-performance organization • that follows the principles of the new logic because it works against the key principles of integration, leadership, and involvement Making employees owners: gain sharing, profit sharing, and stock Lawler is "particularly intrigued" with the idea of making every employee in high-performance organizations a stockholder In high-performance systems, aligning everyone's interests can reduce many of the potential conflicts between what is good for shareholders, what is good for senior management, and what is good for the rest of the work force Chapter 10: Communication and Measurement • • • • • In traditional organizations, information about corporate performance is used to help senior management direct and control operations Performance information is carefully guarded, often out of the fear that it may be misused or perhaps even leaked to competitors and the outside world There is also the belief that with a few exceptions, employees not need performance information Communication concerning business performance is put on a "need to know" basis Organizations are even more secretive about their business plans, the financial performance of their business units, and comparison of their performance with their major competitors Consistently communicating goals, plans, and performance results An organization can guide employees' behavior only if it consistently and frequently communicates to them what the plans, goals, and objectives are for each work group and for the total organization The new logic starts from an entirely different premise It argues that for individuals to be full participants in the organization and to add significant value, they need to understand all its operations, including the financial ones As a result, the organization needs to place a strong emphasis on communicating operating results and reward system data, and tailoring performance measures to provide individuals and teams with feedback Knowing the score all the time The growing use and capability of information technology and computers may be the most important development in enabling corporations to become highperformance organizations: (a) Making levels of management unnecessary by creating laterally integrated organizations that operate more rapidly and responsively; (b) Enabling employees to make operating decisions about such things as pricing, inventory management, and production quickly, without having to check with supervisors or staff support people for information and expertise; (c) Guiding employees through complex customer service operations such as order administration, insurance claim processing, and back loan approvals; and (d) Enabling individuals, via networks, to coordinate their behavior with others in the same work process or business unit without having to go through the hierarchical chain of command Chapter 11: Making It Happen Creating the New Logic Corporation • • • • Based on a number of studies of organizational transformations, there appear to be some general guidelines that, when followed, can increase the chances for a successful transformation to a highperformance organization Establish compelling business reasons for change Organizations decide to change to the new logic for a number of reasons Some find it aesthetically pleasing Others agree with its underlying values Still more believe that it provides the kind of culture that they prefer All of these reasons are valid and can lead to change But in my experience the most effective way to motivate change is to establish a compelling business reason Survival, competition, and winning in the marketplace are the kinds of compelling reasons that consistently generate energy around change and also provide a sense of direction In the absence of these, change becomes a luxury or a hobby rather than a business necessity Often the best way to establish a business justification for change is to analyze the competitive environment New technology such as computers or automation in the workplace, the start-up of operations, new business ventures, and new territories or locations also can provide a felt need for change One of the most important things that an effective manager or leader can is to help generate the feeling within an organization that there is a need for change Leaders must guide the change Hierarchical, autocratic institutions and organizations can change through only two fundamentally different processes: top management-driven initiatives and revolution Senior managers are uniquely positioned to supply the kind of strategic leadership that is • • • • • • • • • critical to a successful transformation to the new logic They are in a position to help define the mission of the organization and to establish a link between the mission and the type of management and organization principles that are used Take a long-term view of the change process Depending upon the size of the organization and the urgency for change, the amount of time required can vary from a few years to more than a decade Create a climate of continuous change The most popular models of change management involve three phases: (a) Create dissatisfaction with the existing state of affairs; (b) Make needed changes; and (c) Return stability by "refreezing" so that the organization operates with its newly created organizational practices and structure However, in this era of rapid environmental change, Lawler questions whether refreezing is the best third step It's better to think of the final phase as continuous change and organizational learning Avoid fads For organizations, the challenge is to identify the useful new practices and reject the large number of new practices, recycled