Reorganizing part of honeywell: From strategy to structure

The authors report on a study that used tactical response planning and participatory decision-making to reorganize a large human resources department during a time of change.

Reorganizing Part

of Honeywell: From Strategy to Structure Rosabeth Moss Kanter John D. Buck

INTRODUCTION

Most strategic planning models stop short of considering the model’s organizational implications or applying them to the activities of any particular functional area within an organization. This article illustrates the tactical side of planning. We show how one department within a major corporation carried out a participative study of its own activities and future objectives and used that study to reorganize the department (with an eye on the future) and put it in a more strategic position. In 1982, the Employee Relations (ER) department of the Defense Systems Division (at that time an 80-person unit of Honey-

well’s largest division) undertook a study of its own functioning. One of ER’s motives for the study was to create a better link between human resources planning and strategic planning for the business as a whole. The planning framework was one that treated ER as a total organization operating in its own “markets” and serving its own set of customers. Most widely used planning models and organization-design models concentrate on the total business unit. But business unit strategy and the overall structure of departments, functions, or groupings must be matched by appropriate (aligned) strategy, structure, and tactics or activities in individual departments or operating units. This kind of

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Exhibit FIVE l l l l l

PRINCIPAL

REASONS

FOR INITIATING

The organizations now all, flexible;

emerging they will

as successful will need to be able to

bring particular resources together quickly, on the basis of short-term recognition of new requirements and the necessary capacities to deal with them. They will be organizations . with a whole host of sensing mechanisms for recognizing emerging changes and their implications. The balance between static plans-which appear to reduce the need for effective reaction-and structural flexibility needs to shift toward the latter.

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DEPARTMENT STUDIES

Transitions in leadership Emergence of new issues Internal growth Adjustment to changes in related areas Organizational effectiveness (customer and employee

tactical or response planning (so-called to distinguish it from the broader and often lessimplementation-oriented issues considered under the strategic-planning rubric) is increasingly important in today’s uncertain and competitive business climate -where the ability to respond quickly to a rapidly changing environment distinguishes successful from less-successful organizations. In The Change Mastem (Simon & Schuster, 1983) a study of those people and organizations able to anticipate the need for productive change and lead it, Rosabeth Moss Kanter asserted: be, above

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The tactical model is based on the assumption that every department or group within an organization needs to engage in regular studies of its own structure and activities to be sure that it is aligned with the overall business strategy, that it is responding effectively to its internal or external customer environment, and that it is flexible enough to be able to continue to define new tactics in the face of changing circumstances. The Honeywell case illustrates how planning and organizational design models can be modified for and applied to the department level of organizations. Honeywell’s tactical approach used participative processes to

sensitivity)

guide the planning study and thus ensured rapid and effective response to change. Participation also helped establish a base for continuing structural flexibility. The model used by Honeywell’s ER department is generalizable to all kinds of staff functions and, with some modifications, can be applied to manufacturing and other line departments as well. It is not only the nature of the study (the data collected, the methods used, the model supplied) that is noteworthy but also the process of participation that was used and that allowed for swift implementation (change) without creating “losers.” The study, carried out quickly and cost effectively, shows that such undertakings do not have to be expensive in either time or resources.

REASONS FOR INITIATING STUDY

A DEPARTMENTAL

An organization is a living system constantly in motion. Any way of organizing is a temporary statement of arrangements that makes sense in the context of current size, market conditions, the actions of related organizations, and the issues that must be managed. Effective organizations are thus subject to continual adjustments and readjustments more frequently and rapidly when the surrounding environment is dynamic rather than stable. These general principles hold true for departments or operating units within organizations as much as they do for the organization as a whole. Ideally, then, a department study to

Rosabeth Moss Kanter, currently on leave from her position at Yale University (where she is professor of sociology and professor of organization and management in the School of Management), is chairperson of the board of Goodmeasure, Inc., an international management consulting firm specializing in strategies for innovation, productivity, and effective human resources management. Dr. Kanter’s latest bestselling boo&, The Change Masters: Innovation for Productivity in the American Corporation (Simon b Schuster, 1983). is a selection of the Fortune Book Club, the Macmillan Book Club, the AMA Book Club, and the Executive Program. Her 1977 book, Men and Women of the Corporation (Basic Books), received the C. Wright Mills Award for the best book of that year on social issues and was a selection of the Book-of-theMonth Club and the Fortune Book Club. One of her Harvard Business Review articles, “Power Failure in Management Circuits,” was a McKinsey Award winner for 1979. She is also the author of Life in Organizations, and five other books as well as over 100 articles in books and scholarly journals. A Tale of “0”: On Being Different, an audiovisual production about discrimination, which she conceived and directed, is in use in over 2,500 organizations worldwide and has been translated into French, Swedish, Dutch, and Spanish. Dr. Kanter received her B.A. from Bryn

identify adjustments in organizational arrangements should be undertaken periodically from a position of strength and not in response to specific problems. There are five specific circumstances that can provide the impetus for a department study (as shown in Exhibit 1). 1. Transitions in leadership. Any changes in leadership provide an opportunity for departmental self-examination, for three reasons. New leaders need information rapidly on the whole function. Joint reflection on department and organization mission can provide a context for l

