How to put humans at the center in designing an organization

Too many organizations bring in management consultants and a host of other people to try to “fix” employees’ experiences and performances; however, the science has evolved and we can do better, using modern analytics and social science applications. In this article, I will address the challenge of providing 21st-century solutions to designing an organization as a system and provide an evidence-based solution that management consultants, academics and educators can use to transform work and put humans at the center of design. These excerpts are adapted from my book Strategies for Organization Design.

After more than 20 years of organization strategies consulting, I believe the same three challenges plague traditional organization design:

• Design decisions are not linked to human behavior.
• Design solutions are focused primarily on the individual.
• Design ignores the power of horizontal networks.

The first fundamental gap in the existing models is that they do not clearly link the big, macro decisions that happen at the system level of an organization to the individual and group behaviors that result. However, due to a set of hardwired evolutionary conditions in human brains, the environment an individual or group is in has a direct and predictable influence on feelings and behavior. By understanding the context that has been designed and combining this with the psychology of how humans think and feel, we can understand individual thoughts and behaviors that are the direct outcomes of these design choices.

Today we talk about organizations’ ecosystems and platforms, strategy and transactions, and the operating models and capabilities needed for future success. In addition to the chief executive officer, we have chief strategy officers, chief transformation officers and various business unit heads. Then, in a totally separate part of the company, we talk about workforce experience and employer brand, incentives and rewards, and hiring and retaining for the workforce of the future. Often these issues are relegated to the chief human resource officer, the chief diversity officer or some similar title, like chief impact officer or chief people officer.

These conversations occur in separate silos, as if they are completely unrelated to one another, but they are actually one and the same. The choices made on how to set up an executive team, their roles and their accountability for profits have a direct and predictable impact on how middle managers feel and how frontline workers act. We need to use these insights early and often to create an environment where an understanding of human behavior is at the center of the design.

The second, related challenge is that the interventions suggested to remedy the many trials of traditional organizational design in today’s environment are almost solely focused on the individual, with only the occasional attempt to address the group.

To create meaningful, positive impacts, the levels of analysis that matter are not just individual, but also group and system. Spending time teaching interpersonal communication skills, coaching for implicit bias, and investing in leadership development could bring about some change at the individual level in some cases, but ultimately, focusing on the individual is a flawed approach to changing an organization.

Third and finally, organizations have traditionally been relentless in their pursuit of an ideal design that leads to maximized output, productivity, and stability. The problem is that almost every minute of the day geared toward these pursuits is dedicated to a relatively small percentage of what it takes to get things right. With recent advancements in the field of network analysis, it is becoming evident that important work is increasingly accomplished collaboratively through networks. But until very recently, the only network we ever paid attention to was hierarchy.

With the power of data and analytics, we can now make many types of networks visible, not just the traditional vertical hierarchy.

Trust relationships and how they span across an organization can now be visualized using network analysis. Seeing them allows us to influence them, which enables us to transform the workplace —and by extension, work overall.

So knowing these are the three key gaps in the field of organization design, how do we close these gaps and create a better workforce experience for all? I have been searching for this answer for over 20 years, in the process building one of the largest organization design practices in the world, advising dozens of CEOs and hundreds of executive and team leaders on the topic of organization design. I have found that six key levers must be pulled, and they must be pulled at the same time in the same direction to get the best business outcomes and the best experience for the workforce:

• Hierarchy
• Networks
• Measurement
• Membership
• Responsibility
• Teaming

Broken workplaces

Is there really a problem with the way organizations are designed? Between 55% and 80% of us do not enjoy work (Greater Good, 2019)1. Employees experiencing burnout are 63% more likely to call in sick and 2.6 times more likely to be looking for a new job (Wigert, 2020) 2. These figures all have a direct and profound impact on a company’s bottom line.

Today’s workplaces are broken. We face cumbersome internal mechanisms, antiquated procedures, and redundant, overlapping roles.

When we do try to positively influence the workforce, our interventions predominately focus on individuals — their skills, their mindsets, their strengths — yet there is ample evidence showing these tactics don’t impact team effectiveness or organizational performance (Dignan, 2019) 3.

