Organizational Design Change.

There is a lot of research on the brain and behavior. Science can tell us why we feel and act the way we do. At Emerson, we like to take scientific findings and use them to help you get the business outcomes you want. There are three principles, based in science, which can help you make any organizational change or learning program better. Science tells us that if we want to implement something new in an organization, we should make it feel Familiar, Controlled, and Successful.

The first principle is Familiar.

Our brains see anything new as a threat. We feel fear. Familiarity can make a new thing feel safe and valuable. Familiarity is created by comparing the new thing to your past experiences. Compare the change to something good. Compare the change to something bad. Use what they already know. And, of course, we know stories are powerful. So you can use a story as the vehicle for each of these. I’ve used story telling on many of my projects. Typically, I find executives or well-respected managers to share stories that help make the change to feel familiar. Also, use repetition. Perhaps the information is new to people when you start the project, but if you keep repeating it over and over, it becomes familiar. I do this by having multiple resources sharing their stories.

The second principle is Controlled.

Our brains don’t like uncertainty and they don’t like feeling vulnerable. Giving people predictability and control lowers anxiety and unleashes people’s potential to plan and organize. Control is created by giving a change predictability and structure, and by giving people choices. Share a schedule or project roadmap to help those impacted by the change to understand when things are happening. This helps them to schedule the rest of life which gives them some control during the change. Also, Frequently Asked Questions provide stakeholders with additional information which helps them to feel control.

The third principle is Successful.

Brain research tells us exactly why winning feels good. And why winning together feels even better. A feeling of success is created by engineering small wins and celebrating milestones. One way to make someone feel successful doing something new is by breaking that new thing into small, simple tasks. Another way to make people feel successful is by making the new thing doable. Also, be sure to make your change measurable. Being able to measure it helps to show when goals are being achieved. Once those goals are achieved or those milestones are met, use rewards to encourage people to continue moving forward with the change. In past projects, I’ve set it up so that teams who are showing progress, get recognized by the company. This encourages them to continue moving forward and it helps the rest of the organization see how things should be done based on the new way of doing business.

Creating connections between your change and other experiences makes people feel it’s familiar, which turns off fear, makes the change feel valuable, and helps people remember it. Adding choice, structure, and predictability makes the change feel controlled, so people feel less anxious, more engaged, and get to use their brains’ executive functions. Engineering small wins; measuring; providing feedback and rewards; and celebrating make people feel successful, activating the feel-good chemicals in their brains. Use the simple strategies outlined here to make your change feel Familiar, Controlled, and Successful. In doing so, the change will be more quickly adapted in your organization.

We all know the bad news. The US economy lost 20.5 million jobs in April 2020, according to the Bureau of Labor Statistics—by far the most sudden and largest decline since the government began tracking the data in 1939. The unemployment rate soared to 14.7% in April, its highest level since the BLS started recording the monthly rate in 1948. The last time American joblessness was that severe was the Great Depression.

But it’s not all bad news. Certain businesses associated with logistics and supply of critical goods are actually hiring…like crazy. Instacart is hiring 300,000 contract workers. Amazon is bringing on 175,000 new workers for its fulfillment centers and delivery network. We see additions of 50,000 each for CVS Health, Dollar General, and Walmart. Lowe’s is hiring 30,000 employees. FedEx is hiring. Ace Hardware is hiring.

A company like Amazon is used to scaling up for seasonal hiring but many businesses are not. Hiring thousands so quickly taxes the organization’s entire talent management system.

At Emerson, we think of talent management holistically; it supports the organization’s culture and helps achieve desired business outcomes.

When you need to scale quickly, here are some ideas to consider:

Talent Acquisition

Standard career fairs and job postings won’t work right now. What are the best ways to acquire talent? How can you quickly identify the best when supply exceeds demand due to high unemployment?

