Organization Fitness - Iowa SHRM Conference

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  • 1. Competitive Advantage Through Organization Fitness Building Strong Leaders and Organizations Since 1979 Cedar Rapids, Iowa
  • 2. Organization Fitness
    • A model for:
    • Furthering competitive advantage
    • Redesigning an organization;
    • Increasing organizational effectiveness;
    • Implementing change; and
    • Creating human resources strategy.
  • 3. Competitive Advantage The Traditional or “Michael Porter” View
    • Very few new competitors exist
    • No substitutes for the product or service exist
    • Buyers/suppliers have little bargaining power
    • Very little rivalry exists between competitors
  • 4. Competitive Advantage The Revised View
    • Patents are not that valuable
    • Monopolies and regulated industries are vanishing
    • IT and the internet allow rapid diffusion of ideas
    • Economies of scale are less important
  • 5. The New Competitive Advantage
    • “ The unique ways that an organization architects itself to achieve organization fitness”
  • 6. Framework for Organization Fitness Work Culture Structure People Systems Strategy Products
  • 7. Organization Components
    • Technical competencies
    • Behavioral competencies
    People
    • Values and norms
    • Management philosophy
    Culture
    • Procedures and policies
    • HR systems
    • IT and technology
    • Product/service systems
    Systems
    • Organization structure
    • Business processes
    • Work Design
    Structure Components Dimension
  • 8. Organization Fitness
    • Like Humans, organizations can have varying degrees of fitness
  • 9. What Do You Have?
    • Jaguar styling
    • Porsche engine
    • BMW suspension
    • Rolls Royce interior
  • 10. Steps to Architecting Greater Fitness
    • Review strategy and operating environment
    • Describe current structure, systems, culture and people
    • Identify structure, systems, culture and people needed to support business strategy
    • Identify gaps
    • Develop action steps
    • Measurement and follow up
  • 11.
    • Fortune 1000
    • Diversified Utility and Energy Provider
    Case Example
  • 12. Strategic Imperatives
    • Prepare for energy de-regulation
    • Create competitive mindset
    • Create value-added products and services
    • Innovate
    • Assemble leadership capabilities to lead a competitive enterprise
  • 13. Current Organization
    • Longevity and loyalty
    • Paternalistic
    Culture
    • Very little competitive experience
    • Long service; little diversity
    People
    • IT based on legacy systems
    • Little real-time reporting
    • Limited use of technology
    Systems
    • Hierarchical
    • Highly staffed corporate center
    • Designed for regulated business
    Structure Description Organization Element
  • 14. Required Organization
    • Performance-based; change ready
    • Outwardly focused
    Culture
    • Transformational change leaders
    • Greater diversity and varied work
    • experience
    People
    • Quicker, cheaper and better
    • Wider access to real-time info.
    • Strategic HR management
    Systems
    • Stronger customer service function
    • Greater emphasis on marketing
    • Leaner, but not anorexic; nimble
    Structure Description Organization Element
  • 15. Key Action Items
    • Built new cultural assumptions into HR systems
    • Measured progress
    Culture
    • Robust leadership development
    • Early retirement program effort
    • Increased use of “outsiders”
    People
    • Enterprise information system
    • Automated meter reading
    • Total compensation overhaul
    Systems
    • New call center and processes
    • Formal marketing function
    • Business development function
    Structure Description Organization Element
  • 16. Organization Fitness at Two Retail Giants
  • 17. Strategy
    • Sell a limited number of items
    • Lower cost for higher quality
    • Rely on high volume
    • Target small business owners
    • Aim for upscale shoppers
    • Pay workers well
    • Sell a limited number of items
    • Low cost over value
    • Sell memberships
    • Target mass consumer
    • Keep labor costs low
  • 18. Structure/Systems
    • Buy directly from manufacturers
    • Use own warehouses or depots
    • High degree of integration in logistics
    • Costco more streamlined; fewer levels
    • Walmart highly centralized
    • Sam’s Club/Walmart – World-Class IT
  • 19. Culture
    • Emphasizes individual worker
    • Rewards initiative
    • Employees empowered
    • Highly egalitarian
    • Emphasizes uniformity
    • Customer is king; daily cheer
    • Employee behavior specified
  • 20. HR Systems and Metrics
    • $17/hr average pay
    • 92% of insurance covered
    • 13% of workforce unionized
    • Turnover rate of 6%
    • $11.50/hr average pay
    • 65% of insurance covered
    • No unionization
    • Turnover rate of 21%
  • 21. The Wall Street View
    • “ From the perspective of investors, Costco’s benefits are overly generous.
    • At Costco it's better to be an employee or a customer than a shareholder.”
    • Bill Dreher, Retail Analyst,
    • Deutsche Bank Securities
  • 22. The Academic View
    • “ It is absolutely not true that all those companies that are not being nice to their employees are simply stupid.”
    • Peter Cappelli, Professor of Management, Wharton
  • 23. The Costco Success Story
    • What’s Professor Cappelli’s Point?
  • 24. Using Fitness to Develop HR Strategy
    • Structure:
    • What business processes need to be reconfigured or improved to help achieve business strategy?
    • Systems:
    • Will changes in structure or staffing place new demands on recruitment, staffing, leadership development or succession planning?
  • 25.
    • Exercise
    • Enhancing Innovation
    • Through Organization Fitness
  • 26. Roadblocks to Achieving Fitness
    • Politics
    • Lack of discipline
    • Seeking problems for solutions
    • Inadequate resources
  • 27. Key Lessons Learned
    • Strategy drives fitness
    • Can’t achieve by decree
    • No design is perfect; there is no one best design
    • Don’t change culture by changing culture
    • People are not the final source of competitive advantage
  • 28. Strengths
    • Fad-proof
    • Comprehensive
    • Comprehensible
    • Applies at enterprise or operations levels