Companies Can Benefit from OD-Infused HR Departments

Q: Our company has just started an HR department. What organizational development (OD) aspects are most important for the department to address now?

A: This is a complex, but not necessarily difficult, problem ith multiple solutions. This is the correct time to consider these aspects, when your company is small and beginning to grow significantly. Let’s address the OD issues from the CEO’s perspective.

In its simplest form, OD focuses on two global elements: organizational structure and people development.

Determining Organizational Structure

Organizational development defines how job tasks are formally divided, grouped and coordinated. It also defines how, when and by whom decisions are made. Fortunately, in smaller organizations, the organizational structure that works best often is easier to implement than those at larger companies.

The job of an HR and business professional is to evaluate which structure works best for the company’s people and its customers, and then make recommendations to the CEO.

Where to begin? First, become the resident expert on various organizational structures available to the organization. Among the most common structures:

• Simple.
• Functional.
• Bureaucracy.
• Matrix.
• Virtual.
• Hybrid.

Evaluating and selecting the right structure or a combination of structures is based on the organization’s expected and desired efficiencies, profitability and performance measurement standards.

Next, identify the structures used by the organization’s benchmarked companies. After examining the advantages and disadvantages of each structure, determine what structure would be appropriate for the company. (Remember that egos play a big part in any organization. Disagreements about who reports to whom have hindered and stalled many companies.) Then present the department’s findings and recommendations to senior leadership. The more comparative data that is available, the more credible the arguments will be.

Developing Employees’ Technical Skills

It is essential to establish a learning environment within the company, beginning with the CEO. The competition for the organization’s customers and top talent can be brutal and relentless. Young employees, in particular, are looking to continually develop their skill sets. They will go to, and stay with, the companies that can give them career-enhancing opportunities and experiences. If a company doesn’t keep up with the changing demands of customers and employees, someone else will.

To that end, companies first must address all employees’ core skills and competencies. That is, organizations must work to ensure their employees are technical experts in their discipline and are exceptionally literate in general business practices and approaches.

Train employees to become world-class experts in their functional discipline. For HR professionals, that might include acquiring knowledge, skills and abilities (KSAs) relative to employment law, compensation practices, benefit design, regulatory compliance, human resource information systems and other HR technologies. Finance workers might advance their KSAs in basic and advanced finance and accounting, changes in generally accepted accounting principles (GAAP), Financial Accounting Standards Board (FASB) standards, financial statements preparation and budgeting.

Companies’ initial focus should be on training that develops KSAs that help advance the company’s business objectives directly. As time and budgets permit, more training in some of the softer, but just as important, subjects might be added.

Developing Employees’ Business Literacy

OD begins with a solid understanding of the business or industry that the company is in. Well-qualified HR professionals or sales managerswho cannot interpret the company’s financial statements, for example, seriously limit their value to the organization. A company with deteriorating financial conditions is going to focus on reversing that trend, sometimes at the expense of other valuable employee development work.

So everyone in the company should be able to correctly answer such questions as:

• What are our core competencies?
• What is our competitive advantage?
• Who are our customers, and why do they buy from us instead of our competitors?
• What are the challenges that we and our competitors face in the marketplace?
• What is our financial condition?

Each question is worthy of a powerful learning program. Without understanding what keeps a company in business, all other development programs might appear to be irrelevant and a waste of finite resources.

Ken Moore is president of the Ballston Spa, N.Y.-based organizational development consulting firm Ken Moore Associates. He is an adjunct professor at the State University of New York—Albany and at the Union Graduate College, where he teaches graduate courses in strategic management. Moore also is a member of the Society for Human Resource Management's Organizational Development Special Expertise Panel. He can be reached at kmoore01@nycap.rr.com.