• Tap into communities like church groups, food banks, university campus online boards.
• Work with other companies that have laid off or furloughed workers.
• Apply AI technology to filter best applicants.
• While it may be tempting, don’t hire the first warm bodies. Maintain your recruiting rigor with a focus on the critical skills for the job as well as cultural fit. In some markets and industries, it’s a buyer’s market, so leverage it and don’t settle.

Onboarding

Measured, multi-week onboarding doesn’t cut it when hiring thousands at one time. How can you streamline the process?

Use a “speed dating” model. Allow groups of applicants for similar jobs to familiarize themselves with the end-to-end process in a few hours by moving quickly through the main steps or stations. Then, assign a given cohort to specific coaches for more detailed on-the-job training.

• Show short videos rather than live demos or blend videos with live learning. Note that videos don’t have to be professionally done to convey key points. Think TikTok, not Ken Burns. Use a tripod and your iPhone.
• Update your critical job aids. Simplify them to highlight the common, critical, and catastrophic–the “must-knows and dos” for the job. Think about how employees will use the job aids. Should they be laminated or posted? Should they only be online? Ensure they are multi-lingual if needed.
• Make it easy to spot coaches or team leads through clothing, like a colored cap or vest or a large badge. Post visible “Ask Me” signs on the tops of the coaches’ workspaces.
• Appoint a buddy to each new hire for a quick-and-dirty mentoring program.

Engagement and Retention

Turnover is costly. For workers earning $30,000 or less, the typical cost of turnover is 16% of annual salary, or $4,800. For workers earning less than $50,000 annually, average cost of replacement is 20% of annual salary, or $10,000. Five to ten thoursand for each entry level job? Multiply that by a thousand and you can see how turnover can hurt.

Unemployment is high so getting a replacement worker is easy, right? No! Every turnover requires replacement costs like recruiting, physical or drug testing, background verification, and training.

Source: https://busybusy.com/blog/reduce-employee-turnover-cost/

Putting a little effort into retaining those you hire will save you a lot of money.

• Make your work environment positive, comfortable, and safe!
• Focus on respect for employees. Provide supervisors with tangible examples of what “showing respect” looks like.
• Offer appreciation with unexpected small perks like periodic snacks–maybe a weekly delivery of fresh fruit or some other food your employees would enjoy.
• Recognize employees during staff meetings. Make it more personal; for example, ask leaders to send handwritten notes to employees’ homes.

Development and Performance Management

Yeah, we know what you’re thinking: hire now and worry about development later. But it’s never too early to think about how you’re going to evaluate, develop, and retain that new hire. You’ve just placed someone in an entry level job; what are the criteria to determine she’s ready to be a supervisor a month from now? How can you use development to avoid turnover?

• For job positions with the biggest hiring need, develop some simple evaluation criteria. Anticipate and document how you’ll close performance gaps and how you’ll promote those who are excelling across the board.
• Hiring is harder than firing, so be thoughtful about termination. For the harder-to-fill positions, how deep are the employee’s deficits? What is the return on investment for developing that person instead? How much effort can you afford to spend in developing a poor or mediocre performer?

By the way, be on constant lookout for new hires you want to retain and/or cross-train after your demand surge subsides.

Impact on Culture

Every employee contributes to the culture, including the new hires. When you’re hiring thousands of people at one time, they have the potential to impact the existing culture. That’s not necessarily a bad thing, but no company wants to change their company culture unwittingly.

• Set the stage by showing a video on the company culture, purpose, vision, and values during onboarding.
• Enlist high-profile company leaders to visit facilities and personally welcome some of your new hires. A high touch “hello and welcome” is more meaningful than a big, impersonal all-hands. The new hires who speak to the leader(s) will tell other new hires of the gesture and that’ll strengthen engagement and loyalty.
• If the new hires are located together, physical reminders like posters and company gear such as caps or tee-shirts can reinforce the company culture.
• Invest more time with the coaches, team leaders/supervisors, to ensure they role-model the culture. They are the closest to new hires and their impact is huge.
• Identify a few key behaviors that are imperative to maintaining your culture/values and bake those into performance evaluations. Then act quickly to address those who are counter-cultural.

