The organisational levers model is shown in Figure 1.
The expression 'levers' is used to represent the different parts in an organisational system. A systems approach seeks to respond to external influences on the organisation and to integrate change across each of the organisational levers. Change in one lever will impact each other lever one way or another. Let us explore the model further. The main elements of the model are the following:
External environment: In the context of HR transformation, the external environment can be seen in two ways:
First, as the broader socio-economic and political environment within which the organisation as a whole operates. This external environment includes forces for change that come from government, regulation, societal changes, legislative change, competition, customer requirements, shareholder expectations, technological changes, products and service provision, etc. These are the forces we need to understand and interpret in order to develop strategy.
Second, in the case of HR transformation, the external environment can be the above plus those other business functions "external" to the HR function. So, in this instance, customers will be primarily internal clients; services will be the things that the HR function actually delivers to internal clients; technological changes could be the IS strategy, etc.
Taking a multi-layered approach to the external environment is important. There is a major stakeholder engagement piece that is often overlooked when transforming HR. This then results in confused and dissatisfied internal business colleagues who feel HR transformation is being done to them rather than with them. In making the business case for change, it is also critical that we not only factor in external drivers but are clear about the internal benefits and impacts on business colleagues.
Internal organisational levers: In this framework there are four internal organisational levers. You might have come across other similar models that may use different terminology. It really does not matter what terminology is used or how many organisational levers are defined. The important point is the principle that the organisation is a system comprised of different parts that interact. For the purpose of this book, we will use the following internal organisational levers:
- Structure — which includes consideration of areas such as reporting structure (formal and virtual), job and work group design, role expectations/measures, facilities/offices and organisational integrating mechanisms (those things that help people to work together more effectively).
- Technology — the technological infrastructure of the organisation.
- Work processes — the key work processes, reflecting both the services that are delivered and the channels through which they are delivered.
- People and culture — the skills and knowledge, core capabilities, values, style and behaviours along with people policies and practices.
Performance: Performance is the final lever. Although changes in performance are often driven by the external environment (e.g., shareholder expectations or the realisation that new benchmarks have been set), it is important to recognise performance as a separate driver for change, not least because it has such a high focus in organisational life. We need to know whether we are achieving key performance indicators, being cost efficient, delivering value for money, achieving return on investment, delivering to customer expectations, being competitive against external benchmarks, setting and delivering to agreed service levels. Also, decisions around capital investment should be linked to anticipated benefits. Therefore, in making the case for investment in technology we need to be clear about the performance gains which we expect to bring to the organisation.
Strategy is also part of the organisational levers model. Strategy is about direction setting and is the product of considering what we need to do inside the organisation in response to actual or anticipated change in the external environment. As such it provides our context for change.
Change may be initiated in any of these organisational levers, and a systems mindset will recognise that there will be an impact on the other levers.
Okay, so that is the theory. But how do we apply this model in practice? Let us take the example of technology-driven change in HR: moving transactional and operational HR activities to an Web-based HR. As we consider the above model, we may easily make the link between technology and work processes, as many HR processes will become embedded in the new Web-based HR. But do the other organisational levers come into play?
The external environment: There may be a number of changes in the external environment that are influencing the use of technology in HR, for example: new Web-based software solutions; younger people expecting Web-based interaction with their employers/prospective employers; more affordable technology; convergence of technology and telecommunications; organisations that are adopting Web-based HR setting new benchmarks; new outsourcing/off-shoring possibilities being offered by suppliers, etc. There may also be drivers for change inside the organisation but external to HR, such as higher client expectations about the services that HR will provide; the desire of managers to have information about their people on demand; and so on.
Whatever the external drivers, this model will help you capture these and think through their impact on the HR delivery model. But in this example, how might the other organisational levers be affected?
Structure may be impacted in a number of ways through technology-led HR transformation. The types of roles needed in HR may change along with the number of people involved in transactional work/handling enquiries. Transactional and enquiry work may be outsourced (resulting in a different organisational sourcing model) or brought into a shared service centre (perhaps even outside the direct reporting lines of the HR function or in multiple geographies). What remains inside the HR function may be a different type of professional role. The need to integrate the work of HR management may increase as HR delivery channels become broader and outside the HR function's direct reporting lines. What line managers and employees are expected to do in terms of information management, may change.
When organisational structures change, work processes will also change. This means that organisational boundaries (whether between different roles or between different teams or groups) must be addressed in order to ensure that work is properly integrated. This means considering aspects of organisation that integrate work activity, such as communication processes, cross-organisational teams/committees and other forms of reporting and governance.
Performance requirements from HR are certain to be affected as a result of technological change. There may be fresh challenges around HR costs or ratios, expectations around service levels, delivery of a different kind of professional HR agenda. The way performance is monitored may also change, with clearer metrics and more transparent data.
As a consequence of the above, people and culture are impacted. New roles require new capabilities. Line managers will need to learn new skills. The relationship between HR professionals and the line managers needs to be recast. A new HR culture needs to emerge and expectations around HR's contribution re-set.
Hopefully, this illustration brings the organisational levers model to life and shows how change in one organisational lever impacts the others. What this model also illustrates is that if change initiatives are kept narrow in focus and not joined up, then the risk of conflict and dissonance between competing changes becomes very high.
We will show how this model has been used practically to support the HR transformation process: to undertake a gap analysis, to support the envisioning of the new HR, to shape the transformation programme and work streams and to monitor/mark progress.
