Aligning Reward Systems in Organization Design: How to Activate the Orphan Star Point”, write a 2 page paper explaining what you have learned from this article. Make sure it is double space, Times Roman, and font 12.

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Read the below article “Aligning Reward Systems in Organization Design: How to Activate the Orphan Star Point”, write a 2 page paper explaining what you have learned from this article. Make sure it is double space, Times Roman, and font 12.
Companies are becoming more sophisticated in using organization design as a critical tool for
driving business growth through new structure and capabilities. It is intuitive that aligning the
right measures and reward systems with structure and process is important to organization
design. But reward systems are often on the sidelines during the design process. The reasons
are many, and they need to change with the help of some simple frameworks that provide
a basis for diagnosing alignment needs and for making concrete adjustments in incentive
programs and metrics to support changes in structure, process and people.
I
t has been more than 35 years since Jay
Galbraith (1975) offered the now widely
accepted Star Model (See Exhibit 1) as a
lens on organization design that aimed to
align structure, process, people and rewards
with the business strategy.
Metrics inform employees and managers of
what is important and provide leadership
with a dashboard for steering business
growth. Rewards influence behavior and
are intended to align individual actions
with organizational goals. The Star Model
has been widely adopted largely because of
its behavioral point of view on organization
design.
Metrics and rewards are a substantial part of
bringing those behaviors to life, and yet
design practice is not well-defined, and the
literature is nearly silent on how to align
reward systems to an integrated organization
design initiative. Rewards systems are the
orphan star point.
The wrong incentives may actually make
matters worse than no incentives at all. In his
famously titled paper, “On the Folly of
Rewarding A, while Hoping for B,” Steven
Kerr (1975) made the case well. We would
extend the argument to suggest a Compensation
Hippocratic Oath: first, do no harm.
The Effects of
Misalignment
When metrics and pay are not aligned with
new organization structures, roles and business
processes, the unintended consequences
are many. Take the example of a significant
reorganization of a large industrial products
company intended to drive growth in four
vertical markets. The design change shifted
the organization from a purely regional
model with country-based P&L units to four
global industry-aligned units. Despite an
intent to realign executive targets and incentives
as a part of the initiative, legacy programs
prevailed due to a lack of flexibility on the
part of corporate compensation programs.
Country managers in the new organization
continued to behave as they had in the old.
Instead of collaborating across countries and
regions to bundle their products with those
produced in other country-based businesses,
they continued to chase business on their own
to keep their local factories filled with orders.
EXHIBIT 1: GALBRAITH’S STAR MODEL
Instead of helping key account leaders in a
vertical market to offer higher-value solutions
that would have meant greater sales for the
overall company, they did precisely what they
were being incentivized to do.
When metrics and rewards systems are not
realigned with changes in structure and business
processes, the impacts are predictable:
• Individual performance targets compete
with the goals of the strategy.
• Roles and accountabilities are confused or
continue to be aligned around the old
organization design.
• How will we grow
and compete in
our markets?
Strategy
Capabilities
• What talent
is needed?
• WhatHR
practices and
routines are
critical to our
capabilities?
• How will we grow
and compete in
our markets?
• How will we grow
and compete in
our markets?
People
Practices
What do we need to
be able to do better
than our competitors?
Structure
Metrics/
Rewards
Behavior
Process
‘ How should
we organize?
I What are the
key roles?
• How should
power be
balanced in
the matrix?
• How are decisions
made?
• How does work flow
between roles?
• What management
processes need to
be defined?
Performance Culture
VOLUME 34/ISSUE 4 — 20H 39
• Decisions are made to optimize
performance in one unit contrary to the
needs of the larger organization.
• The organization is slow to act and
burdened with internal conflicts.
• Leaders resist change (because it is rational
to do so when incentives encourage old
behaviors).
• Individuals hegin to question the impact of
the organization design changes on their
personal economic well being, distracting
them from winning in the new formation.
The Causes of
Misalignment
Reward systems are often the missing element
in a comprehensive view of organization
design for a number of common reasons:
• Compartmentalized thinking from HR
leaders-Orgí\n\zaúon design professionals
exclude compensation input or include
their comp colleagues too late in the
process.
• The special sensitivity of pay programs –
Leadership may be reluctant to make
adjustments that could reduce
accountability for results or upset internal
and external equity dynamics.
