Tag Archives: Natural Systems

Dynamic Balance and HR Strategy – Should they be linked?

We constantly talk about the dynamic changes in the business environment and how we need to adapt in order to survive, but how much do we look into the dynamics of our own organizations to make sure we achieve a balance that will allow us to thrive?

I we take Fritjof Capra‘s definition of dynamic balance, we find a different way of looking at our organization which can help us in better defining our HR Strategy.

“An ecosystem is a flexible, responsive, ever-fluctuating network. Its flexibility is a consequence of multiple dynamic sense-and-respond feedback loops that keep the system in a state of dynamic balance. No single variable is maximized: all variables fluctuate in concert around a collective optimum.”

Lets clarify this definition by looking at how Giles Hutchins talks about feedback loops in his book “The Nature of Business“:

“Nature is interconnected and interdependent, with every part of the ecosystem functioning as part of myriad seamless endless cycles. These beautifully coordinated cycles of nutrients, energy, water, materials and information are possible because of the feedback loops. Feedback loops are nature’s way of ‘staying in sync’ with ever-changing conditions.”

So the question is, do we really pay attention to the messages the organization is providing? Do we create an environment where there is a constant flow of feedback that enables the organization to continuously adapt to the constant change?

I fear the answer is no. One of the most important components of the definitions above is that every single part of an ecosystem is important. What I tend to see in organizations is that when there are conditions changing in the market, it is mostly upper management and the marketing and sometimes strategy specialists who define what the company will do in order to weather the storm. What we tend to forget is that there might be other things we can do to adapt that we don’t know of because we are not listening to the organization.

I have had the fortune (and also the stress) of living and working in Argentina during the hyperinflation. When I say hyperinflation I mean it: 4,923% inflation in 1989 followed by 1,343% in 1990! It is difficult to convey the type of environment this creates. You need to make decisions and make them fast. You need to decide if you are going to sell your products or not because between when you send them to the customer and when you receive their payment the money you receive is not enough to pay for the costs of producing it. In essence, you need to figure out how to survive.

I was working at a B2B company at the time and witnessed one of the best examples of how to listen and use the feedback to make it through the difficult times and be prepared for when things got better. We could not send the sales force out to get orders so, what could we do? They came up with impressive ideas of how to build customer loyalty by helping them find ways to move through this crisis and survive themselves. Sometimes it was simply helping them figure out a solution to a problem that normally would require a big investment but that with a little ingenuity could be resolved with much simpler means. It had nothing to do with our specific business, we were only helping out by listening and providing ideas.

By Opensourceway

What we were able to do with this approach of listening to employee ideas, keeping them informed of how things were evolving, involving all in thinking how we could reduce expenses so we could keep everyone employed, how to help our customers while we could not even provide them with our products, was to have extremely committed employees and customers. As soon as things started to improve a little and we were able to see the light at the end of the tunnel, we started selling at levels that were significantly higher than before the crisis. We became the number one provider for our products and services in the market.

What would have happened if we had not listened? I don’t know if I would be where I am today, because I don’t know if the company would have survived and maybe my career would have taken me to other shores.

My point is, if we want to maintain a dynamic balance that allows us to thrive despite difficult or normal ever changing conditions, we need to ensure that we have open communication channels that allow us to benefit from the knowledge and ideas of employees at all levels. Maybe looking deeply at some of the examples of companies that have failed can provide us with insight as to how much the employees knew about the mistakes their upper management was making and that they felt they had no power to influence or make their voices heard.

We don’t need to take this to the extreme. If we fail to listen and take advantage of the knowledge of our employees, we might still succeed but we will probably not achieve as much. Our role, when defining our HR Strategy, is to make sure we understand the dynamics of our organization and enable the feedback loops that will take advantage of our employee’s insights and ultimately achieve dynamic balance.

Nature’s Principles: Cycles and how their understanding aids our HR efforts

Talent

From the perspective of our talent, looking at what has happened during past cycles can help us identify actions that have been successful and those where we have lost talent we would have preferred to retain. During the last economic crisis, when we had to downsize or restructure, did we lose any talented or high potential employees? Were we able to retain the expertise we needed for when the economy rebounded? Did we panic and laid off employees or closed plants only to find that we needed to hire new ones very soon because the dire predictions ended up not being so bad?

