If the predominant structure of your organization is still focused on functions and divisions and you are vested in the long-term viability of your organization, then as a chief human resources officer (CHRO) or chief people officer (CPO), you may want to rethink its value in this swiftly intensifying digital age. Digital transformation is more than just about emerging technology and technology modernization. It involves an entire reconsideration of the organization’s operating model, part of which concerns rethinking the organization’s structure.
In the relentless migration from analogue activities to digital automation facilitated by emerging technologies and paradigms, a key question any lead HR practitioner must answer is, “How do I organize the people of this organization to best produce increasingly digitally enabled value for our customers?” If the answer reflects old organizational paradigms such as functions and divisions, the savvy chief operating officer (CEO) may want to check the CHRO by asking, “Why are we maintaining old organizational paradigms?”
Sure, there might be a western cultural affinity for divisions and functions, but using divisions and functions as a way of organizing work is a 100-year-old model; function and divisions were formulated decades before the development of office automation in the 1960s, not to mention a century before revolutionary technologies such as distributed ledgers and the Internet of Things (IoT). They therefore cannot help but be anachronistic relative to the realities of the needs of digital organizations that demand flexibility, experimentation and collaboration rather than rigidity, detailed planning and bureaucracy.
If only digital transformation in the interest of maintaining the market relevance of the organization was as simple as reflecting on organizational structure. The new world of digital work also demands a rethink about the balance between skillsets and mindsets. Whereas skillsets have been and will continue to inexorably be the target of automation, there currently is no machine that has the capability to automate mindsets. This means that in an era of increasing focus on the difference between humans and machines, having the CHRO emphasize skillsets relative to mindsets positions the organization extremely well for downstream redundancy in an increasingly digital workflow context.
So where can the CHRO seek inspiration? Perhaps they can look to the vibrant and growing community of digital native organizations (DNOs)—organizations born in the modern digital era. DNOs focus on the mindsets of highly skilled people, where top skills are tablestakes rather than absolutes. DNOs are about innovation, and they tolerate mistakes while emphasizing collaboration by means of team structures that change as the market and product demand changes. DNOs have an entirely different way of thinking of organizations beyond mere jobs and bureaucracy—the latter terms incidentally both originating in the 19th century.
But it is certainly not all as simple as this; many traditional organizations have regulatory requirements to meet, which sometimes constrains their ability to change. Unfortunately, staid structures and management paradigms significantly compromise the sustainability and competitiveness of traditional organizations relative to the much more agile DNOs, and this will still need to be addressed somehow.
It is also not to say the organizational knowledge of traditional organizations should be relinquished relative to all that is new and working for DNOs. Rather, it is about organizations keeping abreast of two things: What it takes to inspire and motivate a modern generation of workers relative to older workers to co-create digitally enabled value for the organization’s customers and realizing that change impacts every dimension of traditional organization that cannot be ignored if the longevity and attractiveness of the organization to newer generations of investors and workers is of interest.
Ultimately, although organizational structures may be lagging digital transformation, looking into what DNOs are successfully doing with respect to people leadership may be just the catalyst human resources departments need to re-energize their disciplines for the 21st century.
Editor’s note: For further insights on this topic, read the authors’ recent Journal article, “It Is Time to Stop Haunting the Ghost in the Machine!”, ISACA Journal, volume 5 2022.
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