• Lack of flexibility in core policy –
Compensation policy is sometimes overcontrolled
by pay experts focused more on
creating consistency than responding to
the differentiated needs of business units.
• Legacy of pay and metrics complexity –
Programs and measures often try to
emphasize too many things and lack focus
on profitahle and sustainable growth.
Many organization designers lack experience
in designing metrics and compensation
systems and so ignore the topic. Perhaps
more importantly, when they do engage
with their compensation colleagues, both
parties approach the topic with very different
frameworks.
Organization designers seek to differentiate
the organization by creating unique, hardto-replicate
capabilities that can produce
lasting and sustainable competitive advantage.
Conversely, many compensation
strategists seek to match industry patterns to
ensure that the company’s policies are not
out of line with competitors or with lahor
market realities. Indeed, corporate governance
for executive compensation (through
board compensation committees) relies
heavily on survey and proxy data, as well as
peer company comparisons, to ensure that
compensation awards are within acceptable
ranges in terms of amount (total compensation
value) and delivery mechanisms (base,
bonus, equity, etc.).
One HR executive recently articulated a common
dynamic: “Our directors, who come
from both our industry and other industries,
seem to find comfort in focusing on conformity,
cost and governance. The compensation
consultants are particularly influential. Compensation
committees are hiring their own
consultants now to balance out perceived
EXHIBIT 2: REWARDS SYSTEMS: ONE OF FIVE POINTS OF STAR MODEL
Operating
Governance Model
r ^
Rewards
Philosophy &
Goals
– Base/variable pay
– Role of fringe benefits
– Comp governance
Comp Delivery
Mechanisms
L. J
• Salary administration
– Market pricing
-Job evaluation
– Performance management
– Variable pay delivery
Structure
Process
People
Less Adjustable ^ More Adjustable
conflicts created by the comp consultants
hired by HR. These corporate compensation
consultants have the last word on interpreting
hoth the market data and the position of
the management compensation consultant.
Since all the consultants all seem to know
each other and have much the same data,
there is a lot of conformity.”
An Effective
Design Process
Organization designers and comp professionals
need a common language and set of
frameworks to work together on the orphan
star point. And they need a process road map
to assure that pay program designs are
synched with the design of the other
star points.
Our research and consulting experience
reveals two frameworks that can guide the
redesign of rewards systems in alignment
with the other organization design star
points:
1. Rewards System Design Logic (The What)
2. Design Milestones Process (The How)
Rewards System
Design Logic
Rewards systems alignment should include at
least three elements: (See Exhibit 2)
• Strategic drivers (inputs to design thinking)
• Rewards philosophy and objectives (core
design decisions)
• Compensation delivery mechanisms (how
core policy is carried out)
Strategic drivers
The key inputs to aligned reward systems
design are:
• operating governance;
• organizational capabilities; and
• labor market requirements.
The operating governance model spells out
the extent of central versus distrihuted decision
making for matters of enterprise policy,
including rewards systems. The more integrated
the governance model, the more linked
business units and functions need to be. Harmonized
rewards systems and metrics are
part of driving integration (see Table 1).
40 PEOPLE & STRATEGY
DIMENSION
ORGANIZATION
DESIGN
STRATEGY
GOVERNANCE
TALENT
REWARDS
PHILOSOPHY
EXAMPLES
TABLE 1 : OPERATING GOVERNANCE MODEL: DEGREES OF
INTEGRATION ACROSS BUSINESS UNITS
1. FULLY
INTEGRATED
(SINGLE
BUSINESS)
Single strategy
guides all P&L
units with minor
variations
• Direction
comes from
organizational
center
• All process
and practices
are common
• Single culture
• Single talent
pool for
ieadership jobs
• Numerous
synergies
expected
• Single design.
limited need
for variations
• Central
administration
Cisco, CocaCola,
Toyota
II. DIVISIONAL
(CLOSELY
RELATED
PORTFOLIO)
Complementary
business
portfoiio and core
strategies with
synergies
• Controlling
certain key
functions to
drive scale.
