Corporate leaders often fail because the organization’s structure is wrong: key players don’t have budgets or authority, the company moves too slowly and the structure promotes destructive conflict. Younger, motivated people with highly sought-after skill sets often find their talents underutilized. The result is that talented people lose motivation and the organization suffers “brain drain” as they look for opportunities elsewhere.
Companies often fail to recognize, let alone solve, the design/talent problem – they throw training at it, when they should instead redesign the organization to help talent thrive, according to Amy Kates and Greg Kesler managing partners at Kates Kesler Organization Consulting and coauthors of Leading Organization Design: How to Make Organization Design Decisions to Drive the Results You Need (Jossey-Bass, December 2011).
“Talented people join and stay in an organization to have an impact – to do work that matters to them and to make a difference. But a badly designed organization keeps them from having an impact or satisfying their values,” says Ms. Kates.
How sub-par organization design debilitates talented people. “When organizations don’t address design, they allow complexity to grow unchecked,” Ms. Kates says. “Fiefdoms and boundaries develop, while lines of authority become unclear. The pace slows down as work requires approval in more and more business units and bureaucratic layers. Talented people get frustrated, and they look for opportunities elsewhere so they can get more traction. Size doesn’t have to mean bureaucracy, but it takes fresh organizational thinking. Companies worry about losing talent – Google is losing talent to Facebook as it becomes bigger, slower and less agile.”
- How good organization design can energize talent – and why creating “good conflicts” is key. “Bad complexity slows an organization down,” says Mr. Kesler. “Effective organization design creates connections among the many competing objectives of a large company – balancing global and local authority, setting up good, creative conflict. For example, when a global brand manager and a local sales organization share responsibilities, and are rewarded for working together, they will fight for their interests so that both the global brand and the local market are addressed. Talented people thrive on that kind of energy. There are boundaries, but you can reach across them – and good creative work happens when boundaries are broken. Nothing creative happens without working across functions.”
- Why talent at the top doesn’t notice bad design while talent in the middle suffers. “Top-level talent is often insulated from the effects of organization design,” says Ms. Kates. “Top-level leaders create the matrix, but the burden of living in it falls on middle management. It’s mid-level talent that experiences the frustration.”
- How to unlock the value of talented people. “Companies need to recognize the importance of addressing strategy, talent and organization design together. It’s hard to do, but absolutely necessary. When it comes to talent, specifically, companies must set up structures and systems that make the work ‘matter’: taking away layers of approval; making it possible to work across cross-functional boundaries; creating matrixes that are complex for the right reasons – that give full scope to both global and local interests, and allow managers and the organization as a whole to ‘finish the play.’ These steps will make it more likely that you can keep the people you want,” Mr. Kesler says.
- Which companies are getting it right and using organization design to attract and keep talent. “GE is an example of a company that gets it,” Ms. Kates says. “They provide training that specifically addresses how to manage and function effectively in their matrix. They bring together training with organization design, and apply an awareness of how the two interact.”
“Most leaders agree that great talent can overcome poor organization. The most effective leaders realize that a thoughtful balance of center-based leadership with local initiative is critical, that the greatest creativity and innovation emerges from managed conflict between central and local initiatives and perspectives. Creating this kind of tension should be the goal,” Mr. Kesler says.