(with apologies to Edward Lawler III)
“The efficacy of designing organizations around jobs is challenged” – a statement made by Edward Lawler III of the Center for Effective Organizations (CEO) at the University of Southern California in an article published in 1993 entitled “From Job-based to Competency-based Organizations” – see the original article here. For the Digital Era – I would change the statement slightly “The efficacy of designing organisations around a hierarchical structure of jobs is challenged”. This article was probably ahead of its time, but certainly needs to be revisited with the changes ringing through organizations embarking on Digital Transformation.
The table below is based on information from this article by E Lawler with some of my own comments and inclusions. It is an endeavour to show the difference between the traditional hierarchical organisation and the more agile, or flexible, competency-based organisation needed today, and demonstrates a clear cultural change for this to be effective.
| Traditional Hierarchical | Competency-based | |
| Base Document | Job Description | Competency Profile |
| Nature of Work | · Mass-production economy
· Routine work · Competitive Advantage from doing Organisation and Job Design and Selection better than competition · Hierarchy of responsibilities, duties and accountabilities · Static structure of jobs · Individuals synonymous with jobs and accountable for job performance · Manager assesses how well individuals perform |
· Knowledge economy
· Work based on knowledge and skill, is highly-interdependent and/or rapidly changing · Competitive Advantage from management of individuals to develop Organisational Capability · Adaptable, flexible structure of teams with competencies and ability to learn · Constantly changing structure of teams · Individuals’ knowledge and skills key competitive assets · Self-managing teams |
| Organisation Design | · Rigid, Job-based
· Functional / product focussed · Grouped according to similar job activities · Operate hierarchically · Relies on excellence in job activity |
· Flexible, fluid competency-based
· Customer focussed · Grouped on cross-functional teams · Operate laterally · Challenge: Need to maintain functional excellence |
| Work Design | · Jobs are fundamental building blocks
· Basic work unit is a department structured around a hierarchy of jobs · Develop detailed Job Descriptions · Identification of work to be undertaken · Job is important part of self-concept – “I’m a xxxxxxx” |
· Individuals are fundamental building blocks
· Basic work unit is a “work team” structured around production process, service process, customer base, or product requirement · No permanent assignment of work activities to particular individuals · Develop profile of competencies needed for a work area (roles) · Individuals contribute critical capabilities to the team · Identification of critical skills needed for team effectiveness · Challenge: What individuals need to do to make work processes effective · Challenge: Self-concept of individuals · Challenge: Accountabilities assignment |
| Selection | · Individuals selected based on fit for the job
· Based on ability to do the job · Assessment methods: Behavioural Interview, psychometric, skills, job performance |
· Individuals selected based on organisational / team fit
· Individuals selected based on fit to the learning environment · Selection for organisational membership · Individuals who can learn and follow career tracks available · Based on cultural fit, skills and competency assessments · Assessment methods: “realistic job preview”, learning agility, culture, skills and competencies · Challenge: Right number of individuals for different skill development opportunities · Challenge: Validation of selection instruments |
| Career Management | · Generally hierarchical, upward moves
· Defined career moves · Challenge: Decreased availability of hierarchical careers |
· Generally lateral moves
· Multiple skills acquisition “tracks” · Not suitable for “hierarchical striver” · Challenge: Selection of individuals |
| Learning and Development | · Development programs designed around job skills
· Skill development not “strategic” |
· Critical!
· Skill sets to include business skills · Well-developed system for individual development · Development programs designed around competencies and work processes · Skill certification process that assures that skills and competencies are maintained · Challenge: Understanding of skills sets to develop and associated challenges and costs |
| Remuneration | · Job evaluation approach
· Industry benchmarking · Pay for job performance · Appraisal and recommendation of manager to determine pay |
· Pay for skills and competencies needed and developed
· Individuals have value, not jobs · Based on defined skills/competency sets · Appraisal by peer ratings, experts, and tests to determine pay · Challenge: Define skills and competencies needed · Challenge: Skill evaluation, assessment, certification, pay rate, training closely tied to skills sets · Challenge: Assessment of skills set and level of skill/competence · Challenge: How skills/competencies can be priced in the market · Challenge: Performance pay based on individual or team performance |
| Human Capital Strategy | · Competitive Advantage from doing Organisation and Job Design and Selection better than competition
· Management and HR responsibility · Organisation/department strategy developed independently of ability to acquire or develop skills needed |
· Competitive Advantage from developing and deploying core competencies and skills better than competition
· Responsibility of teams aware of business strategy and organisation direction · Organisation/department strategy developed with view of ability to acquire or develop skills/competencies needed |
Table 1: Differences between Traditional Hierarchical and new Agile Competency-based structures
Looking at this table, it is apparent that, in fact, with organisations moving on their “digital journey”, what is happening is, we are moving from job-based to competency-based organisations. Our first article in this series, “IT Organisation Design for the Digital Age”, suggests that the “traditional” functional/hierarchical structure for the IT organisation going forward will not be appropriate, and that we need to move to more of a “spiderweb”-type structure of roles that make up “teams” that are formed and dissolved as necessary. At the moment this is being accomplished largely on a “job-based” basis. However, for teams to become more effective, the concept of multi-skilling is important. It is also important for individuals when it comes to putting teams together – the more versatile the individual the more valuable.
One thing is certain, making these moves will require:
- A change of culture
- Fastidious and prodigious change management
- An agile approach of “learn-do-learn”
If you would like to discuss any element of your digital journey, please send us an email. We really look forward to a broadening discussion on these points.