common process
and poiicy
consistency
• High degrees
of cross-BU
movement of
key taient with
common process
and metrics
• Single design,
with variations
in practices as
necessary
• Mixed
administration
P&G, PepsiCo, IBM,
Danone, Canon
III. HYBRID
(LOOSELY
RELATED
PORTFOLIO)
Driving better
strategies and
more ambitious
targets: few
synergies
• Facilitating some
scale benefits
and some best
practices across
otherwise
Standalone
businesses
capitai, talent
and knowledge
• Limited planned
movement of
talent across
units at senior
levels
• Harmonized
variations in
design with
business unit
administration
GE, Unilever, Tyco,
Philips
IV. HOLDING
COMPANY
(CONGLOMERATE)
Structuring cheap
finance, buying iow.
selling high
• Appointing the best
people to run the
businesses
• Business units return
financiáis to parent
• No common
processes
• Multiple cultures
• No movement of
talent across units
i>v oyifci^i^iv^o
expected
• High variability:
no need for
harmonization
Berkshire Hathaway,
Private Equity
Capabilities represent critical organizational
strengths that help the businesses to compete
in their markets. These will often vary across
a portfolio of business units in a large diversified
company (and design choices should
accommodate these differences). Capabilities
determine what behaviors and actions should
be encouraged and rewarded.
The competitive talent (labor) market drivers
define the price of acquiring and retaining
defined sets of talents, based on market forces
globally and locally.
These three drivers provide the guardrails
by which a company should set its rewards
system philosophy and objectives and influence
the design of compensation delivery
mechanisms.
Rewards philosophy and
objectives
The core elements of rewards systems design
are: 1) base pay; 2) variable compensation;
3) fringe benefits; and 4) compensation governance
including performance management.
Issues that are often addressed in compensation
philosophy and objectives include:
• Should compensation be a driver or a reenforcer
of behavior?
• Where does the firm wish to position
itself in the labor market (at what
percentile)?
• What portion of total rewards will be
distributed in cash, equity and social
benefit programs?
• How much leverage should variable
rewards have (how much pay should be at
risk at different levels of the organization)?
• Where and how will compensation design
and delivery be governed?
These rewards strategy decisions tend to be
stable over time. As a practical matter, they
represent the boundaries that organization
designers need to work with as they consider
aligning star points. Increasingly, they are
influenced by the realties of competing for
key talent in fields such as engineering, creative
design and general management.
Changes in core compensation policy should
only be made to change culture to fit new
market environments.
Compensation-delivery
mechanisms
Ck)mpensation-delivery mechanisms include
components such as base salary administration,
job evaluation, market pricing,
performance management and delivery of
variable pay programs. These mechanisms
should be adjustable, within controls suited
to the operating governance model of the
company, and tailored to the needs of major
business units.
Variable compensation delivery can include
short-term bonuses and long-term incentives
such as options and equity and are
normally tied to achievement of critically
defined metrics. While the design of these
programs will be common in integrated
companies, the administration of these plans
can be adjusted to support a business model
or strategy or capabilities to execute the
strategy. A business unit that realigns itself
from a set of regional profit and loss units
to global products or markets must be able
to align the metrics for new performance
expectations, and then adjust weights in the
bonus formula, within limits, to drive new
(global) behavior. At a minimum, adjustments
must be made to minimize the
destructive impact of programs that continue
to support the old organization.
The Design Milestones
Process
Kates and Kesler have defined an organization
design process centered around five key
milestones (Kesler & Kates, 201 I ). The milestones
represent a series of design decisions
that are made in a logical sequence. In the
model, two arrows labeled “operating governance
model” and “capabilities” span all five
steps in the process. Organization design
decisions are anchored to these two foundational
elements. These elements should guide
design decisions about rewards systems just
as they influence structure, process and people
decisions.
The design questions related to metrics and
rewards at each milestone are highlighted in
Exhibit 3 (p, 42). The design work related to
metrics and rewards at phase in the process
is discussed below.
VOLUME 34/ISSUE 4 — 2011 41
Milestone One: Business Case
The first step in the milestone model is to
create a clear case for organizational change
to either support a new business strategy or
to close a performance gap. In this diagnostic
step, leaders and designers should ask:
“How are current metrics and rewards contributing
to the current problem?” Examine
the current measures used to hold key players
accountable. It is often revealing to line
up the score cards of regional managers
with those of the global unit heads and
functional leaders. Individual performance
targets and quarterly business review metrics
should be examined for alignment
against the strategic goals of the business.
A gap may exist in the way behaviors are
incented relative to new capabilities the
business needs to create. These data points
should be factored into the diagnostic
“problem statements” that emerge from
interviews, focus groups and other qualitative
analysis.
