development How does your organisation stack up?

The pillars of successful organisational development How does your organisation stack up? This viewpoint explores how senior HR leaders can build a...
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The pillars of successful

organisational

development How does your organisation stack up?

This viewpoint explores how senior HR leaders can build and align the three pillars necessary for successful organisational development: strategy, enablement, and engagement >> Now, more than ever, exists a vital opportunity for senior HR leaders to make a real difference to bottom-line performance.

2. Enablement: the structures, processes and culture needed to implement and execute this strategy effectively.

Too many organisations are currently falling short of their strategic goals because of a fragmented approach to organisational development. And HR is uniquely placed to respond to the challenge, helping ensure that the three pillars of successful organisational development are aligned to current and future needs. These are as follows:

3. Engagement: delivery through engaging people. Drawing on insights from our experience and research into what makes the high performing World’s Most Admired Companies1 (WMAC) so successful, this paper explores how senior HR leaders can take a proactive role in building and aligning the three pillars of organisational development.

1. Strategy: forming a strategy which will positively differentiate an organisation’s performance from its competitors. 1Hay Group and FORTUNE magazine have collaborated annually since 1997 to identify, select, and rank the World’s Most Admired Companies and uncover the business practices that make these companies both highly regarded and successful. For more information, please visit www.haygroup.com/fortune ©2013 Hay Group. All rights reserved

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The pillars of successful organisational development

What do we mean by organisational development? There are many different definitions of organisational development, and to some extent this is individual to every organisation. Hay Group sees organisational development as an organisation-wide effort to align the business’ strategy, structure and people to respond and adapt to the changing external environment.

Pillar one: strategy Creating a corporate strategy that will positively differentiate an organisation from its competitors, and then building the organisational capacity that brings competitive advantage.

Most companies devote a lot of attention to strategic planning. But the WMAC are adept at putting those strategies into practice. Our research suggests that clarity is key. Within the WMAC, strategic objectives are clearer at all levels and performance measures are more closely aligned with them. WMAC hold their executives more accountable for communicating and executing business strategy. Indeed,

nearly 80 per cent say managers understand their roles in implementing strategy compared to 58 per cent in the peer group. Therefore, when developing OD and indeed HR strategy, it is essential to start with a deep understanding of the business strategy, market forces and competitor activity, before applying strategic workforce planning, talent management, assessment and leadership development. Provided below are the warning signs of potential underperformance. Consider how your organisation stacks up between these and the practices of WMAC.

Warning signs of the underperforming organisation

Characteristics of the high performing WMAC

HR strategy has not fundamentally changed in the last five years.

HR strategy is aligned to business strategy and culture.

HR plan is much less detailed than the business plan.

HR plan has a depth and rigour of analysis that matches the business plan.

HR teams have little or limited understanding of the business cycle.

HR and organisational development plans are consistently reviewed to respond to changes in the external environment.

HR teams pursue HR excellence, as opposed to business excellence as a goal.

HR teams’ goals are to support business success.

HR teams do not spend significant time in the business, building relationships and understanding business issues.

HR teams spend significant time building relationships, and talk business language with operational executives. They have a shared view about where and how value is created in the organisation.

©2013 Hay Group. All rights reserved

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Pillar two: enablement Creating the conditions to ensure the organisation can implement and execute its strategy effectively, through structures, processes and culture.

An aligned culture is one in which people do things instinctively to help the business, without relying on complicated service level agreements or process manuals.

Many organisations have a significant gap between rhetoric and reality, and without a cohesive view are in danger of investing in the wrong things.

And the WMAC are much less tolerant of ‘off strategy’ behaviour, with only 22 per cent reporting any degree of tolerance compared to 52 per cent of their peers.

Indeed, Hay Group’s annual WMAC study with FORTUNE magazine over the last 15 years, finds that these high performing companies regularly outscore their industry peers on creating the right environment to implement their strategies. WMAC set their organisation up to enable people to be successful by closely aligning their systems and development with their strategy.

2. Structures and processes that drive performance

In particular, two key areas differentiate the WMAC to their peers:

1. Culture aligned to strategy These organisations have strong, positive cultures that make strategy happen, by mobilising and marshalling resources behind key goals and objectives, with strong accountability.

The WMAC structures and processes sustain performance over time, and are also agile to respond to changing pressures. Dealing with challenges such as innovation, going global, and reacting quickly is just part of ‘business as usual’. For example: ƒƒ 83 percent of WMAC innovate in areas of current strength ƒƒ 84 per cent can respond flexibly to local market needs ƒƒ 89 per cent ensure employee skills keep pace with job demands. As a result, the WMAC build structures and ways of working that endure despite economic and market flux.