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Mawr in 1964 and a Ph.D. from the University of Michigan in 1967. She is the recipient of many national honors, including the Guggenheim Fellowship, four honorary doctoral degrees, and “Woman of the Year” awards from three national organizations, including the lntemational Association for Personnel Women in New York. Dr. Kanter has been a director of the American Leadership in Houston, the NOW Legal Defense and Education Fund, the Education Fund for Individual Rights, and the American Sociological Association, as well as a founding member of the Committee of 200, an organization of top women business leaders. She was also a member of the 1978 American Assembly on Corporate Governance. Dr. Kanter was the consultant who worked with John Buck on the reorganization project at Honeywell.

team building. Transition offers an opportunity for reexamination, since the new leadership has less of a stake in tradition and is not caught in the web of established expectations. 2. The emergence of new issues. Any way of organizing reflects the issues that were current at the time the organization chart was developed. As new issues emerge, they raise questions about where they fit into the existing array of functions and activities. Even if they can be tacked on to existing department units, as new issues accumulate, they begin to raise questions about the appropriateness of the current mission and charters. As new isl

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sues arise, they may compete with existing “products” or “services” for the attention of department officials, and in some cases they may overshadow existing issues to the extent that old “products” begin to fade. Not only does mission and purpose need to be reexamined in response to important new issues, but the organization itself may need to be rearranged (since an organization chart is one way a department has of telling constituents about what it finds most worthy of high-level attention). 3. Internal growth. Success can drive a department reexamination as much as the existence of problems, because various forms of internal growth may bring about the need to reconfigure activities. Growth in staff may create the need to add levels of management to handle more people. Growth in function or activities, each of which initially may simply be added to the organization as another subunit reporting in to the department head, may eventually force an examination of span of control if there is overload at the top. As new activities are added, it may be important to consider grouping for maximum interaction, transfer of skills, and efficiency of communication. To the extent that growth makes it possible to afford specialists, the question of coordination between and communication among specialists becomes important. Finally, growth tends to require more management and less professional activity on the part of department leadership, who may be playing dual roles as both professional experts representing a discipline to their own managers and peers and as internal managers responsible for supervising people. The need for more management brings up organizational issues that must be resolved. 4. Adjustment to changes in related areas. No department inside an organization works alone: it must take into account what other departments are doing, so that its own activities are well coordinated with them and so that it can handle the issues of territory and jurisdiction that arise when other units offer

“competing” services. Staff departments, in particular, are subject to these adjustment pressures. They must match what they “offer” in “products” and “services” with what their “customers” in their “markets” (in the rest of the organization) want and need. And they must also handle “competitors” from elsewhere in the organization-or even, occasionally, from outside- who may be handling a piece of what the staff department thinks is its domain. (Competitor is not the best word to use here, especially when the hope is that there will be collaboration between units working on similar problems. In this context, competition describes that mix of collegial and advisorial interaction that occurs among professionals.) In the case of very large organizations, the competition may not be among related functions at the same organizational level, but rather between high and low levels of similar departments: a corporate unit compared with a divisional unit, for example. One’s decision to offer a particular kind of training or to develop a particular product raises questions about what activities are appropriate for the other. A line manager’s formulation of his or her own program in a particular staff area raises questions about the way the staff department should respond to such initiatives: Provide assistance? Wait passively and do nothing? Applaud, and help other departments develop their own programs? Because any department exists in a system in which other departments are also making decisions and choices, there is a need-quite apart from sensitivity to servicing its customers-for the department to monitor and adjust to changes made in the neighborhood in which it is operating. 5. Organizational effectiveness. General concerns about organizational effectiveness prompt a healthy department to continually monitor its market and employees to make sure that the department is sensitive to the needs of both groups and aware of informa-

tion that might need to be taken into account in planning for the future. A survey of department clients or constituencies and employees does not necessarily mean that there are problems or that changes will be forthcoming. It is simply good practice for the department to be aware of how well it is doing and to make sure that lines of communication are kept open. It is important to look for two kinds of indicators: effectiveness of current functioning and department articulation of organizational goals (the alignment of the department plans with more general business plans). Strategic planning at the departmental level is just as critical as such planning on the organizational level in insuring organizational effectiveness.

CIRCUMSTANCES HONEYWELL

SURROUNDING

THE

STUDY

All five of these circumstances were involved in the DS (Defense Systems) Division Employee Relations Department Study at Honeywell. A number of events contributed to the director’s decision, with the agreement of his staff, to initiate this study two months after he was appointed. He felt that the study would not only serve the immediate needs of the leadership transition but would also make it possible to reorient the department’s mission and structure. The department was at a critical juncture where the decisions that would be made about how it would organize for the future would determine its effectiveness and business contributions. It was clear that there were a number of new issues on the horizon, several of which were already embedded in rather recently organized units within the department but others that had still not found their home in Employee Relations. Five issues in particular had emerged that did not seem to fit into traditional employee-relations slots: health and wellness, and medical and counsehng services; ergonomics; reintegration of employees

John D. Buck is director of human resources for Honeywell’s Defense and Marine Systems Group, Avionics Division, in Minneupolis, Minnesota, He joined Honeywell’s Avionics Division in 7977. He spent his first three years working in several employee relations functions and in 1979 became manager of employee relutions for the Aerospace and Defense Group staff and field sales organization. In 1980, Mr. Buck became director of employee and community relations for the Process Management Systems Division in Phoenix, Arizona. In 1981. he became director of employee relations for the Defense Systems Division. He assumed his present position, director of human resources for the Defense and Marine Systems Group, in 1984. Mr. Buck holds a B.S. degree in business administration from Munkuto University. He also completed the Executive Development Program at Northwestern University in Chicago, Illinois.