The business case milestone is complete once
a set of design criteria has been articulated.
Later, in most cases, adjustments to rewards
and metrics will play a role in achieving these
design criteria.
Milestone Two: Strategic Grouping
Once the business case is spelled out, the next
set of decisions in the design process is to
define the basic structure of the organization.
Put another way, what basic grouping of
work do we believe will best create the capabilities
necessary to deliver the strategy?
Metrics can play an important role in helping
the leadership team choose the best primary
grouping logic (function, product, geography
or customer). Robert Simons has argued the
power of measures as a force for strategy
alignment and renewal (Simons, 2005). A
creative way to puzzle through the pros and
cons of each option is to ask the question:
“What lens do you want your leaders looking
through as they make decisions? What data
should inform their work and how they track
progress?” In Gillette’s razor business, the
focus is brand not product. Brand metrics
drive brand leaders to embrace cannibalization
and planned obsolescence of older
models to continue innovation into newer
shaving systems with a higher value proposition
and price points for blades. Roles and
metrics aligned by product would likely drive
very different behaviors.
Once a basic structural choice is identified,
metrics should be listed for each of the proposed
organizational units or groups.
Without a basic summary of the accountabilities
of each unit, it is difficult to know
what is being proposed. For example, a unit
called “marketing” may take many different
forms ranging from media and communications
to product management to profit and
loss management.
Metrics also play a useful role in testing
whether the strategic grouping concept
EXHIBIT 3: THE FIVE-MILESTONE DESIGN PROCESS (WITH REWARDS SYSTEM DESIGN QUESTIONS)
42
oject Pha
Q.
M
O
0)
*.» w 0) – ^
^ a!
o3 ^
•a c
1 “”
• Capabilities

3usiness Case ^
& Discovery A
1 Strategic ^
1 Grouping ^1 Integration .
*
1 Talent & 1
1 Leadership J
1
1 ^
1 Transition
1 J á
^ ^ Operating Governance Model
We ore c/eor
on the problem
to solve
Are pay and metrics
aligned with the
strategy or do they
contribute to the
case for change?
In what way?
2. We have made
a basic structure
choice that
supports the
strategy
What measurement
lens should managers
use to make the best
business decisions
(e.g., customer.
product, brand, region)?
What should the
accountabilities be
for each major unit?
Where should we
create line of sight for
the P&L?
3. We have tied the
pieces together —
designed the points
of linkage across
boundaries
How should rewards
systems and metrics
help create integration
among the units
(especially in the
matrix)? Where should
pay for performance
contain a team or unit
element? Which team
or unit, and with how
much leverage?
4. We have staffed
the critical roles to
carry out the work
and build talent
for the future
What are the “pivot”
jobs in this new
organization and what
do we have to pay to
attract and retain that
talent? What business
dashboard will the
leadership team use?
What should the
accountabilities of key
roles be? How should we
structure incentives to
drive the right behaviors
in the new roles?
5. We are prepared
to measure, learn
and adjust
How will we manage
the pay of new job
incumbents (and
others affected) in
this restructuring?
What reporting
systems must be
developed to
implement this
new organization?
PEOPLE & STRATEGY
makes sense. Who owns the P&cL in this
new organization is often an early point of
discussion as alternative design choices are
debated. Engaging the GEO and the GIO in
discussions at this point always makes
sense to gain their input and to give each an
opportunity to begin to form new thinking
about how to support a realignment of
P&L reporting.
iVIilestone Three: Integration of
the Design
In this design stage, the work shifts to linking
together the separate organizational
units that have been planned. A clear, common
rewards philosophy and set of goals
will act as an integrating force in the culture
of a company, often demonstrating a
lot about what leadership values. In itself,
this can be a positive force. But it is
not enough.
The call for “boundaryless organization” at
GE, IBM and elsewhere has become an
urgent matter of working across geographies,
functions and business units to go
faster and to gain the benefits of scale. Some
common examples of integration needs
include the following:
• Divisions in GE share common
infrastructure under a single enterprise
executive for Ghina to maximize presence
and influence with regulators
and customers.
• Goca-Gola uses communities of practice
in talent development to grow general
managers across its worldwide operating
units.
• Govidien uses a key account organization
to work across business units to bring one
face to large health care customers.
