How Can Human Resource Management Support Organizational Agility?
The landscape in which organizations are operating is changing substantially.
Significant factors such as the introduction of new technologies and business models, the increasing spread of globalization, and demographic changes have meant that organizations of all sizes, operating in all sectors, have had to adapt.
We are seeing substantial levels of industrial restructuring in almost all countries around the world, markets that are increasingly dynamic and volatile, with significantly greater levels of competitive intensity than was previously the case. Commentators have argued that whilst change has been ever-present in the business landscape, the nature of change has itself changed. Arguing that turbulence and unpredictability are now the norm rather than the exception, the phrase ‘hyper-competition’ is increasingly used with reference to the modern business environment.
As a direct result of these trends, the shifting sands metaphor is often discussed in relation to organizational advantage. Thought leaders are increasingly suggesting that the notion of sustainable competitive advantage is something of an illusion. Organizations may build a strong competitive position, but factors outside of their control can quickly render any advantage redundant as markets shift, consumer tastes change, and new business models come into fashion.
And so, in these environments that are increasingly dynamic, unpredictable, and prone to disruption, the need for organizational flexibility - and increasingly, organizational agility - has never been more pronounced.
Channelling Darwin, it is very much the case that it is not necessarily the strongest organizations that will survive, but rather those which are most adaptable. Whilst Darwin’s original On the Origin of Species is now more than 150 years old, the essence of his observations is arguably more relevant now in a business context than it ever has been.
Agility vs flexibility
What must be remembered is that ‘agility’ and ‘flexibility’ are different concepts. They are not the same, and the terms must not be conflated.
Agility is a broader concept than flexibility, and something that operates at a different scale. Agile organisations are not simply ‘flexible’ in terms of their use of labour, or the offerings that they provide for customers, they are instead able to proactively sense changes in their environment, pivoting their entire internal ecosystem to take advantage of new opportunities or to move away from threats.
In this sense, agile organisations are nimble and able to reconfigure themselves profoundly in the pursuit of success.
One excellent example of an agile organisation is the Chinese consumer electronics and home appliance group, Haier. Haier has built itself around the concept of the self-managed team, removing hierarchical reporting lines and large departments and divisions in favour of small microenterprises which link with one another whenever, and however, they need to.
It is said that Haier in some senses mimics the structure of the Internet; small pieces, loosely joined, which evolve and develop organically as the environment itself changes and evolves.
The role of Human Resource Management
So, what is known about the role of the Human Resource Management (HRM) function in promoting organizational agility?
We know, first of all, that the methods and processes surrounding people management have a substantial impact on agility. Taking employment contracts as an example, we know that agility is supported where contracts are flexible, for instance in terms of hours or place of work, or indeed with regard to the precise contents of an individual’s role; enabling roles to adapt and evolve over time is important.
We also know that approaches to reward management have a significant role to play in incentivising particular behaviours and outcomes associated with agility, just as we know that encouraging employee voice and involvement can assist organizations in their efforts to demonstrate an agile mindset.
One of the most substantial factors we see though concerns organizational investment in learning. Agile organizations invest considerable sums in employee learning and continuous development, seeking to continuously develop staff, not just for the current roles and positions, but for future roles and work which may not yet have been defined. In this sense, agile organizations keep one eye on the horizon, building dynamic career structures that do not necessarily involve an upward linear progression through a series of related job roles – an approach to career management that is rapidly falling out of fashion.
Building very much from the above, something we see across organizations which can be characterised as ‘agile’, such as Haier and others, is risk tolerance, and a capacity to learn from error rather than a desire to apportion blame and criticism when events or projects do not turn out as expected. Learning cultures permeate these organizations, with leaders and managers seeking out risk and opportunities to grow and develop, to do otherwise would run counter to what we understand about the nature of organizational agility as a concept.
In short, agility is very much called for in the modern business environment.
Organizations which are static, held in place by outdated processes, systems, and cultures are unlikely to be successful in the changing landscape faced by businesses of all kinds. HRM functions have a large role to play in instilling the qualities associated with agility in our organizations, with learning and development being a crucial part of this.