into “one work force”; safety considerations; and environmental management. To the extent that these issues were already represented in functions within the Employee Relations department, an overload at the top was created because all functions reported to the director, whose span of control continued to grow. Other managers also found new activities added to their areas of responsibility and, thus, the overload on management was repeated at lower levels. At the same time, the

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director played a dual role as manager of a line department and as counselor (on peoplerelated matters) to the vice-president/general manager of the division. Dual roles were replicated at lower levels, where Employee Relations managers served as both advisors on line functions and as managers of their own line organizations. The growth that came with the department’s success and with its attraction of new issues raised many questions about how to organize for effective internal management. Recent developments at Honeywell and their manifestations in new DS activities also raised questions for the Employee Relations department. Honeywell had recently begun to focus on participative management, and had asked all departments to become more sensitive to participation. This had several implications for the Employee Relations department. First, what should the role of employee relations be in a participative environment? Should it take the lead and serve as a model? Should it provide services to line managers trying to change their own practices? Should it get employees involved in making decisions about their own environment - traditionally an employee relations prerogative? These general questions took specific form in DS because the division had five employee/manager task teams dealing with work-force issues and reporting to a steering committee made up of the general manager and his staff. The steering committee had completed a planning process and had issued a mission statement with objectives and procedures for managing quality-of-work-life issues at DS. Over the long run, the steering committee planned to charter task teams on matters affecting many line departments, including Employee Relations. But Employee Relations was the first to have to manage the new process whereby employees would contribute to the design of compensation, appraisal, or communications programs. At the same time, the Employee Relations depart-

ment, and particularly some of its key staff, were expected to service the steering committee and assist with planning and development of even more participative and innovationproducing activities. Therefore, the department director wanted to make the best decisions concerning both the traditional and new role of employee relations under the altered circumstances. The timing was also right for a departmental study because of the general concern in both the aerospace and defense group, of which DS was a part, and within the corporation that Employee Relations was well-aligned and well-integrated with business planning. DS’s success and rapid growth meant that it was likely that DS’s shape as a unit would change in the years to come, and employee relations would need to change right along with - or even ahead of - the division itself. Employee Relations needed to take the lead in anticipating the demand for its services and in meeting the challenges of change. Finally, though to a lesser extent, the study was stimulated by an interest in making sure that Employee Relations lived up to the principles it espoused to the rest of the organization. If participative management were the watchword of Honeywell, then the Employee Relations department should scrutinize its own functioning to be sure that it met the standard. To the extent that career development was a prominent issue at DS, ER was concerned about the career paths open to its own members.

CRITERIA

FOR A DEPARTMENT

STUDY

If a departmental study is to be productive and to have managerial support, it should meet these five standards: 1. The data base should be broad. The study should involve a scan of information on the department’s environment from as many sources as possible -not only from the standpoint of issues, but also from the stand-

point of related activities and their relevance to the department’s functioning. Information of some sort should be gathered on all of the department’s markets, constituencies, competitors, and neighbors. Future-oriented information (such as business plans and environmental scans) should be used along with data on the impact of current activities. 2. Analytical tools should use objective, agreed-on standards. Models and techniques and criteria for organizational design should be agreed on in advance of collecting data, so that there are decision-making rules and methods for analyzing findings. 3. The study process itself should help move the department toward its desired goals. A departmental study is not an external activity but rather another example of how the department does its work. Therefore, the organization of and process for the study should come as close as possible to the principles by which the department wants to operate. Key leaders should be involved as full participants and decision makers in determining the shape of the study, in reviewing results, and in participating in successive iterations of analysis and recommendations. They should also help construct processes for involving other employees in the study and in simply being aware that the activity is going on so that they can contribute as appropriate. Team building and enhanced communication should be a by-product of a departmental study in addition to its specific findings and recommendations. 4. The human dimension of the organization needs to be protected. In order to effectively carry out a departmental study with full ownership of results and commitment to carrying them out, people in the department must not feel personally attacked or evaluated. To the extent possible, only functions and activities should be under scrutiny, not the performance of individuals. Naturally, individual performance data will come to light, and it is impossible to fully separate an activity from the person carrying it out. But prob-

lem performers should be dealt with independently of the study process, and people should examine their function with the security that they personally will still have a job even if their function changes shape. It is important to promise at the outset that changes will be minimal in the beginning and phased in over time, so that people will have time to readjust. 5. The study should be speedy and cost effective. There are several reasons for this standard, in addition to the obvious benefit to an organization of not squandering resources. Speed is important because of the dynamic nature of an organization; many findings may only remain relevant for a short time, and if a department waits too long to make adjustments, the moment to be strategic and anticipatory may pass. A long study increases staff anxieties, even if they have been given assurances. It is difficult for people to commit themselves to innovation or change while they are uncertain of not only their own future but also of what shape the department will take-whether authority relationships will remain the same, whether they will be working with the same set of people, whether priorities will change, and so forth. The sooner these matters are resolved, the easier it is for people to work effectively. Finally, ownership of and commitment to change calls for channeling resources toward specific activities and not toward merely examining them. If we put these criteria together, it becomes clear that a departmental study with action consequences cannot afford to carry out elaborate surveys, collect much original data, or wait for the results of perfect research. Instead, the study must balance considerations of staff involvement and speedy returns with the need for a broad reach of areas examined. A shorter, more intensive period of study and examination that touches base with a range of constituencies and uses analytical tools to raise questions and make estimates is likely to be the best method.