• Functions are aligned into crossfunctional
product category teams at
Green Mountain Goffee Roasters to
speed consumer-centric innovation.
• Tyco’s valve and control product units are
placed under a single vertical market
executive to bundle products and services
sold into the oil and gas market.
There are many ways to create integration,
ranging from establishing networks and councils
to creating robust planning processes and
linking units together with smart pay programs
and measures. It is in Milestone 3 that the bulk
of the compensation alignment effort needs to
occur. The compensation-delivery mechanisms
TABLE 2: HOW REWARDS AND METRICS CAN HELP SUPPORT INTEGRATION
DESIGN NEEDS
• Communities of practice in thr _ . • i
talent development to grow general managers
across its worldwide operating units
• Functions are aligned into cross-functional
product category teams to speed consumer^
centric innovation
• Product units are placed under one market
executive in order to bundle products and
services sold into a vertical market
• Key account organization works across
business units to bring one face to large
customers
• Divisions share common infrastructure under
an enterprise executive for China to maximize
presence and influence (cost effectively)
an objective related to companywide talent
development
• All members have category team objectives
• Incentive formula includes category as well as
division and enterprise performance
• Complementary P&Ls set for product and
vertical market units
• Managers are measured on total value of key
customer order
• Division and enterprise account reps share
credit in scorecard for sales
• Incentives reinforce higher value bundled sales
• Set some shared objectives for country and
divisional leaders and give both a substantial
stake in enterphse performance in the country
have the potential to be powerful integrative
forces in integration challenges like those listed
above. Gapabilities and operating governance
(two of the strategic drivers in rewards design)
should influence which integrating tools to
apply (including rewards and metrics) and how
to apply them. Let’s look at the logic stream for
rewards and metrics as integrators in organization
design (see Table 2).
standpoint, but if you miss your operational
performance metrics, your total pay will be
dramatically reduced. This focuses managers
on their operational results, which is how the
company differentiates itself in the marketplace.
In short, hit your operational goal and
your pay is doubled. Meet your P&L numbers
but not your operational metrics and
you could lose your job.”
Leaders and compensation people often err on
the side of narrow line-of-sight for its supposed
motivating effects.
Variable Compensation
The importance of aligning management
incentives with desired organizational capabilities
should not be underestimated.
Variable pay is the “so-what” — the payoff
— of well-crafted metrics. A senior HR executive
at a well-known logistics company
characterized the power of management
bonus programs in getting people’s attention
around a critical capability:
“Gompensation here is focused on operational
excellence. It tracks to our advertising
message. A huge portion of compensation is
tied to performance metrics, to a lesser extent
financial metrics. Your pay is tied to 99.998
percent successful delivery metrics. You can
hit your numbers from an operating profit
One important consideration is the relative
weighting of financial goals and other operatingobjectives
with other priorities. Integration
at the enterprise level is reinforced by a single
balanced scorecard approach that dictates
broad categories of measurement that are
adaptable to divisional needs.
Another key challenge is the need to balance
the inherent tension between a) establishing
clear line-of-sight between a manager’s variable
pay and her own outputs versus; and
b) encouraging more collaboration based
more on unit or companywide results and
payouts (integration). Leaders and compensation
people often err on the side of narrow
line-of-sight for its supposed motivating
effects. This argument is often exaggerated, >•
VOLUME 34/ISSUE 4 — 2011 43
and, in any case, integration and collaboration
become more difficult when there are
smaller units of measurement for variable
pay.
Performance Management
Larry Bossidy and Ram Charan (2002)
made the case that performance management
in high-performing companies is a
business process, not a human resources
process. PepsiCo, P&G, Honeywell and others
are known for their goal-deployment
rigor through core business processes that
cascade objectives down and sideways
across the businesses. New business teams
and other organizational startups should be
launched with deliberate efforts to create
linkage among the targets of those who
depend on each other in the new structure
to achieve business results.
tegic capabilities. Creative designers at Apple
and Nike are paid based on market pricing of
jobs. Software engineers at Google are paid
at levels necessary to compete with Facebook
and others in the same talent market. GE and
other companies continue to market price
division general management roles, especially
for executives that have global experience,
because these pivot roles have an outsized
impact on results.