It’s daunting to hire thousands in a matter of months. Hiring the right people in the right numbers will answer your business demands and yield the outcomes you want, including revenue, profitability, and brand reputation. Invest a little to do it right.

Scale fast but scale smart.

Getting the Inclusive Culture You Need

No organization remains untouched by these times. The pandemic, the sweeping protests for justice, and 2020’s political tipping point affect every person, every community, and every business. We must respond or be responsible.

You want to lead your organization through this and emerge stronger. You want to be on the right side of this sea-change and tap into the culture of tomorrow. Being one of the thrivers will mean you can attract the talent and customers you need in the future. So you’ll apply all your leadership talents to this challenge, just like all the other challenges you’ve faced.

Wrong. Here’s the first hard truth: To do this right, you will have to UNLEARN some of the behaviors that got you this far.

Don’t wait.

Act. Don’t wait until you have the perfect plan. Nature abhors a vacuum, and so do employees. They will fill in an empty space. If you say and do nothing, or wait too long to plan a response, they will assume you agree with the status quo or don’t care. And by the way, saying, “We are going to do something – stay tuned” is doing something. Just don’t do NOTHING.

Don’t talk.

Listen. Don’t say your organization celebrates diversity. Ask, “Does our organization celebrate diversity?” Don’t say you are putting health and safety first. Ask, “Are we putting health and safety first?” You might have departments and task forces and employee surveys on this stuff. So what — assume you have a problem and find out what it is.

And this is critical: Make it safe for employees to answer the questions and ask their own. If they think there will be consequences for making their bosses uncomfortable, you will hear nothing, learn nothing, and accomplish nothing. So say it, straight up: “No one will be fired or demoted for speaking up.” Also, give people several channels of communication – live and face-to-face, by anonymous forum, by survey, and via small groups or task forces. Capture what you’re hearing, synthesize it, and then distribute it for feedback. Say, “This is what we’re hearing. Are we getting it right?” Then listen again. It’s a cycle, not a task to be checked off.

Tap into the positives of a grass-roots change.

Wanting to be heard is innate. Forming community is natural. Think about protests and social movements – people march to be seen and heard, and they work on causes to create change together and feel like a part of something big. Simply put, these things activate feel-good chemicals in our brains. Do this for your business, and your employees will feel good about your culture. You will create unity around your organization, your brand, and your mission.

Don’t fix.

Disrupt. Changing culture is like changing the course of a river. You have to really want it, because it takes dynamite. It’s messy and confusing while it’s happening.

But the ugliness of the disruption is good – it’s a signal to all that you mean business. This is not just about memos and posters and procedures – they’ve seen all of that. This has to look like nothing they’ve seen before. It’s Opposite Day. How do you usually talk to everyone? What words do you use? Where do you meet? How does it feel? Don’t do any of that. Say or do things they don’t expect to set the right tone.

Then use that dynamite. When you hear what’s wrong, go after it. That looks different for every problem and every organization. Use your sounding board to guide you.

Don’t lead.

Facilitate. As you figure out significant actions to take, let people step up and lead, based on their skills and passions. And then follow; ask what you can do to advise, clear a path, and make things happen. And then lead by example. Show employees you are taking concrete and personal steps toward the culture you are defining together.

Don’t celebrate.

Never stop. Don’t declare victory and disband the change team. Assume there is always more to do. Make the effort permanent. Keep listening and learning. Forever. You can celebrate, but celebrate progress, as defined by employees and experts. Celebrate growth, and then keep growing.

So here are your new leadership behaviors, for a new culture:

Act.

Listen.

Disrupt.

Facilitate

Never stop.

I recently realized our Founding Fathers were among some of the first organizational designers. The comparison stuck out to me while I’ve been learning about Constitutional Law through an online class at Yale. Don’t believe me? Indulge me for a minute or two and I’ll explain.

An organization’s structure can either enable or block change. If you want to institutionalize change and make it sustainable and successful, then your organization’s structure must facilitate the behaviors you ultimately want.