Organizations need to intentionally intervene at the system and group level — not just the individual level — unifying all so they work in harmony, as a system. Using the principles of psychology, these designs and reorganizations need to be informed by how the human brain, with all its quirks, operates so that all workers consistently experience meaning, belonging, and mastery because these all have a direct and positive impact on the bottom line (as does having all aspects of organization design work in harmony).

When we dig into the research on the common issues that make for an unhappy, unproductive workplace, what do we find?

• Lack of ownership
• Poor collaboration and overlap in roles
• Perception of pay and performance unfairness
• An us-versus-them mentality
• Lack of social connections
• Lack of empowerment and autonomy

Note that these are all group-level dynamics. They occur because we are hardwired to belong, but in today’s organizations, the conditions that create that sense of belonging are suboptimal.

Create the best hierarchy to address a lack of ownership

“No bosses! No titles!” This kind of messaging accompanies an idealized organization chart, or org chart, that shows a series of concentric circles, a constellation of stars, or even a tree of life. The stories and anecdotes that circulate around this no-boss movement are usually about how small groups of peers self-organize — without the tyranny of managers — to create breakthrough results. Never mind the lack of accountability and clarity these types of changes create. Hierarchy is out, and self-organization is in.

However, when you look more closely for examples of this, it is impossible to find companies that actually self-organize. Sometimes we see fewer management layers. Sometimes we see teams that can decide how to organize their roles and resources to get specific outcomes accomplished. Sometimes these teams are able to set their own objectives and rewards. But all these teams exist within some defined hierarchy.

Yet many modern-day organizational theorists still hold the idea that “hierarchy = power = exploitation = evil” (social psychologist Jonathan Haidt). Before coming to such conclusions, it’s helpful to use a biological and an evolutionary psychology lens to understand how we as individuals view our groups and our environments.

When decisions must be made quickly, when knowledge is concentrated at the top, and several business decisions need to be coordinated at the enterprise level, the value of hierarchy is evident (Dignan, 2019).

Apply insights from network analysis to address poor collaboration and overlapping roles

Companies have been designed like machines. The engineering jargon we use to talk about organizations reveals how deeply we hold this metaphor. As corporate advisor and coach Frédéric Laloux says, “We talk about units and layers, inputs and outputs, efficiency and effectiveness, pulling the lever, moving the needle, acceleration and hitting the brakes. Changes must be planned and blueprinted, then carefully implemented. If some of the machinery functions below the expectation, it is probably time for some soft intervention and the occasional team building—like injecting oil to grease the wheels” (Laloux, 2014, p. 28) 4

However, adding a soft approach to grease the wheels does not make a happy organization. Both the hard and soft approaches seek to control the individual — the soft just assumes that what matters is emotional rather than financial stimuli. People feel bad and ineffective, so they get teambuilding and celebrations, but unfortunately only the symptoms have been addressed, not the underlying problems.

Use measurement to overcome unfairness in pay and performance

The fairness principle makes us want to shun or punish cheaters. This provides evidence for the human instinct toward procedural justice at work. John Stacey Adams’ equity theory explains that we are motivated when our perceptions of the workplace are fair and not when it’s unfair (Adams, 2020) 5. What matters most in workplace motivation is the effort we put in and the outcomes we get. If we see it’s fair, we will be motivated. Conversely, if you see a colleague doing the same work but getting paid more, or you see another colleague who has the same reward but seems to be doing less, you will probably lose your intrinsic motivation.

NeuroLeadership Institute CEO David Rock’s research shows that when we receive a rating or appraisal, our brain shifts into fight-or-flight mode and begins to rely on our limbic brain (Weller, 2019) This shift, which takes place whenever we are threatened, immediately takes us out of the mode to learn or create, making us defensive. Ironically, the actual act of executing a performance appraisal itself reduces performance.

Understand membership and belonging to overcome us-versus-them mentality

Much of the us-versus-them dynamic has been eloquently described in social psychologist Jonathan Haidt’s model of loyalty and betrayal. The loyalty/betrayal foundation in our brains evolved in response to the adaptive challenge of forming and maintaining coalitions (Haidt, 2012) The foundation is just part of our innate preparation for meeting the adaptive challenge of forming cohesive coalitions. The trigger for this is anything that tells you who is a team player and who is a traitor, particularly when your team is fighting with other teams.