old practices, and current fads that dominate the management field but are not a good fit for them or are simply not very useful Avoid a faddish, ever-changing, flavor-of-the-month approach to organizational effectiveness Focus on where change goes and what points it covers A critical question concerns where to start the change process There is no right answer Typically, the best place to start the change process is where the organization is open to change If there are complaints and pains with respect to the pay system, this most likely is the right place to start change The critical issue in changing to the new logic is that change does not end with just one point on the Star model It needs to continue until all points on the model have been changed and aligned Don't wait for heroes An all-too-common belief is that change can happen only if a single hero emerges to lead the process Waiting for a great leader to produce change is not only foolhardy but potentially fatal in an era in which rapid change is badly needed Avoid corporate anorexia from excessive downsizing In the corporate world, the initial downsizing often makes the organization leaner and meaner, but continued downsizings, as with human beings, make them weak and emaciated, which leads to decreased performance and then to further downsizing as business loses mount A death spiral is particularly likely to happen when downsizing improves only the cost structure of an organization Replace downsizing with a growth strategy Clear signs that an organization is becoming anorexic: (a) an automatic tendency to downsize regardless of business conditions and cost structure; (b) loss of employee commitment; (c) no time or money to invest in the future; (d) loss of business from the downsizing of the sales force; (e) rehiring fired workers Do not downsize repeatedly De-Layer, don't just downsize Taking out levels of management is key Talks about GE's "workout program" as it relates to eliminating unnecessary work, making the organization capable of operating with fewer people and fewer levels of management Chapter 12: Beyond the Corporation The Impact of the New Logic on Society • • • The new logic of careers Current "deal" in many companies today is IF YOU stay, your job plus someone else's, and "volunteer" for task forces, WE'LL provide a job if we can, gestures that we care, and the same pay, and YOU'LL BE PART OF a business trying to survive a crisis Highperformance organizations need clear, mutually beneficial relationships that look something like this: IF YOU develop the skills we need, apply them in ways that help the company succeed, and behave consistently with our values, WE'LL provide a challenging work environment, support for your development, and rewards for your contribution, and YOU'LL BE PART OF a high-performance organization In thinking about what it is like - what it will be like- to work in a high-performance work organization, these adjectives come to mind: challenging, exciting, demanding, stressful, uncertain, and even bewildering People are bound to feel more stress in a high performance work environment simply because there are so few givens and there is so much more at risk in this world of much greater ambiguity and uncertainty After all, workers are now responsible for how their organization is performing as well as for their lives and their careers Given the increasing importance of lateral processes in organizations, it is also very important that managers make cross-functional career moves In the future, a good manager is likely someone who will have spent four or five years in each of several functions and who is capable of performing an • important integrative role as a member of a product development team or a task force That manager's expertise may look like a T that is, deep in one area, but broad in knowledge of a number of functions Winners and losers in the new logic First, senior managers are likely to continue to be winners in high-performance organizations But the skills required by the new logic may mean that different individuals will end up in executive positions Second, there will be radical change in the world of middle- and lower-level managers As the new logic spreads, self-managing teams and information technology will much of the work of these managers In many cases, these jobs will simply be eliminated because they are unnecessary and not add value Workers who can learn different skills and adapt to the new organizational forms should well But the future is not bright for those who cannot adapt to situations that require them to deal with ambiguity, to manage themselves and others, to handle change, to add to their skills, and to develop significant technical and organizational expertise For some relatively low-skilled workers, the new skills they need to learn may be beyond their learning capabilities, or they may simply be too invested in the status quo to give it up For those who are unwilling or unable to change, not sure anything can be done to assure that they will continue to enjoy the same standard of living  ... adopted new organizational approaches and reached to higher levels of performance The way organizations need to be: Focused on new organizational capabilities In order to be successful, organizations... key core competencies and organizational capabilities Chapter 5: Organization Design Matching the Organization to the Business • • • • The challenges in structuring an organization according to... referred to as "OD" or Organization Development, as it centered on developing people and organizations toward improving business numerics Later in P&G it became known as Organization Excellence