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Current organization chart

Current

mission

(jarmary

OF ER DEPARTMENT

2 STUDY

Internal department considerations

7982)

about management, operations, and

New department mission and charter

1982) ________________----- _____________--- ________________________________________------- ____________________- _______________________- ______ (April

MODEL

Exhibit

THE DS EMPZOYEE RELATIONS DEPARTMENT STUDY

The specific objectives outlined for the DS/ER study included: measuring the effectiveness of the Employee Relations department; defining its mission as a function in the Defense Systems division; defining its working relationships with the division’s steering committee, division task teams, and external organizations; and improving ER’s performance, effectiveness, and image in the division-that is, moving the operational to the strategic mode. The study team consisted of the director of Employee Relations, an outside consultant, and the eight managers on the director’s staff-three employee relations managers from the division’s three operations (generalists) and five specialists out of the division office. The study-team members had a general idea of what standards the Employee Relations department would have to meet in five years. Excellence, as perceived by management and employees, was the first and clearest goal. They wanted an ER department that would be playing a key role in profit, would be proactive, would play an advocacy role for employees, would respond to linemanagement needs, and would contribute to employee self-esteem. Furthermore, they wanted to implement the “single work force” concept (consistent treatment of unionized and nonunionized employees) and to make sure that there were career paths for Employee Relations personnel to line functions and vice-versa. Finally, they felt that they would have succeeded if line management would be able, in that period of time, to conceptualize human resources issues and understand their importance to the business. The general model of the input and output of the DS/ER department study is presented in Exhibit 2.

DATA GATHERING

AND DATA ANALYSES

Ten kinds of analyses were carried out (see Exhibit 3). The analyses had to balance assessment of current functioning with awareness of future directions - that is, respond to the department’s current customer environment as well as organize that same environment to lead it in new directions. Analyses also had to balance questions of strategywhich activities to carry out to best meet future objectives-with questions of organization - where to put these activities, how to group and coordinate them, and how much consistency of policy and direction to have across them. Furthermore, all important aspects of the environment had to be scanned and relatively quickly: business priorities and related human resources plans; the department’s own boss and other higher-level authorities; division management in general; various levels of employees; organized special interest groups of employees (for example, a black employees’ organization); heads of task teams working on empIoyee-relations issues; external bodies such as councils and committees in the corporation and at the group level beyond the division; related areas carrying out activities that might conceivably fit better in an employeerelations department; . the department’s own employees. Data on the environment included analysis of department’s customers, clients, competitors, neighbors, constraints under which it must operate as imposed by its own management, and external changes that affect the department’s role. For DS/ER, there were five sets of guiding questions: 1. Division business plans. What are the implications of the business plan for the ER l

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Exhibit 3 ITEMS

INCLUDED

IN DEPARTMENT

STUDY:

DATA

Item areas (manage-

Questionnaire

Experience with and needs for the department (key clients)

Priorities for the department needs (company)

Current

with external and future

Other companies’

Carried out by:

and business

bodies

activities/functions

structures/practices

to management

sample

Director

Sensing sessions with 100 employees in small groups Interviews with minorities Interviews with task-team chairs, steering committee

Consultant

Interviews with VP/general manager Review of divisional and corporate HR plans

Director Total staff

Structured

analysis

Total staff

Structured

analysis

Total staff and consultant

Director and consultant

Visits to other companies

Total staff

Structured

analysis

Total staff

Staff concerns and recommendations

Individual

interviews

Consultant

Department employee recommendations

Unit meetings

Policy

centralization

Organization

or decentralization concerns and

design

Development

department role? How will future organizational changes affect and/or be guided by the

ER department? 2. Specific clients/constituencies. How is the ER department viewed -as a whole and in part-by its primary clients, management, and employees at various levels? What are the needs and desires of these clients for future ER department services? 3. Human resources planning issues. What are the critical human resources issues for DS and for Honeywell, and how does this affect the ER department’s role and operations? What issues have receded or are under control, and tention?

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METHODS

Method

Effectiveness of department ment perceptions)

Relations

AND

what

4. Related,

issues

require

neighboring

special

functions

at-

and

Total staff with own employees of 12 possible charts

Consultant

overlapping territories. What activities are currently undertaken elsewhere that might logically fall under a new ER department, in light of other changes? What kind of relationship does ER have with related functions, and what kind should it have? How should it relate to the steering committee and to task teams on employee-relations issues? 5. Counterparts in Honeywell and crossdivisional bodies. How does and should the Employee Relations department conduct its relationships within the Minneapolis area where there are a large number of Honeywell facilities? How does and should the ER department conduct its relationships with the group, corporate, bodies?

and other

cross-divisional

THE

TEN

DS/ER

ANALYSES

CONDUCTED

BY THE

STUDY

The ten analyses designed to provide answers to the guiding questions began with the environment, moved to considerations of departmental activities or functions according to environmental data that was collected, and ended with concrete planning options. Effectiveness of Department (Management Perceptions)