From the point of view of compensation
strategy, benefits represent a substantial cost
of total compensation and therefore must
be considered as a strategic cost. Organizations
derive little if any behavioral change
from this portion of compensation, but benefit
programs can be an important factor in
attracting and retaining the right talent, and
their design can help or hinder the portability
of talent around the world or across lines of
The redesign of an organization can fundamentally
change roles and responsibilities
in a manner that creates perceived winners
and losers. It is easy to give people more
money when they are promoted. It is often
less clear how to treat pay and perks of
those with diminished roles. Human
resources should have a clear practice to
guide pay decisions as organization implementation
takes place.
Our research indicates practices vary widely
in this regard. In some companies, immediate
downward adjustments are made. In others,
a “red circle” treatment may last for a transition
period of one or two years. Still others,
in order to avoid adverse cultural reactions,
may protect people indefinitely. Clearly those
organizations with broad banding approaches
to job evaluation have greater flexibility in
this regard.
Implications for
The sill urnan resources function need to Human Resources
be bridged, and compensation, organization effectiveness
and staffing people need to be partners in the
organization design and implementation process.
Milestone Four: Leadership
and Talent
In this milestone, the new organization
design is staffed. This is a window of opportunity
to upgrade leadership and other talent
in the new organization. The temptation to
fill new roles with legacy players should be
avoided (CLC, 2010). Companies continue
to battle for critical skill sets that remain in
short supply and now on a global scale. In
the fourth phase of organization design, the
human resources executive must be thinking
about how to use pay to attract and retain
needed talent.
The combination of base pay, variable compensation
and benefits (i.e., total
compensation) needs to be market-driven,
with each component weighted by the organization’s
compensation philosophy. Rarely
will the organization design influence the
design of base pay programs. It may, however,
influence matters such as job evaluation
and merit guidelines. Some newly created
positions may be considered “pivot” jobs
(Boudreau and Ramstad, 2007) due to their
disproportionate impact on the building strabusiness.
If the operating governance model
of the enterprise is a “holding company,” this
is not important; but if the intent is a more
integrated model, where leadership talent
can be moved across boundaries, a common
platform of benefits may be quite important.
Organization design has become a core competency
for the human resources organization
throughout the past five years. But this capability
should not be the sole domain of
organization effectiveness professionals.
Human resources executives should bring
compensation professionals into the organization
design process early. The core
compensation philosophy and goals should
be considered with more attention to the
operating governance model of the company.
Pay systems can be separated into those eleRewards
and metrics should cease to be the orphan
in Galbraith’s famous Star Model.
Milestone Five: Implementation
The development of the business dashboard
and agreement on management routines for
quarterly and annual business reviews are
critical elements transition planning. Implementation
of complex organization
realignments often takes many months or
more. Rarely do leaders and designers get it
completely right the first time. It is critical to
begin using the new metrics to track results
and be willing to make adjustments in the
design over time.
ments that remain relatively fixed and
common over time versus those delivery
mechanisms that can be adjusted to fit the
needs of different business units trying to
build unique competitive capabilities, linked
to their strategies.
The silos within the human resources function
need to be bridged, and compensation,
organization effectiveness and staffing people
need to be partners in the organization design
and implementation process. HR generalists
PEOPLE & STRATEGY
I
should become skilled activists in developing
metrics and helping to cascade husiness
objectives up and down and across the organization
in the launch of new teams.
Rewards and metrics should cease to be the
orphan in Galbraith’s famous Star Model.
This box of tools is much too important to
be ignored in our efforts to build more agile,
capable organizations to compete in today’s
markets.
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(liilbraith, J.R. Designing Matrix Organizations that
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design challenges. SF, C;A: Jossey-Bass.
Kerr, Steven (1975). On the folly of rewarding A, while
Uopmfi im R. Academy of Management Journal, 18,769-8.1
Kesler, G. and Kates, A. (201 1). Leading organization
design: How to make organization design decisions to
drive the results you want. SF, CA: ¡ossey-Bass.
Simons, R. Levers Of Organization Design: How Managers
Use Accountability Systems For Greater Performance
And Commitment. Cambridge, Mass.: Harvard Business
School Press, 2005.
Michael H. Schuster, J.D., Ph.D., is a
professor of management strategy and
chair of the U. S. Coast Guard Academy’s
Management Department. He
is also managing partner at Competitive
Human Resources Strategies, LLC
(CHRS), a consulting firm based in
Narragansett, R.I. He can be reached
at mschrs@cox.net.
