Transformation (Part 3): the crucial role of the CHROAdd bookmark
Missed Part 2 of the series? Read it here.
In the last article, we looked at the crucial role of the CFO in driving transformation. In this column, we examine the key to success: the capability for employees to change.
The CHRO plays a crucial role in this. To understand the internal complexities, we take a look inside Sebastiaan Laurijsse's IT organisation – Laurijsse is the Director of IT & Digital Transformation Manager at NXP, and co-contributor to this article.
Tired of change
NXP underwent a period of significant change and insecurity as a result of mergers & acquisitions activity. These changes naturally impacted the corporate culture, as well as the workforce.
On the one hand, the result was a culture defined by “we have always done it this way”; but there was also insecurity resulting from the technology itself, and concerns around whether staff would stay relevant, and whether their jobs might disappear or be cut because of data science, Laurijsse explains. This creates barriers that make adoption difficult.
NXP promises speed and agility to shareholders. "I want this same value embedded in my organisation," explains Laurijsse.
By way of a simple example: If your internal client has to wait 10 days for a laptop to arrive, your organisation is not agile. Everything should operate flexibly and in real-time.
To achieve this, Laurijsse started with his operating model, asking the question: "Which people, infrastructure, resources, technology, service providers, contracts, locations, KPI’s and measurements show that the division and internal processes truly add value to the strategy?"
His program is called “Organise for change”, ensuring that the people, resources and processes can continuously adapt. That sounds simple, but it’s not, he explains.
The same financial envelop
The semiconductor world is operating ahead of the curve. NXP sells future products that will be released in 3-4 years. As a result, it quickly feels the impact of changes in economic cycles, which has resulted in a search for cost efficiency, especially over the past years.
The main questions Laurijsse has asked himself are: "How do we eliminate waste in our service delivery and increase efficiency? How do we develop products in such a way that they enable the business to shorten the time to market or increase the quality of our products? How do I improve the productivity of our staff?"
At the same time, h efinds himself having to operate within the same financial envelop. "I get a budget each year, and in a year’s time I have to achieve more. Given this budget, I have to look at my costs."
From pyramid to diamond
Laurijsse's strategy has been to allocate the biggest chunk of his budget to human resources. However, he explains: "When I zoom in further, I see that a large part goes to repetitive tasks, incidents, standard work and procedures. Our next step was, therefore, to figure out what the operating model would look like when we applied technology to replace standard work. And then the question was whether we could hire staff with more expertise?"
The result, he says, is an organisation that went from a pyramid to a diamond shape. "You operate within the same envelop, but higher up the value chain."
To do this, you have to provide staff with the opportunities and the time to enhance their skillset, he explains. But you also have to restructure, let people go, hire new staff and build new hubs.
"You hire people with new skills, both from the market and universities."
This sounds logical, but employees who have been impacted by the cost savings, are tired of change and unsure about their job, so they see this negatively.
"In the change curve you get frustration, resistance, emotions, limited adoption and a relapse – because we said we weren’t going to cut jobs, but we eventually had to. Staff don't know about the individual cases where we’ve been trying to develop someone for years, but it just didn’t work out," Laurijsse explains.
From cooperation to competition
Another aspect in the transition from pyramid to diamond shape is that the culture changes. New staff, with new expertise, often have other interests, religions and political preferences. And they are also more competitive. So, you see a shift to a performance culture, whilst what you really want is a culture of collaboration, where team members help each other.
The crucial role of the CHRO
The CHRO is incredibly important in the transformation. The key is to create an inclusive environment where people feel safe to develop themselves. That’s when people can realize their own potential and the organisation is able to grow as a result.
The CHRO is the guardian of the strength and the health of the organisation. How do you build stamina? How do you alleviate pressure? After a phase of consolidation, when do you give the organisation a rest, wven while the CFO is still keen to pursue more results?
These questions are not only crucial during COVID-19, but also during times of pressure and insecurity, such as transformations.
In the next article, we take a look at the last piece of the puzzle in terms of complexity: India-based Service Providers. They represent a large part of the work force. To truly be successful, they need to embrace your transformation, too.
Ready to move onto Part 4 of the Transformation Series? View it here.