Our Founding Fathers knew this, and that’s what led them to scrap the Articles of Confederation (America’s original org design) and start over by creating the Constitution (our current org design – with some tweaks).

A case study in organizational design

What I learned in class is the founders’ first attempt at org design, the Articles of Confederation, focused too much on the organization. It did not focus enough on design and how people work together to deliver value to the customer; a common error made in organizational design.

For example, in the Articles of Confederation, each state was supposed to support a federal army for defense. But, there were not any “levers” or processes created to compel states to send money or troops. The result was many states did not contribute their fair share in America’s revolution against Britain. This nearly caused America to lose the war for independence.

Luckily, the founders recognized the flaws of their original org design. So, they started over by creating the Constitution with a laser-like focus on the processes that would deliver value to the customer. “We the people”.

A new design

The founders first focused on the country’s three key processes: the legislative process (Article I – The Legislature), the executive process (Article II – The Executive), and the judicial process (Article III – The Judiciary). Only once they identified the key processes did they add in details within each article about specific job functions. They also included other articles to better define and clarify jobs and functions.

The Constitution, unlike the Articles of Confederation, now had “levers” or processes in place that re-enforced the behaviors and actions the founders wanted from each branch and the states.

See, I told you our Founding Fathers were some of the first organizational designers! Their org structure and design have lasted more than two hundred and twenty-five years, with a few org design tweaks or amendments along the way. That’s an impressive track record!

Modern-day application

You can have the same success in creating your organization. Remember to focus on the processes and behaviors that deliver value to your customers. Define jobs after you have defined the processes; only then are you truly designing an organization that facilitates successful behavior and change. Hopefully, one that lasts as long as the original org designers created when creating our Constitution.

Your company is about to experience big change.  I know what you’re thinking: “What a great opportunity to improve your organization design! Should we stick with a functional structure or experiment with a matrix? Hmm…”

Well, maybe not. But maybe you should! A change is a great chance to examine your organization’s structure. If you’re thinking about a new model, consider reverse-engineering your design. Start with the customer’s perspective.

• What would your customers recommend? Do you know?
• What is your customer experience journey? Do you know where you deliver excitement, confidence, trust, or other kinds of value?
• What problems do your customers experience? How adept are your teams at solving them?

Chances are, you don’t have the answers to all of these questions. But if you like this approach to organization design, here are the steps I suggest:

1. Map your customer journey, include emotional peaks and common problems (by frequency and type).
2. Get the right talent, skills and knowledge to deliver delighters, and eliminate or solve problems. That means building new job descriptions and recruiting differently.
3. Define the performance management system you need to drive the right behaviors.
4. Create supporting business rules and processes.
5. Empower your customer-facing work teams to meet customer needs and enable the outcomes they want.
6. Follow the same steps to redesign your support functions. They must serve your customer-facing teams – their internal customers.

Organization design shouldn’t be about boxes on charts or what makes sense historically.  Focus on what delivers value, and you’ll build the optimal structure.

First, the good news: retail sales picked up in December driven by improved demand at car dealers, Internet retailers, furniture stores and building materials outlets. But sales continued to decline at department stores, restaurants, and electronics/appliances merchants.

Retail is undergoing the biggest transformation in decades. Most department and specialty store operators announced terrible holiday sales and negative comps. As reported by CNBC, RetailNext found that, despite a spike at the end of the holiday season, sales and traffic fell in double digits for many brick and mortar retailers. But this isn’t a seasonal problem.

America is completely over-stored. According to Howard Davidowitz of Davidowitz and Associates we have three times the retail space per person of the United Kingdom, Japan or Canada. CoStar estimates that over one billion square feet of retail will be closed or converted in the coming years. Over $50 Billion in real estate debt on retail stores is coming due in the next eighteen months; this is in the context of a rising interest rate environment and low economic growth (no more than 3% of GDP).