Gregory Kesler is a managing partner in
the consulting firm Kates Kesler, based
in Wilton, Conn. He writes and lectures
extensively on the subject of organization
design. He can be reached at
gregisikateskcslcncom.
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Aligning Reward Systems in Organization Design: How to Activate the Orphan Star Point”, write a 2 page paper explaining what you have learned from this article. Make sure it is double space, Times Roman, and font 12.

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Read the below article “Aligning Reward Systems in Organization Design: How to Activate the Orphan Star Point”, write a 2 page paper explaining what you have learned from this article. Make sure it is double space, Times Roman, and font 12.
Companies are becoming more sophisticated in using organization design as a critical tool for
driving business growth through new structure and capabilities. It is intuitive that aligning the
right measures and reward systems with structure and process is important to organization
design. But reward systems are often on the sidelines during the design process. The reasons
are many, and they need to change with the help of some simple frameworks that provide
a basis for diagnosing alignment needs and for making concrete adjustments in incentive
programs and metrics to support changes in structure, process and people.
I
t has been more than 35 years since Jay
Galbraith (1975) offered the now widely
accepted Star Model (See Exhibit 1) as a
lens on organization design that aimed to
align structure, process, people and rewards
with the business strategy.
Metrics inform employees and managers of
what is important and provide leadership
with a dashboard for steering business
growth. Rewards influence behavior and
are intended to align individual actions
with organizational goals. The Star Model
has been widely adopted largely because of
its behavioral point of view on organization
design.
Metrics and rewards are a substantial part of
bringing those behaviors to life, and yet
design practice is not well-defined, and the
literature is nearly silent on how to align
reward systems to an integrated organization
design initiative. Rewards systems are the
orphan star point.
The wrong incentives may actually make
matters worse than no incentives at all. In his
famously titled paper, “On the Folly of
Rewarding A, while Hoping for B,” Steven
Kerr (1975) made the case well. We would
extend the argument to suggest a Compensation
Hippocratic Oath: first, do no harm.
The Effects of
Misalignment
When metrics and pay are not aligned with
new organization structures, roles and business
processes, the unintended consequences
are many. Take the example of a significant
reorganization of a large industrial products
company intended to drive growth in four
vertical markets. The design change shifted
the organization from a purely regional
model with country-based P&L units to four
global industry-aligned units. Despite an
intent to realign executive targets and incentives
as a part of the initiative, legacy programs
prevailed due to a lack of flexibility on the
part of corporate compensation programs.
Country managers in the new organization
continued to behave as they had in the old.
Instead of collaborating across countries and
regions to bundle their products with those
produced in other country-based businesses,
they continued to chase business on their own
to keep their local factories filled with orders.
EXHIBIT 1: GALBRAITH’S STAR MODEL
Instead of helping key account leaders in a
vertical market to offer higher-value solutions
that would have meant greater sales for the
overall company, they did precisely what they
were being incentivized to do.
When metrics and rewards systems are not
realigned with changes in structure and business
processes, the impacts are predictable:
• Individual performance targets compete
with the goals of the strategy.
• Roles and accountabilities are confused or
continue to be aligned around the old
organization design.
• How will we grow
and compete in
our markets?
Strategy
Capabilities
• What talent
is needed?
• WhatHR
practices and
routines are
critical to our
capabilities?
• How will we grow
and compete in
our markets?
• How will we grow
and compete in
our markets?
People
Practices
What do we need to
be able to do better
than our competitors?
Structure
Metrics/
Rewards
Behavior
Process
‘ How should
we organize?
I What are the
key roles?
• How should
power be
balanced in
the matrix?
• How are decisions
made?
• How does work flow
between roles?
• What management
processes need to
be defined?
Performance Culture
VOLUME 34/ISSUE 4 — 20H 39
• Decisions are made to optimize
performance in one unit contrary to the
needs of the larger organization.
• The organization is slow to act and
burdened with internal conflicts.
• Leaders resist change (because it is rational
to do so when incentives encourage old
behaviors).
• Individuals hegin to question the impact of
the organization design changes on their
personal economic well being, distracting
them from winning in the new formation.
The Causes of
Misalignment
Reward systems are often the missing element
in a comprehensive view of organization
design for a number of common reasons:
• Compartmentalized thinking from HR
leaders-Orgí\n\zaúon design professionals
exclude compensation input or include
their comp colleagues too late in the
process.
