Why organizational agility starts with HR

Why do we need organizational agility and how does HR fit in?

In Reinventing Organizations, Frederic Laloux briefly examines human evolution. According to him “… for some reason, humanity evolves not continuously, but by sudden leaps” ([Lalo16]). We do not grow gradually, like a tree, but transform “overnight” into something else. He is not the only one who sees the world this way. According to [Pere10] we are currently living during the turning point of one of those leaps, or, as she calls them, “great surges”. Other researchers, academics, organizational architects and management innovators are also recognizing the seismic shift happening in organizations and are calling for change – a change towards more agile, people-centric organizations, operating under agile principles. The timeline in Figure 1 shows a selection of works discussing this organizational change and the new ways of working; it is by no means exhaustive, but merely an illustration of how long visionaries have been urging to embrace the change and prepare for the work of the future.

Figure 1. The case for organizational change embracing agility and its principles, a brief timeline. [Click on the image for a larger image]

What has made this transformation urgent? While not entirely novel, organizational transformation towards agility has been accelerated by a number of factors, such as a multi-generational workforce, digitalization and globalization of organizations, social media, shift to knowledge work, the sharing economy, and most recently, the COVID-19 global pandemic. There is even an acronym to describe some of those economic factors at play – VUCA (volatility, uncertainty, complexity and ambiguity).

What should change? And why is HR best positioned to lead this transformation?

In order to achieve organizational agility, all parts of an organization have to be transformed. We can start by transforming the IT department, for example, but unless the rest of the organization follows, they will soon hit the limits of what they can achieve in isolation. There is one department, however, that spans across departmental boundaries and can affect the entire organization, and that is the HR function. HR owns processes which make the organization what it is, so without HR becoming agile first, an organization cannot truly transform. Once the HR function has embraced agile values and principles and restructured their processes to adopt agile practices, they can start reshaping the organization. Once agile, HR becomes the fertile soil where the seeds of organizational agility can grow further.

Organizational agility needs HR agility to start the transformation and to sustain the new organization

In 2001, a group of software engineers created the Agile Manifesto to change the way they build software. Years later Modern Agile was created in an effort to extend agility outside software development into the organizations themselves. Then, the Agile HR Manifesto addressed agility in workplace culture. While all of these contribute to increased agility, let’s not forget the most important element that has to be transformed – the organization itself! As Edward Deming said almost 30 years ago: “A bad system will beat a good person every time. So fix the system.”

How do we fix the system that is today’s organizations? While “the organization as a machine” dominated the management world for decades, it is no longer relevant in today’s complex reality ([Lalo16]). The organizational processes designed for efficiency and control in the last century cannot serve us well anymore. We have to shift from an enterprise (inherently oriented towards profit) to an organization (inherently oriented towards a goal). A more fitting metaphor today would be “the organization as an organism or social system”. As such, rigid, pre-defined structures and functions are no longer useful and instead organizations should look towards nature for more apt models – schools of fish or flocks of birds, or even a forest’s ecosystem ([Lalo16]). All of these teach us how to quickly respond to change as one complex organism.

It is no longer enough to have a powerful leader with a strong vision that pushes their agenda down the ranks. It is no longer enough to strive for efficiency and control. The only way to deal with a VUCA context is to utilize the power of the collective group and to engage every employee, to coach them (instead of managing them), so they can grow and reach their full potential, in order to best serve their customers. Becoming nimble and regrouping on the go, responding to an ever-changing environment is going to differentiate thriving organizations from those merely surviving.

Organizational change requires participation from the whole organization and cannot be forced top-down. According to [Such11], it takes reflection and discussion to see the patterns of thinking and interaction we are implementing and the new behaviors that might interrupt old patterns or give rise to new ones. To be able to interrupt old patterns, organizations need a new type of leadership to lead this transformation, accompanied by new types of HR processes to enable the culture change required to become an organization of the future. Can we transform HR by applying agile principles and values to create the basis for organizational agility and fix the broken system of today’s organizations? We believe so.

How HR becomes agile

Agile HR is a term that has been around for a few years now and can be traced back to the Agile HR Manifesto, signed by 27 professionals in 2017. Like Modern Agile, the Agile HR Manifesto and principles are built on the original Agile Manifesto, reimagined for HR (Figure 2). Also in 2017, Pia-Maria Thoren’s book Agile People, A Radical Approach for HR & Managers describes how to apply agile principles and tools to the world of HR. Since then, a lot has been written on how HR can adopt agile principles and practices to transform the organization from within ([Cappi18]).

Many companies have adopted agile HR practices either from the start of the organization (Buurtzorg, Morning Star) or included HR as part of an agile transformation (ING). When considering traditional HR processes, each one of those processes can or should be reimagined to support the entirety of an agile organization. What these could possibly look like from an agile point of view, is illustrated in Figure 3. Parallel to transforming core HR processes, agility in HR also means a cultural shift for many organizations, with HR owning the transition and reinforcing the agile values and behaviors with the newly reimagined processes, methods and systems.

Figure 2. Agile HR Manifesto and Principles. [Click on the image for a larger image]

Figure 3. HR, reimagined in the agile context. [Click on the image for a larger image]

The organizations of the future are already here

What do organizations of the future look like? For them to be nimble enough to operate in our reality they need the right type of leadership and the right type of organizational structure. Be it the Humanocracy organizations studied by Gary Hamel and Michele Zanini ([Hame20]), the teal organizations of Frederic Laloux ([Lalo16]), or the organizational trends Corporate Rebels track all over the world, we see a common theme of agility on both leadership and process level that will further support agility of culture and structure. Some common characteristics have been identified, which would form a sound basis and starting point of the necessary mindset and culture (see Figure 4 for comparison between teal organizations and organizational trends from Corporate Rebels). Let’s meet some of them in the box “Organizations of the future that employ Agile HR principles and values”.

Figure 4. Characteristics of Agile organizations according to Frederic Laloux and Corporate Rebels (shown in bold). [Click on the image for a larger image]

Only when there is a fit between culture and structure, can an organization be truly agile

Agility is the sole answer to operate successfully in a VUCA environment, since organizations of the future need agile leaders and agile processes to support, inspire and help them grow. While some critics have been insisting agile is still a fad, it has slowly permeated every corner of many organizations. We believe agility, both as a mindset and a set of principles to apply, creates a foundation on which organizations can build, motivate and let their workforce be(come) whole. Since HR is the organizational architect, they should be the ones not only redesigning the core processes and structures for agility, but also setting the intention and leading the transformation to adapt and embrace a new mindset. Only when there is a fit between the culture (values and behaviors) and the structure (methods, processes, systems), can an organization be truly agile. And who better to spearhead the cultural and structural change, than HR.