Retail experts expect tens of thousands of stores to close in the coming years. These are some of the store closings announced just this month:

• Sears will close another 104 stores, laying off 4,000 employees. They have closed more than half their stores since 2011. Roughly 80% of remaining 714 leased Kmart Stores and half of the 386 remaining Sears stores will come for lease renewal in the next five years and will likely be shuttered.
• Macy’s is closing 68 stores, laying off 6,800.
• Limited (owned by Sun Capital Partners) is closing all of its 250 stores, and will probably liquidate merchandise online.
• Abercrombie & Fitch will likely close up to 50% of its remaining 745 leased stores over the next 18 months, as leases expire.
• American Eagle is expected to close 185 stores over the coming year, as leases expire.

Thousands of employees will lose their jobs in the ongoing shift from brick and mortar to online retail. Even Walmart, once expansionary, is now closing stores in favor of investments in online retailing. Walmart spent $3.3 Billion to buy Jet.com, a money-losing online retailer that is barely one year old. And why not – online retail represents only 10% of the retail market and is expected to climb to over 50% in the next fifteen years. Amazon just announced they will hire another 100,000 employees in the US over the next 18 months. Retail sales are systematically shifting online and the biggest beneficiary of that trend is Amazon and any retailer that gets ahead of the trend.

Retail companies need a proven, disciplined approach that delivers results.

So what does that mean? First, make hard decisions quickly. Uncertainty is the retail leader’s greatest enemy. It is more important than ever for retail companies to have a plan to steer through this tsunami of a marketplace.

To do this, leaders must be certain. Align the entire management team around a common vision and strategy, and do it with speed. Playing catch-up is not good enough, as many retailers have discovered the hard way.

Once you have a well-conceived plan and your leaders are aligned, create momentum. How do you create momentum across your entire company? There are two essentials.

• First, focus on your early adopters. Get them engaged and working toward the new way of doing business. Yes, you will need the entire company behind your changes, but don’t try to win every heart and mind at first. Ironically, you’ll move faster if you identify and deploy influential people, ate every level, who will adopt your change and get moving.
• Next, make the change feel familiar, controlled and successful to employees. They have to feel safe and confident of success, or you’ll get nowhere. Moreover, research shows we must create momentum within 90 days of launching a change – again, speed is of the essence.

So management needs more than a plan; they must engineer momentum by using the right people and launching the right activities. In a vacuum of direction, employees are uncertain and afraid; lack of certainty will make any initiative fizzle.

Strategize fast, align and get on-message, and create momentum. The whole marketplace is changing forever, but the swift and strong will survive.

Christian is Vice President, Consulting for Emerson Human Capital. Christian has led enterprise-wide transformational retail consulting projects for Gallup and Accenture and worked in global development for Walmart and Metro AG.

There is no one best model for a learning and development function, but there is a best model for your organization.

In any company, L&D interacts with other internal entities according to certain rules: who has decision-making authority, what the roles and responsibilities are, and who owns the money for training development and delivery. So what are those entities? It could be functions within a business – say, Supply Chain or Sales. For a global corporation, it might be geographic regions – North America, Europe, Asia/Pacific. In a consulting company, it might be major service offerings, like Audit, Tax, and Advisory. In a very large company, the components might be a matrix that crosses both regions and functions or offerings.

Whatever the components, your L&D organization falls somewhere on a continuum of authority and centralization. I’ll talk about the pros and cons of structures along this continuum.

The Centralized Model

How It Works

L&D planning and decision-making are driven centrally. Let’s say Jack Lerner is the head of the L&D function for a consumer products company. Jack has a training budget and a team to build a curriculum and courses for each of the functions. He and his team of direct reports are responsible for onboarding, compliance, and leadership programs that cross the functions.

Jack works with each business function to understand its training and development needs. He then looks across all the existing curricula to see whether there are materials or courses that could be leveraged. If Jack can’t find anything, he works with instructional designers – who might be part of his team or a separate service – to build courses the function needs.

Jack prioritizes course development according to the strategic needs of the overall business. For example, the Rental function might be new, and therefore have a heavier need for development than the very mature Manufacturing function.