Given such strong links to love and hate, is it any wonder we see this foundation taking an important role in feelings of belonging within organizations and an equally important role in creating competition between groups?

Develop teaming charters to address a lack of social connection

Organization designers are keenly interested in social ties and relationships, so they study groups of people, whether large or small. Groups can be anything from a “two-pizza” project team to a department to a business unit or country made up of multiple departments to whole generations of people.

According to social neuroscience researchers, our human ancestors depended as much on social belonging for survival as they did on food and shelter. Poor social standing on both an individual and group basis can actually lead to a higher mortality rate. This explains why we are often “groupish” rather than selfish.

How can social connections possibly be lacking in our modern environment where almost all our work is done in collaboration with others? Think about how much more collaboration we are required to do today and the cost of that collaboration (e.g., the wasted time in meetings, wrong people in meetings, spending time talking with no decisions made, revisiting of decisions). According to network scientist Rob Cross (2021) 6, collaboration today consumes 85% or more of our workweek. This collaboration overload has largely gone unchecked.

Every time a person’s social environment changes, it challenges their sense of stability by way of the brain’s circuitry. And in today’s world, with back-to-back 30-minute meetings each day, our social environment can change 16 times in 8 hours. If the brain decides the change is, in fact, threatening, then it will resist or avoid the change as much as possible — fight or flight mode.

Optimize decision rights to address lack of empowerment

To understand the root of this, we can look at how our brains treat fairness and cheating, which centers on the idea of reciprocal altruism. It evolved in response to the adaptive challenge of reaping the rewards of cooperation without getting exploited. Suppose a coworker offers to take on your workload for 5 days so you can add a second week to your Caribbean vacation. How would you feel? It’s a big favor, and you can’t repay your coworker simply by bringing back a bottle of rum. If you accept the offer, you are likely to do so while gushing forth expressions of gratitude and a promise to do the same for her whenever she goes on vacation (Haidt, 2012). You feel responsible.

Evolution created altruists in our species because we can remember prior interactions and limit our niceness to those who will likely repay a favor. We cooperate with those who have been nice to us, and we shun those who took advantage of us. The art, then, of architecting an effective and productive organization is the right mix of authority in the hierarchy and responsibility in the networks.

The interconnections of a system occur through the flow of information, and this flow plays a predominant role in determining how a system operates (Meadows, 2008) 7 A system generally operates on being itself, changing only slowly if at all — even with complete substitutions of its elements — as long as its interconnections and purposes remain intact. If the interconnections change, the system may be greatly altered. It may even become unrecognizable, even though the same players are on the team.

This perspective helps explain why so many “reorgs” don’t seem to actually produce much more than new org charts and should give us pause when a new leader is eager to make changes by looking first at people, departments, or product lines. With the same old networks of information and goals and incentives, the system behavior isn’t going to change much.

The six elements (hierarchy, networks, measurements, membership, teaming and responsibility) are wired into our brains. They developed over the history of our species to address adaptive challenges. We have both the research and real-world understanding of all these elements and how they operate together as one system, and now we can apply the insights to the six underlying challenges today’s organizations face. The findings elucidate how employee are affected by the organizational context they are in.

Understanding the layers

Organization designers in management consulting are like architects for groups and systems in organizations — they must come into an environment, understand it and change it for the better.

We cannot go from entangled to enlightened by single interventions, such as a team-building exercise. To implement change, we must design the whole system and understand the dynamics of the different layers of the organization based on the context we create.

To summarize, deploying the Peopletecture model allows you as the management consulting practitioner or researcher to do the following:

• Build the best hierarchy you can, and create jobs with clarity of ownership based on this hierarchy.
• Intentionally structure collaboration in the network so that attention is focused in the optimal direction.
• Remove the organizational scar tissue by putting the right measures for pay and performance in place.
• Reduce or eliminate the us-versus-them mentality by simplifying and clarifying a person’s place of belonging.
• Provide radical transparency and empower teams.
• Improve social connections by teaming in ways that make groups wiser.