Areas

A questionnaire was sent to a sample of division managers (approximately 25%) asking them to rate six sections of the ER department as well as the department as a whole on a oneto-five scale according to four criteria: responsiveness, ability, willingness, and effectiveness. In addition, specific comments about strengths and weaknesses were solicited. Respondents were directors, middle managers, and first-line supervisors of salaried employees. Results of this survey indicated that the generalist role in employee relations (employee-relations representatives) was one of the most highly rated in a department that was generally viewed positively. The gaps between willingness and responsiveness or ability identified in one or two of the subsections of the questionnaire made it clear that there was more demand for these activities listed in the subsections than could be satisfied. Open-ended comments also made it clear that division managers did not think the department was visible or proactive enough. Experience with and Needs for the Department (Key Clients) In addition to management views, it was important to give a range of DS employees the chance to comment on the department’s direction. Two very specific groups needed to be reached: a special interest group of

minority employees that had been voicing concerns, and those on task teams that were making policy recommendations about employee-relations issues. To reach a range of employees and to get their in-depth views, the consultants’ staff carried out sensing sessions with 100 employees in small groups of about 8 at 2 locations. There were open-ended discussions about the kinds of experiences employees had had with the department and what kinds of things they would like to see more of or less of in the future. Results here also indicated that ER was generally seen in a positive light. Employees were aware of ER’s increasing professionalism, appreciated that their input was desired (they wanted even more sensing sessions in the future), and commented on excellent communication provided about new policies. They also felt the department was responsive but overworked and understaffed, given the growing desire for more employee-relations services. Employees believed there were three major gaps or weaknesses in the ER department: (1) employee relations worked with or communicated with management more than with employees in general; (2) employee relations was “consciously not visible”-not in contact with most employees and purposely staying behind the scenes; (3) although the desire for training was strong, training needs were not being met adequately, especially with respect to managing people, managing conflict, understanding matrix organizations, and providing technical training. In addition, entrylevel people and middle managers were not adequately trained. Interviews with minorities in DS, carried out by the director, made it clear to him that a strong advocate for minority career opportunities was needed. At the same time, the consultant individually interviewed steering-committee members and task-team chairs working on the department’s project on participative management and quality of work life. In addition to her getting specific

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suggestions for department organization and functioning, she found out that there was consensus that employee relations could play a stronger role in staffing and in serving as experts for conducting these activities. Priorities for the Department Needs (Company)

and Business

Gathering and analyzing data on priorities were relatively easy because of the existence of well-formulated divisional and corporate human resources plans. The total staff reviewed the plans and paid attention to recurring, high-priority items. At the same time, the director carried out a series of interviews with the vice-president/general manager that focused on his priorities for continuing and new employee-relations activities and on which business directions might affect organization of the ER department and delivery of its services. The overall strategic direction to emerge from these analyses was a move toward more decentralization and participative management in the future, which would be guided by the ER department. Recognition of needs to improve integration of the physical aspects of an employee’s work life with other areas traditionally falling within ER’s domain (safety, health and wellness, and ergonomics) also emerged. In addition, the “single work force” concept of consistent treatment across unionized and nonunionized ranks was reinforced. Relations with External Bodies

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Because Honeywell is decentralized and because there are other Honeywell facilities in Minneapolis, where DS facilities are also located, there were a number of external bodies to which the department related that needed to be taken into consideration in planning. After cataloguing all of these councils, committees, and sister departments at higher organizational levels (group and corporate), the study staff carried out a structured analysis of

its current and desired relationships with each. They considered the frequency and kind of interaction as well as the implications of decisions made in those bodies for the DS/ER department’s policies and activities. This analysis resulted in a plan for better management of external relations, since it was found that better communication and coordination was needed among ER department staff who held membership in external bodies.

Current and Future Activities/Functions Based on their professional knowledge, the study staff made a list of all activities and functions currently being carried out by the ER department as well as all of those performed at Honeywell that could possibly fall within the charter of an ER department. These latter activities were discrete tasks specific enough to be identifiable but not so detailed as to make the list unmanageable. Approximately 40 activities internal and external to the department were identified. The consultant then prepared a set of forms for structured analysis that were filled out by each staff member both for their own areas and for all the other areas, and the consultant coded and summarized the results. The forms asked for rating of each activity as high or low on a number of dimensions that included: payoff (connection to a high-priority issue and importance to the company, division, and visibility and status of the department); cost effectiveness (level of resources required compared with those currently available); interdependency with other ER areas (overlap of territories, frequency of contact required, similarity of skills); and constraint (required by law or by company policy). Higher scores indicated that a current activity should be retained and given greater emphasis, while lower scores indicated that an activity might be deemphasized or even discarded. Similarly with external functions, higher scores indicated that these functions might be

included in the newly organized Employee Relations department. It became clear that certain functions belonged together (for example, resource development and human resources planning), that there was a cluster of low-priority items that could constitute an “employee service” section, and that a number of currently external activities might fit well within Employee Relations (for example, labor relations, public relations, the library, and the medical department). The results of the detailed analysis were used when organizational changes were eventually made. Another benefit of the structured analysis was the clear consensus that emerged among the study team. Other Companies’ Structures/Practices The study team felt that its scan of the environment would not be complete without data on employee-relations strategies and organization in other companies. Two visits were arranged to comparable units in General Electric Medical Systems and a division of Exxon. (Information was received from both of them, and a site visit was conducted at Exxon with all members of the director’s staff present.) These contacts were helpful in clarifying the thinking of study-team members and confirming many of the conclusions they had reached. At this point it was possible to use results of the external and internal scans to formulate the elements of a mission statement and department charter. At this point there was a sense of strategic direction and of what the major points of emphasis would be for the future. The focus of analysis then shifted from the environment to questions of implementation: At what level should policy decisions be made? How much centralization or decentralization should there be within the department itself? How should areas or sections of the department relate to each other? How should l

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staff be included in decisions, regardless of the activities they are carrying out? What kind of planning or coordinating bodies would be necessary? What about the people currently in the department? Where were their areas of concern, where could they move, and what kinds of changes would be feasible given current staff and capacity? What developmental or career needs would have to be satisfied by organizational changes? Given the array of strategies and activities important for the department’s future, what were the options for designing the organization chart? The next four pieces of the study gathered information that addressed these questions. l

