New Research Shows Why Focus On Teams, Not Just Leaders, Is Key To Business Performance

Manostaxx - Industrial Management Consulting
Manostaxx – Industrial Management Consulting

Deloitte just launched a study of people challenges in business,Deloitte Human Capital Trends 2016, and the results were striking. Among the 7,000+ companies who responded (in over 130 countries), the #1 issue on leaders minds is “how to redesign our organizational structure” to meet the demands of the workforce and business climate today.

The conclusion, after almost a year of study, is that today’s digital world of work has shaken the foundation of organizational structure, shifting from the traditional functional hierarchy to one Deloitte calls a “network of teams.” This new model of work is forcing us to change job roles and job descriptions; rethink careers and internal mobility; emphasize skills and learning as keys to performance; redesign how we set goals and reward people; and change the role of leaders.

The research, which identifies the top ten human capital trends for 2016, shows that most of the issues facing companies today (employee engagement, culture, time to market, innovation) are tied inextricably to this new way of working. And 92% of the companies Deloitte surveyed cited “redesigning the way we work” as one of their key challenges, making this the #1 trend of the year.

What Is A “Network of Teams” And Why Now?

If you look at the research, you find that companies already operate this way. Only 24% of large companies (>5,000 employees) claim to be functionally organized and only 38% overall.  We naturally run our businesses in sales teams, manufacturing plants, retail stores, product groups, service teams, and geographically independent operations.

Uber, who is well known as one of the most disruptive and innovative companies in transportation, sets up city managers who run their local operation with local marketing, government relations, staffing, and operations leaders.

The problem we face, however, is how we coordinate and align these teams, how we get them to share information and work together, and how we move people and reward people in a company that no longer promotes “upward mobility” and “power by position” in leadership.

As the trends above show, the new organization of today requires us to rethink the leadership strategy, focus on culture and engagement, deliver on-demand organizational learning, and provide information centers, analytics, and digital HR tools to help people operate, share information, and work together well.

I have had the opportunity to talk with dozens of companies about this over the last year, and I believe this is a profound new way of thinking about business. We have to think of companies like “Hollywood Movies” – people come together and bring their skills and abilities to projects and programs, they build and deliver the solution, and then many of them move on to the next “movie” later.

The research identified four keys to success in this new organizational model:

1. Shared values and culture. As people operate in geographically dispersed teams which are closer to customers, they need guidelines and value systems to help them decide what to do, how to make decisions, and what is acceptable behavior. This is driven by mission, culture, and values – hence the tremendous interest in understanding, measuring, and aligning culture (86% of companies rate this as important). The trend entitled “Shape Culture, Drive Strategy” and the article “Why Culture is the Hottest Trend in Business Today” describe this topic in detail.

2. Transparent goals and projects. People operating in teams and small groups have to work with other teams, and they can’t do this unless goals are clear, overall financial objectives are well communicated, and people know what other people are working on. The research on next generation performance management and “The End of the Bell Curve” describe this in detail

3. Feedback and a free flow of information. As teams operate and customers interact with the company, we must share information about what’s working, what isn’t working, what’s selling, and what problems we have to address. While local management and team leadership (i.e. a plant manager or sales leader) should take immediate responsibility for errors, others need to know what problems are taking place, so they can respond to support the team. This takes place today in digital information centers, analytics dashboards, and free flowing feedback systems that have replaced annual engagement surveys and performance reviews.Solutions require a focus on open and transparent feedback, digital information centers, and building an open and inclusive culture. The research on “Feedback is the Killer App” and the article “Why Inclusion is A Critical Business Strategy in 2016” describe this in more detail.

4. People are rewarded for skills and contribution, not position. Finally, the network of teams rewards people for their contribution, not their “position.” The days of “positional leadership” are going away (i.e. “I’m the boss so you do what I say.”) to be replaced by growth and career progression based on your skills, alignment with values, followership, and contribution to the company as a whole. The chapter “Leadership Awakened: Generations, Teams, Science” describes the findings here.

These HR and organizational changes have been taking place for years, but are now accelerating because of the widespread use of digital technology, a demanding younger workforce, and the need for more rapid business innovation. Artifacts like organization charts, job descriptions, performance appraisals, and career paths are being reinvented, redesigned, or even thrown away before our eyes.

The Research: Top 10 Trends Discovered

The title of the report, “The New Organization: Different by Design” came from a detailed study of global trends.

This is Deloitte’s fourth year conducting this research, and this year there were more than 7,000 respondents in more than 130 countries. It analyzed and sorted the data by industry, company size, and geography and found that the trends highlighted are both global and important to companies of all sizes.

Here are the ten trends.

On the topic of structure, the research found that only 26% of large companies (> 5,000 employees) are functionally organized today (ie. sales, marketing, finance, engineering, service, etc.) and 82% are either currently reorganizing, plan to reorganize or have recently reorganized to be more responsive to customer needs. The issue of structure is quite dynamic as we all know: among these companiesonly 8% believe their structure is optimized and only 4% have no plans to change.

As Deloitte talked with companies and explored this issue, it realized that the drivers of this trend are digital technology, information transparency, demographics, and business disruption. Cisco, GE, Cleveland Clinic, and most of the other companies interviewed told of stories about how their functional structures were obsolete, and that this new “team-based” structure was one that appealed to Millennials, drove innovation and customer service, and was now possible to manage well because of the widespread use of digital technology to share information.

Many of us remember the old fashioned “matrix organizations” which were popular in the 1980s. Well today the “matrix” makes a company look more like a series of Hollywood movies, where people take their skills and functional expertise, they work on a “project” or “team” or “program” to get work done, and as they learn and the company adapts, they move into another team over time.

While there are still senior executives in the company, leadership now becomes a “team sport,” where leaders must inspire and align the team, but also be good at connecting teams together and sharing information.

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