Why Organizational Structures in the Digital Era need to be More Agile
Existing Structures are Inhibiting Change
Existing Structures are Inhibiting Change
Digital is often highlighted as being able to streamline internally or externally focused business flows to do something tangibly more exciting, whether they be focused on complex tasks or pervasive processes. Fintech is a good externally facing example that we often read about that are seen to be driving change, yet beneath the surface they also exemplify key differences in project management structures, from an HR organizational viewpoint ,that are starting to strain the existing mechanisms of organizational management across a corporate.
New technology projects whilst enabling step changes in corporate processes are now being hindered by data silos, legacy systems, and rigid departmental structures. These challenges are in need of attention and this can be illustrated taking a deeper look at Fintech.
FinTech really illustrates in the first instance how these new digital technologies can be disruptive and applied in newly defined rich end to end processes to leverage the capabilities of the enterprise. End-users are empowered to engage with an organization more efficiently and quickly through a better user experience (UX) that has smarter and more connected back end processes. These might involve leveraging different external specialist automatic web service based providers that enable instant and seamless back to back compliance checks and balances as part of the overall process. This means that a conclusion is quickly reached as to success or failure for the applicant.
Once accepted through these very streamlined processes, contracts are subsequently exploded into accounting entries through the life of the contract, whilst at the same time being continually monitored to drive actionable contextual alerts and workflows. More holistic analysis is also used to fine tune business models for any new entrants under an identified problem demographic, thereby leading over time to more efficient and evolving processes. If it can be done for FinTech then it is not going to be an issue that prevents other corporates, across different business sectors, from leveraging similar technologies and different web services to drive their own specifically required results for value creation.
Fintech, as an observation, sees underlying digital process design changes that are fundamentally new and driven end to end within a department or at least across a more tightly defined set of stakeholders than typically found in other sectors. Also recognize that in different corporates one teams intended endpoint, and frictions encountered in execution, may be very different from one another’s, depending on how aggressive they have been in pursuing a more automated and comprehensive end to end digital environment.
Sands are shifting slowly and perhaps it is no surprise to find that there are some pockets of success (if you look hard) where finance, HR and operations have at least some joint initiatives despite the constraints of existing organizational structures. However these are often in place despite one other and driven to achieve different end points, although each one at a macro level is trying to achieve more efficiencies through automation within a single department.
Today Human Resources in many organizations is struggling to be heard around the boardroom table, because the depth of its benefits was initially underestimated by corporates and it will take time to catch up. Additionally deployments of software technologies to facilitate Human Resources Management and payroll have lagged other functional areas. It is relatively new with deployments further hindered by the lack of global or regional payroll solutions due to the inherent complexities and dependencies in this space. A perfect storm going forwards, but there are emerging signs of change.
HR itself is solving the same very issues within its functional area, and in the process raising its profile. Whether that be deployment of employee or manager self-service (ESS and MSS), automation of compensation calculations as described earlier, or processes that now leverage more senior management across smaller less well funded operational subsidiaries for oversight, means that HR is also breaking through their domain frictional constraints.
Providing more powerful and holistic support management, both within and across other entities, HR is achieving a higher profile through greater transparency of core issues at a more granular level. These for example might be focused on gender pay gaps, tackling aged open positions more quickly for continued momentum, identifying problem areas through attrition analysis or running simulations for a better understanding of future options in workforce planning by leveraging the best, and deleveraging the worst. Arguably the biggest change will come as HR and financial data are leveraged together with these latest technologies thereby providing deeper and richer operational insights whilst maintaining controls for compliance and being of even more value to the organization. A potential seat at the boardroom table for HR!
Digitalization, automation, through the leverage of new tech, is enabling greater efficiencies and broader participation within and across multi-disciplined departments. Digital initiatives slowly continue to gather more traction within corporates, but today however they are more often focused within a department or across specialist functions like FinTech, within a single geography rather than being fully end to end or indeed pervasive across them. Their impact is seen to be both tangible, real and they leverage not only the best of processes within existing systems, but also add new and desirable capabilities to unlock data silos to drive value creation to new levels never before seen in business.
Next rounds of deep change are already being driven by this new tech enabling the domain creation of end to end ultra-granular processes that can be online, offline, centralized and decentralized across all devices, and that can also drive actionable contextual workflows backed with appropriate content. They can be far more pervasive, encourage broader participation for more domain value, both within the corporate and its partners @anywhere in the globe, and across existing yet different vendor subsystems. They can be focused equally on complex tasks and pervasive processes or both within and across departments and entities.
Tipping points are gradually being reached in some real or test processes, enabling corporate structures in the future to be less rigid, leaner to achieve the same result, and more nimble. In the meantime success will drive success and corporates will push harder to challenge existing organizational structures through iterative and gradual change at least at the start, whatever that means in practice. It will also spur innovations from vendors on how to empower the use of domain data sets more fluidly with full compliance to provide meaningful quality data to drive contextual decision making and agile workflows.
More radically suggesting that Human Resources Management and Financial Management become agile LOB roles to support operations will not be viable for most corporations, nor conversely is the concept of functional management going to continue to fly, at least in their current forms. This leaves end to end holistic process management, being across not within existing inter- departmental functional areas, a theoretical yet mostly untested option. Whether this be achieved through broader more inclusive processes across a broader set of agile & virtually defined stakeholders, or involves very different organizational structures such as domain centers of excellence has yet to be seen, but the cracks are appearing fast in places where structures are inhibiting change. A game changer!