If we analyze how we answered the questions above, we might decide to do things differently. We might want to carefully identify the experts and high potential employees and redeploy them to different areas or assign them to special projects. In our factories, we might decide to go to a reduced hours workweek instead of laying off employees that know the job well. This has many benefits: employees will tend to be grateful because they still have income and benefits and as soon as we need to start producing again all we need to do is to let people know and get the production plan running. In addition, we forego the loss of time and the expense of having to hire new employees and train them.

By Opensourceway

Workforce Planning

Analyzing past cycles can also help with our workforce planning. Although no two cycles will necessarily impact the organizational needs in the exact same way, we can have better projections based on how things worked out in the past. For example, if we look at the workforce requirements when we introduced a new technology, it might provide us with important insight as to which questions to ask and how to plan for the next technology development.

If during the past economic crisis we reduced the workforce and then found that we had to scramble to find the right people to hire because we had gone too far, this is important information to bear in mind and challenge the organization on how to tackle the crisis. The short term savings of reducing our organization might be overshadowed by the cost of rehiring and loss of productivity.

An analysis of how employees nearing retirement age reacted during an upward cycle in the past might raise a red flag if they tended to retire early. If we are again in an upward trend and have a significant number of key employees that could take early retirement, we need to start planning what to do.

Organizational Design

How did we redesign the organization to tackle a downward trend? Did it work? If it did, then we want to pay attention to why and see if this time there are similar factors in play. If it didn’t, we need to figure out what went wrong and learn from it.

What did we do when we were in a growth cycle? Are we sure we were able to achieve the most out of the opportunity or did the design of the organization somehow create roadblocks to the innovation or cross business unit potential?

I guess you can see what I mean with these examples. Although we need to look towards the future and make sure that our HR Strategy is aligned with the Business Strategy, looking back and reviewing how the organization reacted during each cycle can provide us with valuable information that we can use to make sure our efforts will help the business achieve the best results possible.

Nature’s Principles: Networks and their influence on HR Strategy

We are familiar with the fact that organizations are made of networks of relationships. What we rarely try to identify is what Fritjof Capra in his book The Hidden Connection: A Science for Sustainable Living calls “boundaries of identity and interaction” and how these can influence the success or failure of our HR initiatives.

So, what are these boundaries and how can we seek to unveil them within our organizations? Lets try to analyze them from the perspective of their effects. Have you ever been in a situation in which you had to reorganize, followed all the customary procedures to define who adds more value, who less, what positions you actually need and which seem superfluous? You then implement and suddenly find that the organization has lost some key component that had not been identified and things don’t quite work as expected. Giles Hutchins, in his book “The Nature of Business” says that:

“(…) in business, it is not always obvious which parts of the organization that are not overtly adding value are merely there for the ride, or are providing a subtle benefit unmeasured by the normal performance assessment process. Cutting dead wood from an organization in challenging times may be prudent, yet damaging a useful web of stakeholder relations in times when greater resilience is needed is not prudent.”

Understanding the subtle networks of relationships that exist within an organization can be an art. We also need to understand that these relationships are not static. Like Hutchins mentions in his book, “two organisms can have many different types of relationship over time, or even at the same time.” Therefore our observation of the organization cannot be a one-time-only occurrence.

Social production as a new source of economic value creation

by Opensourceway

We need to establish our own networks and take every opportunity we have to observe and interact with as many people in the organization as possible and keep track of what we find. This will enable us to develop a map that overlays the organizational chart creating a picture that combines the formal and informal networks that exist. If someone moves from one position to another, that does not mean that the relationship they have with their former group ends, their influence is probably still there if there was a strong bond within the team.

Who are the people that employees mention when they are discussing examples of leadership? Who do they look to when they want to see what it takes to be successful? Who do they go to when they seek coaching? It is more frequent than not that these are not their direct managers unless they report into one of those great leaders that tend to be so few.

Who do employees identify with? Are there teams that have a strong sense of identity? What drives this cohesiveness? Is it the formal leader of the team or is there a team member that seems to be the driving force behind it? When there is a team that is viewed as a positive example, what we do to that team will also have an impact on the rest of the organization. If we eliminate it because the work they specifically do is not needed any more, what we are saying is that we do not value the principles on which this team operated. If, on the other hand, we figure out how to deploy the team to other work, we are reinforcing that this is the model we want people to immitate.

From the opposite perspective, are there teams that we have identified as being dysfunctional? What are the characteristics of the leader? What is the driver of the lack of identity? Can we identify a specific person that seems to be the disrupting factor? It has been my experience that most of dysfunctional teams lack good leaders. When I have been able to identify a team whose dynamics are negative, it normally correlates with managers that are “old school”, not on board with what the organization is now asking them to do, and frequently boycotting initiatives through sarcastic comments, or they are weak and unwilling to take charge and address the negative behavior of a team member.

