Identify how organizations gain sustainable competitive advantage

Building the Future: HR’s Role in Organizational Design By Steve Weingarden, Ph.D. STRATEGIC HR MANAGEMENT STUDENT WORKBOOK

Building the Future: HR’s Role
in Organizational Design
By Steve Weingarden, Ph.D.
STRATEGIC HR MANAGEMENT
STUDENT WORKBOOK
Project Team
Author: Steve Weingarden, Ph.D.
SHRM project contributor: Bill Schaefer, SPHR, CEBS
External contributor: Sharon H. Leonard
Copy editing: Katya Scanlan, copy editor
Design: Jihee Lombardi, senior design specialist
© 2011 Society for Human Resource Management. Steve Weingarden, Ph.D.
For more information, please contact:
SHRM Academic Initiatives
1800 Duke Street, Alexandria, VA 22314, USA
Phone: (800) 283-7476 Fax: (703) 535-6432
11-0100-SW
© 2011 Society for Human Resource Management. Steve Weingarden, Ph.D. 1
This case study provides a history and overview of organizational design (OD). You
will use the information in the overview to complete an exercise as a hypothetical
organizational design consultant working with a real company of their choice.
You will read about the defi nition and purpose of organizational design, methods
of measurement, six models of organizational structure and two models on how to
apply organizational structure principles.
This case provides an overview of organizational design and includes a scenariobased structured exercise. It is intended for advanced undergraduate students.
Students studying human resources (HR) will likely benefi t most, but general
business students should gain insight from the module, particularly regarding the
role of HR in organizational design.
LearNING oBjectIVeS
You will participate in a structured exercise about organizational design, learning
overarching principles and critically applying those principles to a hypothetical
consulting situation. At the end of the case, you will be able to:

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  1. Identify how organizations gain sustainable competitive advantage through
    human capital strategies such as organizational design.
  2. Describe HR’s role in developing human capital strategies and HR’s effect on an
    organization’s success.
  3. Apply an organizational design consulting model to an organization.
    Case Overview
    2 © 2011 Society for Human Resource Management. Steve Weingarden, Ph.D.
    Read this section before attempting the structured exercise.
    DeFINItIoN aND PUrPoSe oF orGaNIZatIoNaL DeSIGN
    Organizations are composed of deliberately selected and deselected people who
    coordinate their efforts toward a specifi c goal (Etzioni, 1964). The ultimate purpose
    of an organization is to achieve a specifi c goal or mission. The people selected
    (whether self-selected or chosen) and deselected are signifi cant in some manner that
    helps the organization achieve the desired goal.
    Organizational design centers on the organization’s human resource needs to
    achieve the organization’s specifi c goal. Organizational design answers the question,
    “What is the best organizational structure?” and has two objectives:
  4. To facilitate the fl ow of information within the organization.
  5. To integrate organizational behavior across different parts of the organization so
    the behavior is coordinated (Duncan, 1979; see also Stanford, 2007 for a similar
    defi nition).
    Organizational structure and its connection to strategy are core components of the
    organizational design process.
    Organizational Design:
    An Overview
    © 2011 Society for Human Resource Management. Steve Weingarden, Ph.D. 3
    Expertise in “C” Expertise in “D”
    Organizational design centers on the human resource
    requirements an organization needs to achieve its specifi c goal.
    Coordination of Behavior
    Information
    Flow
    Information
    Flow
    Information
    Flow
    Information
    Flow
    Expertise in “A” Expertise in “B”
    Coordination of Behavior
    Coordination
    of Behavior
    Coordination
    of Behavior
    Organizational
    Mission
    and Goals
    4 © 2011 Society for Human Resource Management. Steve Weingarden, Ph.D.
    The organizational design defi nition presented in this case is simplifi ed; scholars
    tend to defi ne organizational design more broadly. For scholars, organizational
    design often refers to all aspects of the relationship between the organizational work
    and the employee (Sandler, 1974). This relationship includes organizational strategy
    and structure as well as more granular issues such as work processes and leadership
    (e.g., see Burton, DeSanctis and Obel, 2006; Nadler, Tushman and Nadler, 1997).
    In fact, it is the organizational design process—specifi cally the structuring process—
    that is the pivotal connector between the business of the organization (e.g., top-level
    leadership and organizational strategy and goals) and the other forms of HR support
    (e.g., workfl ow process design, selection, development and compensation).
    An example of this connection is provided through an integrated management
    system known as requisite organization. One implementation map of requisite
    organization involves an eight-step process:
    Step Process
    1 Build the senior leadership team.
    2 Design the organizational strategy.
    3 Determine the structure needed to implement the strategy.
    4 Design the working relationships between functions.
    5 Ensure people are in the right roles for now and in the future.
    6 Manage performance; ensure that managers are skilled at managerial leadership.
    7 Strengthen the role of managers who are responsible for managing other managers.
    8 Build the compensation system.
    Adapted from Dutrisac, Koplowitz and Shepard (2007).
    This case focuses on how to determine the structure needed to implement strategy
    and set the foundation for other HR processes.
    The HR practitioner’s main role in the organizational design process is that of
    partner. There are three core aspects of this partnering relationship:
  6. To provide leaders with structural diagnosis through identifi cation of the root
    causes of organizational performance issues.
  7. To help leaders evaluate a range of design options by offering clear design criteria.
  8. To ensure that leaders align their organizational design decisions to short-term
    and long-term strategic goals by identifying critical organizational activities and
    current areas of strength and weakness (Corporate Executive Board, 2009).
    © 2011 Society for Human Resource Management. Steve Weingarden, Ph.D. 5
    With these aspects of the relationship in mind, the HR practitioner best contributes
    to the partnership by:
     Providing tools that measure the current internal and external environment and
    current organizational structure.
     Offering knowledge of various organizational structures, including the pros and
    cons associated with each structure.
     Reinforcing that leaders consider strategy as a cornerstone in their design and
    structure decisions.
    These activities represent the strategic role of HR, encouraging HR professionals to
    engage with others in the organization to create the right culture and build the right
    organization (SHRM, 2007).
    Most of the HR practitioner’s organizational design work occurs when an
    organization’s design needs to be revisited or redesigned because changes in the
    competitive environment require changes for the organization and its goals; a
    redesign may be needed to maintain or achieve alignment (Nadler, Tushman, &
    Nadler, 1997).
    In fact, it is critical to identify the current organizational strategy and the internal
    and external environment of the organization to develop the structure. Structures
    must fi t the current and future environment of an organization. Reorganization
    is needed when the current structure does not align with the situation (Bolman
    and Deal, 2003). To understand the current and future organizational strategy,
    it is essential that the OD consultant, whether internal or external, has access and
    input into the knowledge gained through senior leadership decisions regarding
    organizational direction. The OD consultant must have the available scope to
    identify the number of items that go into organizational design decisions (Robinson
    & Robinson, 2005).
    The fi rst step to determine the most appropriate organizational design is to identify
    aspects of the organizational environment. A large component of the internal
    environment is determining where an organization is in the organizational life
    cycle. Organizational life cycle models depict stages where an organization is born,
    develops, grows, matures and dies.
    One of the more delineated models of the organizational life cycle is summarized on
    the following page.
    6 © 2011 Society for Human Resource Management. Steve Weingarden, Ph.D.
    Passage organization Description
    courtship ■ There is no organization.
    ■ Founders are in love with an idea.
    Infant
    ■ Very busy doing.
    ■ Risk is introduced.
    ■ Focus is on short-term results.
    ■ Idea generation is no longer vital.
    Go-go
    ■ Moves fast and often intuitively.

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