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Agile organizations need leadership, not management

While the phrase “the future of work” may be part of the current zeitgeist, in reality, it doesn’t convey the magnitude of the shift many businesses are undergoing. Organizations responding to digital transformation and the changing expectations of workplace culture are moving away from conventional hierarchies toward more agile, project-based teams which create their own leadership. But implementing these changes is no small feat and involves HR directors winning over hearts and minds, as well as demonstrating the business case to an often-reluctant board.

McKinsey defines an agile organization as a “living system” that has “evolved to thrive in an unpredictable, rapidly-changing environment” by “focusing on customers, fluidly adapting to environmental changes” and being “open, inclusive and non-hierarchal; they evolve continually and embrace uncertainty and ambiguity.” Recognizable by their focus on people, agile organizations empower their employees and customers, listening to their feedback, bringing them into the innovation process and using data to evolve in line with customer needs.

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The rewards for companies that manage to do this successfully are potentially huge, ensuring not only that they survive but also boosting their likelihood of success in this new commercial landscape. Part of this success is owed to the resulting dynamic company culture, where empowered employees at all levels make decisions based on outcomes rather than processes, contribute ideas, collaborate and are able to work flexibly. This cannot be achieved by relying on old-hat management techniques but by embracing a forward-thinking and motivational leadership style, projecting a clear vision and garnering support from all levels of the organization.

Using employee experience as a commercial tool is not a new idea; Jeffrey Pfeffer, a professor of organizational behavior at the Stanford Graduate School of Business, argued its effectiveness in his book The Human Equation, published in 1998. Drawing on research into numerous companies, industries and countries, Pfeffer argued that–despite a widely accepted belief of the contrary–the way firms manage their people can become an enduring source of competitive advantage. Now, digital transformation–together with an increased pace of disruption–is making this reality impossible to ignore, challenging traditional organizational structures and fueling the rise of more fluid working practices.

One often-cited example of a company successfully working this way is Zappos, the online shoe and fashion retailer. Zappos found that, as the company grew, it became slower to respond to customers because the layers employees needed to get through to get things done were also multiplying. The board realized that, to provide exceptional service, it would be crucial that every employee understood customers’ needs and had the ability to improve their experience wherever possible.

The solution? They turned to Holacracy, where teams–which are known as “circles”–self-manage. The organization defines self-management as “knowing exactly what you are responsible for and having the freedom to meet those expectations however you think is best. ‘Self-organization’ is being able to make changes to improve things–beyond what is required of you.”

 In 2018, the Business Agility Institute commissioned the first global survey into how companies rate the current integration of agile principles into their operations, spanning 29 countries and 24 industries. It found that 71% of companies surveyed reported that they had low business agility. Why is this number so high? According to the study, the biggest challenge–and the reason for failure in many cases–was ineffective leadership.

Rather than simply focusing on managing people and processes, HR directors should look to inspire employees to lead in their image, making sure they take care to instill the core values of the organization in teams and teach them how to make decisions that align with this. There are five building blocks that HR directors can use to do so:

Start with a Strategic Plan

The first challenge is to bring the board to a point where it can visualize that organizational change–however disruptive it may appear from the starting line–is going to provide real, tangible and long-term benefits to the business. Laying out the vision as a strategic plan that is tied to financial metrics and that explains to the board how this new way of working fits into the organization’s key goals and growth plans is an effective way to start.

Strengthen Your People-Operations Function

One key component of a successful agile organization is that it has a strong people-operations function to support change management and uphold new processes and ways of working. Ensuring that there is a system of workforce analysis in place that enables you to predict skills gaps, drive measurable business outcomes and upskill in critical/new areas is the foundation for progress.

Achieve an Early Win

Respondents to the Business Agility Institute’s global survey reported that business agility was significantly higher (24%) when the board of directors led the journey than line managers. At the beginning, there may be buy-in from team members and the board but the battle for ongoing support has only just begun.

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Securing an early “win” that demonstrates results and value will keep colleagues engaged. One such win could be the successful implementation of a strategy like allocating teams their own budgets, which they spend on solving business problems without seeking the approval of managerial hierarchy. Measuring the impact against KPIs devised to showcase the improvement of these problems encourages the team to tweak decision-making processes if they are not seeing the expected results. There will most likely be an upward trend once measurements are clear and the team has a good system in place for collectively deciding how the money is spent.

Empower Employees, Especially Those Who Face Consumers

This is where the difference between management and leadership is most apparent. The role of transformational leadership is to empower employees to make informed decisions that are aligned with the goals of the business, especially in consumer-facing roles. This is something that Zappos has done particularly well, negating the need to “ask a manager” and counting towards its success.

Build a Culture of ‘Continuous Learning’

Perhaps the most important component, which is both a driver and a symptom of agile organizations, is building a culture that values continuous learning and understands that everyone, regardless of role or title, must know how to lead. Continuous learning is important for organizations, allowing employees to take control of their development and advance their skill sets. This sparks new ideas, encourages collaboration and prepares individuals for the future.

These changes form part of a whole dynamic, ongoing shift, not a project with an end date. There is no “finish line” to cross, as part of the HR director’s changing remit must include upskilling staff, ensuring that power is distributed throughout the whole organization, keeping up with customer needs and inspiring self-management.

HRDs of the future must look at their role in the same way as Zappos’ CEO, Tony Heisch: “Imagine a greenhouse with lots of plants, and each plant represents an employee. Maybe at a typical company, the CEO is the tallest, strongest plant that the other plants aspire to one day become. That’s not how I think of my role. Instead, I think of my role as the architect of the greenhouse–and to help figure out the right conditions within the greenhouse to enable all of the other plants to flourish and thrive.”

Carrie Magee is client partner at Marlin Hawk, the international executive search firm.