Why Use This Model

Centralized models are efficient. Jack will have a good view of what is already in the curriculum and what the gaps are. This model reduces redundancy; without this model, each function tends to build its own courses though another function might already have it. A centralized model fosters standardization of content and processes. The model makes it easier to ensure that all training programs are aligned with the strategic objectives of the company rather than the sometimes conflicting needs of each area. Jack gets his budget from the company overall and usually has the authority of how to allocate funds.

Common Pitfalls

If the other entities in the organization aren’t communicating well with Jack or if they don’t have a good understanding of learning and development issues or if they try to circumvent the centralized function and develop training on their own, they risk creating training that is disconnected from the goals of the business. If Jack’s team isn’t large enough and/or skilled enough, they can be too slow and too removed from the business to be useful in a fast-paced functional area.

The Decentralized Model

L&D planning and decision-making reside in the business components. Jack might have responsibility for programs that cross functional areas, such as onboarding and compliance. In smaller companies, these programs might be handled by HR with little or no dedicated L&D support. In either case, some cross-functional programs are typically still held centrally in the decentralized model. The rest of the learning professionals are deployed to the functions. Each reports to the function’s leadership and develop programs specifically for that function.

How It Works

Let’s say that Alicia is responsible for the Manufacturing function’s learning program. Each fiscal year, she and the VP of Manufacturing work on the training priorities and budget to train the professionals. Alicia then partners works with her team to develop the Manufacturing training program for the year. She is aware of the central training that is impacting the people in her group, but has very little visibility to the training is being built in any other business unit.

Why Use This Model

Decentralized models can be very effective and targeted for the business. There is less coordination, as Alicia has a clear reporting relationship only to the function she serves.  With the Manufacturing team as her focus, she can respond quickly to every request. Her budget is allocated by Manufacturing, annually.

Common Pitfalls

Because Alicia doesn’t know what the other functional leads are doing, she won’t realize that, for example, each of them is building a course on communications. That means wasted development dollars. Each function must also prepare facilitators to deliver the training. And, and in some areas, they might not have enough learners to make a full class. Alicia might not know there’s a new and innovative program Luis is building for his function, so she won’t take advantage of his best thinking. Finally, since Alicia’s L&D team is relatively small (it might just be Alicia, in fact), she is less likely to grow as an L&D professional.

Finally, in the middle of the continuum is the Balanced Model.

The Balanced Model

In this model, L&D planning and decision making are driven through a central function with significant partnership from the business. Jack has responsibility for the company’s cross-functional curriculum. The rest of the learning professionals or HR business partners are deployed to the functions. They are responsible for ensuring function-specific training is built. They own the functional requirements and the outcomes.

How It Works

This is the most matrixed model. All parties must coordinate, collaborate, and communicate for this model to work well. Jack probably owns curriculum that impacts all employees. This might include onboarding and compliance training as well as professional, leadership, and/or consulting skills. Jack also owns the company-wide training schedule, and the learning management system and other development and delivery technology.

The business partners or functional designees are responsible for understanding and representing the needs of the business and the functional and on-the-job skills that need to be built. Together, the crew works to balance priorities and build an effective and efficient curriculum.

Why Use This Model

When implemented well, a balanced model represents the best of both worlds. There is a deep understanding of the business married with standard processes, tools, and governance. This model is both effective and efficient, particularly when it works within a clear governance structure.

Common Pitfalls

On paper, it seems like the Balanced model should be the nirvana of organization structures, but successful implementation is tricky. It requires all parties to communicate and collaborate in good faith – weighing the needs of each part of the business with the company overall. If Luis decides to create custom communications training for his function, even though there is a company-wide communications course, the model loses some of its value.

These three models are common examples of many possible variations. Organization structures are sometimes more fluid in practice than in design. Think about which L&D organization structure you have, whether it’s functioning as designed – to take advantage of the model – and whether it’s aligned with your company’s overall objectives.