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Policy Centralization

or Decentralization

The issue of autonomy versus centralized coordination was important because of the direction in which the division was moving. Since the department had been organized according to heads of specialty functions out of a central office and according to generalist units assigned to each of three operations (see Exhibit 5), and since operations would potentially be even more autonomous in the future, the department had to determine the appropriate level of decision making and the amount of consistency required throughout the division. Each operation might have its own flavor and thus push for differentiated versions of the same activities, even including some of those under the direction of staff specialists that might be located at the division office. With the guidance from the consultant, the staff came to the realization that a consistent divisionwide thrust, via a strategic planning committee cutting across separate employee-relations operations, was needed as well as a connection of specialist functions with each operation so that functions could begin to take on a local flavor, suitable to the environment and its business

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Exhibit PLANNING,

COMMUNICATION,

AND

DECISION-MAKING

4 PROCESSES

Staff meeting

I

Development

Staff meeting

II

Definition

I

meetings (one in

II

director/staff

Individual

director/external presentation

meetings

relations

Review of study data to date Employee concerns, recommendations

manager

to VP/general

Finalization of organization in responsibilities meetings manager

Overall values would be identified by the whole division, but daily activities would reflect the particular business operation.

operation.

Stuff Concerns and Recommendations The specific interests and needs of each DS staff member as an individual and as a professional were solicited by the consultant in individual interviews. Out of these interviews emerged a picture of what would be acceptable to or resisted by each staff member and how his or her own career development needs could be built into the organization. Department Employee Concerns and Recommendations

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and analysis of external

Development of charter (mission statement and operating principles) Criteria for changes Review of possible organization charts Definition of communication and linking bodies Clarification of centralization/decentralization of policies

Individual

Director

of study parameters

Review of study data to date Analysis of activities/functions Preliminary mission statement

Department employee each area) Offsite

STUDY

Actions

Meetings

Offsite

FOR DEPARTMENT

A similar process was carried out by the staff

Negotiation

chart and shifts

of changes in jurisdictions

Recommendations for approval organization changes

of charter

and

with DS/ER employees in individual unit meetings. Their views were sought, and these views helped the study-team members design options for the organization of ER functions that were based on the likely direction the department would take. Organization

Design

The final piece of the analysis involved developing a set of options for organizing the department, which could be discussed with the staff. The consultant developed 12 possible charts, each of which emphasized a particular value, with four recommended charts building in all of the results of the preceding pieces of the study. Several of the charts were meant to be humorous, since they played on the desire of each staff member for a dominant role in the department’s future. But the

existence of multiple options helped catalyze the final stages of discussion and provide a common focus.

DYNAMICS OF THE DEPARTMENT STUDY: PLANNING, COMMUNICATION, AND DECISION-MAKING PROCESSES

Perhaps one of the most significant features of this department study model is that it combined data gathering with participative planning and decision making. (See Exhibit 4.) The DS/ER department study was truly a joint effort, in which each aspect of the study process was defined and shaped by the staff so that there was often no break between analysis and action (making decisions). This is one of the reasons why the study ended with not only a high degree of consensus and support for the recommendations but could also be carried out in a relatively short period of time. There were eight key events or series of events intermingled with the formal data gathering and analyses. At an initial staff meeting, the director and his staff developed study parameters and made lists of relevant portions of the environment, especially constituencies and external relations, and of internal and external activities that would be analyzed. At a second staff meeting, the study team carried out and completed the analysis of external relations and developed a plan. Analysis was possible because this aspect of the study was the most detached from any of the other data sources and could be completed in this early stage. After key constituencies were surveyed, business plans examined, and the analysis of activities/functions completed by individuals, the study team met for a daylong offsite meeting to-review the study data todate. The analysis of activities and functions, summarized by the consultant, was the basis for developing a preliminary list of department areas or sections. A preliminary mission statement was drafted with key words reflect-

ing conclusions reached after examining study data. After the offsite, the staff held section meetings with their own employees, reported preliminary conclusions reached, and solicited input from department personnel. The external company visits were also completed at this time. The second day-long offsite was designed to review all the other pieces of the study and move toward recommendations that the director could consider. The study team was able at this point to write a charter (mission statement and operating principles) based on options provided by several of the staff that set the tone for the rest of the discussions. The team then considered the criteria for any changes that would be made, reviewed the organization charts prepared by the consultant, clarified the problem of centralization or decentralization of policies, and defined what kind of communication and planning bodies would be required in the new organization. Thus, agreement was reached about the general directions and strategy of the department, but the question of specific organizational changes would be left to the director. The final events in the study process were a series of individual meetings. The director first met with each staff member to finalize the organization chart and discuss shifts in responsibilities. Staff were given ample time to argue for changes in the director’s plan. The director also held meetings with external managers to negotiate changes in jurisdiction for those activities that he recommended be brought into the ER department. Finally, he presented the set of recommendations to his boss, the vice-president/general manager, for approval. The role of the consultant throughout the process was to provide a structured framework, analytical tools, an objective outside perspective, and service and advice to the director. The expertise added by the consultant in the form of models, data analysis,

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t

Resources

Human

1

Safety Administrator

Administrator

Development & Employee Communications Supervisor

Supervisor

Security

1

Personnel Supervisor

Employee & Community Relations Marine Systems Operations Manager

EEO Administrator

Minneapolis Staffing & EEO Manager

Representative

Staffs’ Employee Relations

Engineering Employee Relations Representative

I’

