Organizational Agility – the New Nirvana?
In today’s volatile marketplace, as an individual and as a business, you’re only as good as your last success – and recipes of success from the past may prove inadequate to guide us. New information technologies – including high speed internet, low cost devices and intuitive social media platforms – are opening up new communications channels, driving market changes and shifting consumer patterns. The rulebooks of business are being rewritten and market-slayers can be tiny niche players who take on the corporate big beasts and win. Even the very notion of sustainable competitive advantage is questionable today – as firms like Microsoft, Nokia and Blackberry bear witness.
All of this is putting pressure on executives and boards to find new ways of running business in contexts where there are no easy answers. Is it any wonder then that organizational agility now sits high on executive and board agendas in every sector? Back in 2009 an overwhelming majority (88%) of executives in a substantial study by the Economist Intelligence Survey (EIU) cited agility as key to global success and recognised that their organizations were far from agile enough to compete. Judging by the deluge of articles appearing on the subject more recently, the need for greater agility is as great today as it was in 2009 (and just as elusive).
What exactly is an agile organization?
To many people the term ‘agile’ is synonymous with the Agile methodologies originally associated with software development, lean manufacturing, just-in-time supply chains and process improvement in the 1990s. While these approaches are important, the notion of organizational agility is a broader concept that has been informed by complexity science, new approaches to strategy and organization development theories.
An agile organization is one that can adapt and respond rapidly to changes in the marketplace with innovative products and services that customers actually want. In today’s complex world, where competitive advantage is soon eroded by new entrants, simply responding to change is not enough. Agility also involves getting ahead of the curve, shaping the market and creating a new way (or new ways) of competing. Agile organizations recognize that top management will not have all the answers; they harness the ability of staff at all levels to continuously sense the environment for emerging threats and opportunities. They are able to unite staff around a common purpose and mobilise funds, people and information to achieve new goals.
Speed and innovation are of the essence. This puts organizational culture center-stage and, rather than tinkering with a method here or a practice there, agility requires a holistic approach to creating conditions conducive to high performance working. Agile organizations tend to favor flexible working practices that enable innovation and empowerment, such as self-directed teams and flat hierarchies, lean and agile working methods. As a result they can harness their clever employees’ discretionary effort to produce outcomes that work for the business and for customers. This means that the role of the manager is under the spotlight. In agile organizations rather than conventional command and control, the role of managers becomes that of coach and support of teams, the unblocker of the organization’s roadblocks and the strategic enabler who unites people around shared purpose.
Agile organizations focus intensely on customers. To build customer loyalty companies must not only innovate, they also have to continuously work at the substance behind their image and make sure they live up to their brand promise. Agile employers also focus intensely on employees. They recognize that in today’s interconnected era, continuous (two-way) dialogue with employees is vital because elite workers in particular expect to have a voice – to be informed, involved and to have some say on matters that affect them.
The global workforce is increasingly multi-generational and multi-cultural, so no one-size-fits-all when it comes to creating enticing employer brands. People want a “fair deal” that works for them; if not, those who can choose exercise their options and go elsewhere. This leveling of the playing field between employers and employees means that, in order to attract and retain much needed “talent”, distinctive and tailored employee value propositions must be developed that reflect an understanding of employee motivation and meet both business and employee needs. New approaches to work design, working practices, management and leadership, employee learning and communications must be found that enable people to give of their best and succeed.
Squaring the circle – how can HR help?
So how do agile organizations square the circle – obtaining the speed, innovation and flexibility they want – while employees get the fair deal they want, at least in terms of development, flexibility and empowerment? Is it possible to get the best of both worlds?
Grow agile leadership
Senior leaders have a disproportionate impact on the success of their organizations – through their behavior, visibility and decision-making. Agile organizations need leaders who are capable of multi-faceted thinking; who can cope with ambiguity and complexity; who are genuine and able to bring people with them on the continuous journey of change. And while leaders aspiring to be agile have the challenge of keeping shareholders happy in the short-term, they must also act as shield to their organization, look longer-term, challenge shareholder primacy, use their influence to win support for building a more resilient and innovative organization that can create and sustain a new set of competitive advantages.