Warning signs of the underperforming organisation

Characteristics of the high performing WMAC

Last strategic review date is unaligned with the date of the last organisational or leadership model reviews.

Organisation structure is entirely aligned to strategy.

Discussions about culture change fail to translate into tangible action.

Strong practical focus on creating a culture that enables the organisation to deliver the strategy.

Employees are judged on their reputation, not the value that they create.

Leaders take a common view on what the best opportunities are, and give them to their best people.

Rewards do not correlate with current organisational needs, with relatively little pay differentiation.

Rewards are aligned to organisational goals and performance.

Employees constantly find obstacles in the way of success, e.g. process and procedure take precedence over customerorientation and empowering front-line employees.

Employees feel enabled to respond effectively to customer needs and deliver a high quality customer experience that surpasses customer satisfaction benchmarks.



Nearly 80% of WMAC say managers understand their roles in implementing strategy compared to 58% in the peer group.



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The pillars of successful organisational development

Pillar three: engagement Engaging employees around their role in delivering competitive advantage for the organisation.

The WMAC see employees as their most important source of competitive advantage; others see employees as their most important source of cost. Today’s business environment is marked by intense competition, growing complexity through regulation, and financial constraint. To succeed in this challenging

environment, it’s critical that organisations take active measures today to engage their people to ensure delivery of the strategy and long term success. Indeed, Hay Group research shows that while organisations in the top quartile of employee engagement demonstrate revenue growth 2.5 times more than those in the bottom quartile, companies in the top quartile of both engagement and enablement achieve revenue growth 4.5 times greater.

Warning signs of the underperforming organisation

Characteristics of the high performing WMAC

Employee costs are seen as just that: costs.

Salaries are likely to be their single biggest cost and it is known exactly what value is obtained from this.

No common view of the role of managers and what value they add.

Contribution of managers is measured. Organisational leadership knows which managers add most value, and which need developmental support to improve the climates they create for their teams.

Leaders see themselves as ‘boss of their unit’ rather than part of the wider team.

All employees give the same answer when asked: “What are the top three priorities for this organisation?”

People spend more time on internal reporting rather than delivery for customers.

Organisation is clear on the behaviour they expect from leaders and articulates this regularly.

Organisational focus is on the short term, with an emphasis on activity instead of outcomes.

The link between employee engagement and business performance is regularly measured.



Organisations in the top quartile of both engagement and enablement achieve revenue growth 4.5 times greater than organisations in the bottom quartile.

©2013 Hay Group. All rights reserved



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How does your organisation stack up? Many organisations have one or two of these pillars securely in place, but only the most successful have all three deeply engrained and closely aligned. The most successful organisations have also realised that these three attributes are not the domain of one function or

another; but rather a part of a cohesive, organisation-wide effort that is the shared responsibility of all. Consider these questions below to help identify where to focus your development efforts and create a solid foundation for organisational success.

Pillar one: strategy ƒƒ Have you connected your HR strategy to your business strategy through measures such as strategic workforce planning? ƒƒ Are your corporate functions, such as HR, playing strategic roles in shaping and supporting the business; and acting as real partners and enablers to those in operational delivery roles?

Pillar two: enablement ƒƒ Is your operating model and structure 100 per cent aligned to your strategy, or does it need reviewing? ƒƒ If your culture changed, would it make life easier or more difficult? What changes, if any, do you need to make to your culture? ƒƒ What are the organisational blockers to higher employee performance? How can you remove them to enable your employees to be more effective? ƒƒ Do you need to review your HR approaches such as reward and talent management to encourage the right behaviours, and attract and retain the right people to deliver the strategy?

Pillar three: engagement ƒƒ How many of your leaders are demotivating their teams because of inadequate leadership skills and behaviour? For how much longer can you carry this cost? ƒƒ What percentage of people’s time is spent on internally-focused processes, such as management reporting or resolving conflict, instead of delivery of business objectives? ƒƒ What can you do to improve employee engagement to release your people’s discretionary effort? For example, reviewing your recognition policies, performance management system, and available training and development opportunities. Or do you simply need to focus on communicating these more effectively?

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The pillars of successful organisational development

Get in touch If your business has room for improvement under any of the three pillars, Hay Group can help. As a global management consultancy with almost 70 years’ experience, we help organisations align their workforce and organisation behind their strategy and achieve

their business objectives. We develop talent, organise people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organisations realise their potential.

John Douglas Director of private sector consulting

Stephen Welch Director

t +44 (0)20 7856 7165 e [email protected] w www.haygroup.co.uk

t +44 (0)20 7856 7558 e [email protected] w www.haygroup.co.uk

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