Representative

ll

I

@‘RESTUDY)

Representative

I-

DEPARTMENT

Program A: Employee Relations

DS/ER

5

Production/Quality Employee Relations

Relations

OF HONEYWELL’S

Employee

CHART

Compensation & Records Supervisor

ORGANIZATION

Exhibit

and organizational design skills was important but not the primary reason for her inclusion in the study team. The consultant was most valuable in conducting sensitive interviews and in getting accurate information that people might have been reluctant to give directly to the department. The consultant helped smooth negotiations among people who stood to gain or lose from structural change in the organization. In the Honeywell case, the major consultant conducted interviews with higher levels of management; several associates ran the listening sessions with division employees; and the major consultant met individually with all ER department-unit heads in order to take their concerns into account for proposals for new responsibilities and reporting relationships. Outside assistance was important in making the participative redesign process run smoothly. RESULTS

OF THE

STUDY

The department study resulted in recommendations and changes at three levels: mission and charter, organization design or structure, an.d communication/coordination/planning processes. Of course, there is rarely a direct correspondence between “market” data and subsequent organization of activities. Market data generally provide a focus and an emphasis rather than a clear picture of how to divide responsibilities and assign reporting relationships. But there were a few cases in which the results of the study did, indeed, contribute to specific organizational decisions. For example, the high regard in which the employeerelations representatives were held made it clear that the generalist position needed to be maintained. The strong desire for more training across the board made it clear that it was important to bring training resources closer to the people and therefore to decentralize both training and organizational development. Concerns about consistency between

hourly (unionized) and salaried (nonunionized) employees reinforced the need for a “one work force” concept and the desire to bring labor relations and employee relations closer together. A new charter was endorsed by the study team that included a mission statement, operational principles, and descriptions of functional responsibilities. The mission statement clearly linked the department’s desired activities with the direction of its larger environment: The [DS] Employee Relations department provides leadership for progressive human resources planning, policy design, systems, and services that are aimed at fostering productivity, innovation, and a climate of success in the workplace. We contribute to business strategy development while being mindful of the selfesteem and well-being of employees and the division’s responsibility to the greater community.

A new organization chart - a transitional structure for the department-was also developed. (Exhibits 5 and 6 show the old and the new structures.) The study team agreed that it was important to move from the existing organization toward the future one in phases. They were aware of the needs and desires of current employees, which included a preference for smooth rather than abrupt change. In defining themselves as a dynamic organization, the study team considered the possibility that another set of arrangements might be developed in the not-too-distant future. The new organization chart solved a number of important problems identified in the study; the following changes were made and are reflected in the organization chart. The director’s span of control was reduced from its high of eight, with fewer specialists reporting in. Employee Relations managers were given more scope in managing specialty functions in an effort to help move them toward “director” roles in more decentralized operations. Key priority issues were highlighted for their future implications by having those responsible for these issues reporting in to the l

l

21

I

Personnel

Security Supervisor

EEO Administrator

Supervisor

I

I

I

Employee Assistance Manager

Engineering Employee Relations Representative

I

I-

I

CHART

,

DS/ER

6

Employee Relations Director

OF HONEYWELL’S

Minneapolis Community Relations Administrator

IH

I

ORGANIZATION

Exhibit

I

(POST-STUDY)

Program B: Employee Relations Representative

DEPARTMENT

director. A temporary assignment for a minority affairs specialist was created, and strategic issues remained a separate function. Related activities were consolidated and grouped for better coordination and management; human resources planning and development were consolidated, and minor activities were grouped into an Employee Services section. The possibility of developmental assignments was created for Employee Relations supervisors and managers. This was done by consolidating functions and providing for levels of management within such areas as safety, industrial hygiene, medical, and environmental management. The transition to fuller decentralization was facilitated. A fuller role for Employee Relations managers, as managers of a series of specialties as well as the Employee Relations representatives, was one path to this goal; the other was to begin to identify staff in the training organizational development areas and the safety section that could report in to the Operations Employee Relations managers on a dotted-line basis (secondary reporting). Eventually, they could move into the operation and away from central office reporting. A third important result from the study, already started by the study process itself, involved developing vehicles for continuing communication and coordination among department staff and developing an ongoing strategic planning process. There were a number of agreements about how the department would operate in the future and what coordinating bodies would be used: A strategic planning council reporting to the director and consisting of the director, the three Operations Employee Relations managers, and the human resources planner as staff to the council. A regular Operations Employee Relations managers’ meeting. Task teams in each area headed by a member of the director’s staff. Cross-functional teams in Employee Rel

l

l

l

l

l

l

lations to improve communications and transfer of skills. . A marketing plan for better communicating the department’s services to its clients. Regular coffee talks involving the director and a cross-section of department employees. Several months after the study was completed and the recommendations approved by the division’s general manager, the Employee Relations director commented to his staff that l

The new organization has been in place for four months, and it appears to be running smoothly. Early indications are that it was a right decision. I am personally finding more time to devote to working with my peers and spending more time on the strategic aspects of my job. For the first time in 35-plus years, Employee Relations is now a member of the Labor Relations Strategy Committee. I am on this committee, ‘which has the responsibility for defining the strategies for dealing with the union and for recommending to senior management of the corporation (chairman, president, group executives) the wage parameters and contract language changes we want to negotiate when the contract is up for renewal. Until now, this committee has been a very elite group of four to six senior production executives along with the area director of labor relations.