A thorough knowledge of these networks, and the understanding of the organization dynamics that it provides, will provide us with vital information we need when we are developing our HR Strategy and programs. As I mentioned in “Why do HR Strategies Fail?”, we definitely also need to have a thorough understanding of the business strategy. Through our work to learn the business we can gain much of the knowledge we need and this will enable us to be attune to the subtle networks that influence what the organization can achieve.

Human Resources, How can we add value?

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HR is frequently viewed as a function that is needed but in very few occasions are we considered as really adding value to the organization. By looking at the organization from the perspective of nature, can we become a motor for change to help it prepare for the future? Can we use this to demonstrate the value we bring?

It is unfortunately true that HR is viewed as a necessary evil in many organizations. It is also true that many times, as HR professionals, we fail in being able to articulate how we can deliver value and impact the bottom line. We are viewed, and in many cases we consider ourselves, as a function that is there to make sure there is adherence to laws and regulations and to hire or fire people when needed. We are frequently considered overhead or even a burden.

One way we can change this perception is by driving change and helping the organization prepare for future challenges. We need to understand first what changes the organization will face and the only way to do this is by knowing the business intimately and understanding the strategic direction the organization is seeking. But this is not enough.

Lets look at the organization from a different perspective. Giles Hutchins in his book “The Nature of Business” shares the view that if we look at nature to understand its patterns it might

“provide insight into how best to future-proof business for the unpredictability ahead”.

Wouldn’t it be wonderful if we could use this understanding of nature and apply it to the organizations we work in and show how we can add value by developing our HR programs and strategies in accordance to these principles?

What Hutchins proposes is for us to look at the organization based on the Principles of Nature he quotes from Fritjof Capra‘s book “The Hidden Connections: A Science for Sustainable Living“. These principles are:

Networks
Cycles
Solar Energy
Partnership
Diversity
Dynamic Balance

Lets look at each one of these principles from the perspective of understanding an organization. We know there are networks of relationships and many times we refer to them as the formal and informal relationships that occur within the organization. But what about really understanding where the “boundaries of identity and interaction” are? A thorough understanding of these networks will enable us to develop more effective ways to communicate within the organization as well as determining where there are barriers to collaboration.

Cycles are also present within organizations. If we take the time to look at the past and correlate the ups and downs, the expansions and contractions, with the impact on employee morale, retention or loss of talent, etc. we can anticipate what the impact can be if we know we are headed in a certain direction. We can learn from the way the organization moves through these cycles and then decide how we can support it to avoid past pitfalls.

Solar energy is a little more tricky, although if we draw a parallel between how it is the fuel that allows life of all living organisms, we can say that employee engagement is the fuel that enables companies to succeed. It is proven that increased levels of engagement have a considerable impact on the bottom line and we need to make sure we focus on this if we want to add value.

Partnership is the principle of cooperation. Is this a way of life within our organization or do we work in silos, worried about the results of our individual objectives? Are the programs and systems we have in place for measuring performance, establishing goals, etc. fostering collaboration and cooperation? We need to understand the impact of the programs we put in place so that we can re-design them to enable an environment that is conducive to cooperation.

by Jurgen Appelo

Nature clearly shows us that the greater the biodiversity the more resilient the ecosystems are. The same is true within organizations. When we talk about diversity we sometimes fail to grasp the true meaning. We need to foster an organization that is diverse, not only in race or origin, but diversity of thought. Do we let managers hire people that are like them, because they are easier to understand, or do we promote positive change by creating an environment where different is great?

Finally we have dynamic balance. Nature shows us that “no single variable is maximized, all variables fluctuate in concert around a collective optimum”. Do we really take the time to understand each piece of the network, each part of the organization? Do we take them all into account when we are thinking of our HR strategy? We normally focus only on the things that are deemed the most important (our high potential employees, our executives and leaders) and we forget that, if we truly want to drive results we need to maintain the dynamic balance that allows everyone to flourish.

So we need to devote time to understand our organization and what the reality is based on the principles of nature. That will enable us to drive positive change as it will provide an intimate knowledge of the key areas we need to focus on. By driving change from the perspective of the organization as a living organism we will prepare it for the future that lies ahead and the value HR brings will be clear.

My HR Post

A Holistic View of Strategic HR