This article was updated on July 12, 2018.
Organizational structure determines how a business configures its operating units and how they interact to meet business needs. Organizations can be structured in different ways depending on their objectives. But in today's business environment, where organizations are operating globally and information technologies are changing so quickly, new trends in organizational structure are seemingly evolving as fast as they can be identified. So for those enterprises operating in multiple geographies, it is vital to assess how the diverse cultures of the regions in which they do business affect their organizational structure.
Top Global Trends in Organizational Structure
According to a Deloitte global survey of human capital trends, because of "years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization itself, with 92 percent of survey participants rating this as a critical priority. The report goes on to conclude that, "Companies are decentralizing authority, moving toward product- and customer-centric organizations, and forming dynamic networks of highly empowered teams that communicate and coordinate activities in unique and powerful ways."
CEOs and CHROs should, therefore, be working together to understand and create a shared culture, build new management models, design highly empowered teams and develop new leadership and career development models for younger and more globally diverse leaders, employing a strategy of diversity and inclusion.
Why Understanding Values and Culture Is Important
As organizations expand into different global regions and move resources abroad, HR leaders should be thinking about altering their organizational structure and human resource practices to suit the needs of the region. Although, it is challenging for global organizations to establish and maintain a unified corporate culture and code of conduct when operating in multiple national and regional cultures, leaders should attempt to strike an appropriate balance and allow for the influences of local cultures.
According to the book "ISO 9000 Quality Systems Handbook" by David Hoyle, "Culture has a strong influence on people's behavior but is not easily changed. It is an invisible force that consists of deeply held beliefs, values and assumptions that are so ingrained in the fabric of the organization that many people might not be conscious that they hold them." Executive search firm Spencer Stuart also advises that as organizations grow, they may have to change their organizational structures and reevaluate how they balance global leadership with regional leadership models.
Having executives report to both global and local leadership in a matrix structure that promotes collaboration may provide a broader perspective and help to drive a more customer-centric organizational culture.
Recruiting and Developing Global Employees
For new organizational structures to be effective in rapidly changing environments, ideal employees will be skilled in strategy and management, including new types of people skills. It can be challenging to recruit and develop talent with the necessary capabilities.
HR leadership should develop programs and processes to educate employees so that they understand what different cultures value, including customs, philosophies and religions. Those values affect how employees behave and interact with each other and with their managers. There should also be a focus on the different workplace practices and behaviors, including varying reward systems, employee development and oversight, and employees should be prepared for common workplace situations, such as how people communicate (verbally and nonverbally), interact with others, make decisions, complete tasks, negotiate and deal with conflict.
In global organizations, managers are faced with leading international teams, often virtually. They may need to negotiate with vendors and suppliers abroad, as well. All of these situations require different types of knowledge and skills if employees are to succeed in working with new people, bridging cultural gaps and achieving business objectives.
Spencer Stuart suggests recruiting local talent and giving people cross-geographical and cross-functional assignments as ways to develop employees to assume complex international roles.
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