In addition to these overall changes, a number of integrative, participative teams were already operating at all levels of the department to take action on departmentwide issues identified in the study. The Employee Relations strategic planning committee had already held several meetings that were used to define a charter and mission and set priorities for contributing to business objectives and business plans, A secretarial quality circle was formed to give clerical staff a chance to solve problems affecting their work. A computer systems users group had developed a set of objectives and was actively soliciting information from across the department. And eight employee-relations task teams were meeting on such issues as rationalizing the new employee orientation; de-

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veloping a new divisionwide supervisor training program; establishing a five-year plan and investigating the desirability of an employeeservices function; and clustering activities identified in the department study as direct services to individual employees, services that ranged from the cafeteria and employee store to individual psychological counseling. Not only did the new organization and set of activities that emerged from the departmental study immediately improve effectiveness; they also became an integral part of the department’s link with the division’s (DS’s) strategic plan, since they represented a transition toward a decentralization that DS had been anticipating. This movement toward an eventual split of the three major divisional operations into three independent divisions occurred in 1983. Thus, the study results were used to create a dynamic organization, one that was still in the process of moving toward a new state as the business evolved. Because the staff was already functioning as a team in carrying out this study and passing some of their own sense of participation downward in meetings with their own staff, the foundation for an integrated, wellfunctioning Employee Relations department was laid. And because the director had the support of his people, it was that much easier for him to get the support of his own boss. The Honeywell Defense Systems Division Employee Relations Department Study provides an instructive case of how it is possible to carry out a reorganization with a minimum of trauma and a maximum of team building, while applying strategic planning principles to internal departmental structure. The model that the department developed would be especially applicable to any staff department that wants to structure itself to increase external and internal responsiveness. But it also illustrates the kinds of data and approaches that would be useful to any organizational unit-line or staff - that needs to adjust to a dynamic environment. It is pos-

sible in a short period of time to gather sufficient data and perform sufficient analyses to achieve consensus about a department’s direction in ways that will keep it strategically focused and innovative.

IMPLICATIONS

OF

THE

STUDY

This case study and model show how parts of an organization can become aligned with each other and with the overall strategy of the organization and can work in harmony and contribute to the effectiveness of the whole. In a dynamic, competitive, and rapidly changing environment, successful organizations are the ones that can adjust their structures and activities - their tactics - in response to environmental shifts. What this means in practice is that departments within the organization need to engage in planning studies that will determine how to best organize for the purposes of contributing to strategic objectives and serving customers. Such departmental studies should be carried out yearly or when special circumstances, such as new leadership or changes in the “neighborhood,” warrant them. In addition to being sensitive to the need for periodic departmentlevel planning, managers should be aware of what kinds of data to collect and how to both gather data and make decisions about restructuring. In particular, managers who guide departmental planning studies need to do more than create a mission statement based on the department’s relationship to the larger strategy. They also should identify their internal and external “customers” and thoroughly examine their reactions and needs. They should catalogue all current and possible tasks or activities and weigh each one against its contribution to business strategies and customer satisfaction. Such analytical tools as the ones we have discussed should be used to set priorities. The importance of a participative

planning process - involving a core study team and communicating regularly with all affected parties-is crucial to the success of such a study. Of course, department-level strategies can help shape as well as respond to the larger business-unit strategy. This process of successive interactions of plans builds in the “logical incrementalism” that James Brian Quinn identified in successful strategic change (Strategies for Change: Logical Incrementalism, Richard D. Irwin, 1980). Furthermore, participative planning guarantees faster implementation, because implementation can occur during as well as after the planning process. In making decisions about adjustments in organizational structure, depart-

SELECTED

The classic work on the adjustment of structure to strategy for an organization as a whole is Strategy and Structure: Chapters in the History of the American Industrial Enterprise, by Alfred A. Chandler, Jr. (MIT Press, 1962). Mariann Jelinek has pointed out that each department within an organization operates in a micro-environment requiring adjustment to the particular space it occupies and the piece of strategy it reflects in “Technology, Organizations, and Contingency” (Academy of Management Review, January 1977). The competitive and rapidly changing nature of the environment surrounding today’s organizations and the need for flexible structures engaged in continual tactical planning is described in Rosabeth Moss Kanter’s The Change Masters: Innovation for Productivity in the American Corporation (Simon & Schuster, 1983). The changing nature of personnel, employee relations, and human resources departments and the role of human resources in business strategy are the subjects of a

ment planning teams need to be concerned about two aspects of structure: (1) the formal chart designating responsibilities and reporting relationships and (2) the dynamic processes linking pieces of the chart- the integrative mechanisms for communication/coordination/planning through councils or steering committees or temporary task forces and action groups. In the future, we predict that organizational effectiveness will require a new kind of performance appraisal: appraisals not only of individuals and small work teams but also of whole departments. The model described here that we developed for the Honeywell case can be used to address this requirement .

BIBLIOGRAPHY

special issue of Human Resource Management: “Symposium on Strategic Planning and Human Resource Management,” edited by Noel Tichy (Spring-Summer 1983). A set of principles for organization design are laid out in Jay Galbraith’s Designing Complex Organizations (Addison-Wesley, 1973). Principles for grouping tasks can be found in James Thompson’s Organizations in Action (McGrawHill, 1967). The concept of logical incrementalism in planning is developed in James Brian Quinn’s Strategies for Change: Logical Incrementalism (Richard D. Irwin, 1980).

lf you wish to make photocopies or obtain reprints of this or other articles in ORGANIZATIONAL DYNAMICS, please refer to the special reprint service instructiolzs on page 80. _

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