Here HR has a key role to play. HR leaders can act as trusted adviser to executives, helping them improve leader communication for instance. They can expose leaders to new ways of thinking – for instance by introducing them to new peer networks, arranging study/benchmarking visits and so on. They must also challenge leadership behavior that sets the organization back in its quest for agility while supporting leaders who are attempting new, better approaches. Above all they can help grow future leaders who “get it” and who can “square the circle”.
Build a new employment relationship
The quest for agility highlights the need for workforce flexibility. Increasingly organizations outsource “non-core” operations or prefer to keep costs down by working with contractors rather than employees (often former employees who now enjoy few benefits). This is hardly a basis for trust – the foundation of employee engagement, innovation and performance. HR should ensure that, when greater flexibility is being introduced for business purposes, it is not achieved at employees’ expense or that contractors are unfairly exploited as happened in the UK during the recession when many low skilled workers were offered restrictive “zero hours” contracts. After all, why should employees continuously “go the extra mile” if they are treated as commodities by their employer? Challenging such practices and building a fairer deal for employees is a real test of an HR leader’s mettle.
In this new era, employers will need to be smarter about how they develop resilient employment relationships based on adult-adult, rather than parent-child, relationships. They will need to ensure mutual benefits (as well as risks) for both organizations and employees in engaging for sustainable high performance.
In organizations seeking to become more agile, it becomes more important than ever to understand how to maintain or enhance employee engagement since many studies suggest that highly engaged employees tend to be more productive than their counterparts; they tend to support organizational change initiatives and are more resilient in the face of change. Of course, a key feature of sustainable employee engagement is that there are “win-win” outcomes for all concerned, so engaged employees tend to experience enjoyable work, health and wellbeing, and self-efficacy. What’s not to like?
Surveys can help identify the overall state of employee engagement at a given point in time though HR should seek to understand where efforts to improve employee engagement are most needed and where they will bear most fruit:
- Which groups or individuals are critical to your organization’s success?
- How engaged are these people?
- What do you consider the critical people risks in your organization?
- How well do managers in your organization (especially top management) understand the importance of engagement to business success? Can you build a convincing business case for working to improve engagement in your setting?
Then it’s a question of proactively targeting action to increase employee engagement and retention, involving staff and managers in finding solutions. This is also about co-creating employee value propositions which are appreciated and meaningful to employees.
Walk the talk
To be credible, HR functions need to role model both agility and customer focus in their own core practice. The aim should be to make line managers’ jobs easier by creating simple and effective policies and guidelines and user-friendly tools that help people do their jobs. Of course HR advice should be of a high standard, reliable and appropriate. HR should anticipate the key business and workforce trends that will affect their organizations and revise HR policies and processes – such as workforce planning, talent management, succession planning, reward and development – to make them more agile.
By its nature agility implies change. Given that HR is the specialist “people” function, HR professionals should aim to become expert in the people aspects of change, who can work alongside other change agents such as line managers and organization development professionals to help create a “change-able” culture. When working on specific large-scale change projects, HR should adopt agile project disciplines. This is about breaking the end goal down into iterative short cycles of activity, involving stakeholders throughout and adjusting course according to customer feedback and changing requirements. That way the change outcomes are delivered in a timely way, are fit for purpose and “owned” by stakeholders.
Building organizational agility calls for a higher value-added contribution from HR. It requires HR professionals to exercise adaptive leadership. This involves trusting your instincts, letting your own values guide you, taking the risk of challenging poor practice (even if that may not make you too popular with some senior players), and using your influence to win support for new practices that should better serve their organizations’ interests in these fast-changing times. This is about being proactive and embracing “both-and” thinking: – being both business- and employee-focused, both strategic and pragmatic. It’s about being willing to develop your skills and capabilities to perform well, and also about being willing to adjust your course if something isn’t working.
While examples of truly agile organizations remain in short supply, this emerging orthodoxy represents a potentially more adaptable, sustainable, ethical and resilient way of doing business in today’s fast-changing context. By becoming role models of adaptive leadership HR professionals can help their organizations to become more agile and resilient and strengthen their own credibility into the bargain.
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