• The special sensitivity of pay programs –
Leadership may be reluctant to make
adjustments that could reduce
accountability for results or upset internal
and external equity dynamics.
• Lack of flexibility in core policy –
Compensation policy is sometimes overcontrolled
by pay experts focused more on
creating consistency than responding to
the differentiated needs of business units.
• Legacy of pay and metrics complexity –
Programs and measures often try to
emphasize too many things and lack focus
on profitahle and sustainable growth.
Many organization designers lack experience
in designing metrics and compensation
systems and so ignore the topic. Perhaps
more importantly, when they do engage
with their compensation colleagues, both
parties approach the topic with very different
frameworks.
Organization designers seek to differentiate
the organization by creating unique, hardto-replicate
capabilities that can produce
lasting and sustainable competitive advantage.
Conversely, many compensation
strategists seek to match industry patterns to
ensure that the company’s policies are not
out of line with competitors or with lahor
market realities. Indeed, corporate governance
for executive compensation (through
board compensation committees) relies
heavily on survey and proxy data, as well as
peer company comparisons, to ensure that
compensation awards are within acceptable
ranges in terms of amount (total compensation
value) and delivery mechanisms (base,
bonus, equity, etc.).
One HR executive recently articulated a common
dynamic: “Our directors, who come
from both our industry and other industries,
seem to find comfort in focusing on conformity,
cost and governance. The compensation
consultants are particularly influential. Compensation
committees are hiring their own
consultants now to balance out perceived
EXHIBIT 2: REWARDS SYSTEMS: ONE OF FIVE POINTS OF STAR MODEL
Operating
Governance Model
r ^
Rewards
Philosophy &
Goals
– Base/variable pay
– Role of fringe benefits
– Comp governance
Comp Delivery
Mechanisms
L. J
• Salary administration
– Market pricing
-Job evaluation
– Performance management
– Variable pay delivery
Structure
Process
People
Less Adjustable ^ More Adjustable
conflicts created by the comp consultants
hired by HR. These corporate compensation
consultants have the last word on interpreting
hoth the market data and the position of
the management compensation consultant.
Since all the consultants all seem to know
each other and have much the same data,
there is a lot of conformity.”
An Effective
Design Process
Organization designers and comp professionals
need a common language and set of
frameworks to work together on the orphan
star point. And they need a process road map
to assure that pay program designs are
synched with the design of the other
star points.
Our research and consulting experience
reveals two frameworks that can guide the
redesign of rewards systems in alignment
with the other organization design star
points:
1. Rewards System Design Logic (The What)
2. Design Milestones Process (The How)
Rewards System
Design Logic
Rewards systems alignment should include at
least three elements: (See Exhibit 2)
• Strategic drivers (inputs to design thinking)
• Rewards philosophy and objectives (core
design decisions)
• Compensation delivery mechanisms (how
core policy is carried out)
Strategic drivers
The key inputs to aligned reward systems
design are:
• operating governance;
• organizational capabilities; and
• labor market requirements.
The operating governance model spells out
the extent of central versus distrihuted decision
making for matters of enterprise policy,
including rewards systems. The more integrated
the governance model, the more linked
business units and functions need to be. Harmonized
rewards systems and metrics are
part of driving integration (see Table 1).
40 PEOPLE & STRATEGY
DIMENSION
ORGANIZATION
DESIGN
STRATEGY
GOVERNANCE
TALENT
REWARDS
PHILOSOPHY
EXAMPLES
TABLE 1 : OPERATING GOVERNANCE MODEL: DEGREES OF
INTEGRATION ACROSS BUSINESS UNITS
1. FULLY
INTEGRATED
(SINGLE
BUSINESS)
Single strategy
guides all P&L
units with minor
variations
• Direction
comes from
organizational
center
• All process
and practices
are common
• Single culture
• Single talent
pool for
ieadership jobs
• Numerous
synergies
expected
• Single design.
limited need
for variations
• Central
administration
Cisco, CocaCola,
Toyota
II. DIVISIONAL
(CLOSELY
RELATED
PORTFOLIO)
Complementary
business
portfoiio and core
strategies with
synergies
• Controlling
certain key
functions to
drive scale.
common process
and poiicy
consistency
• High degrees
of cross-BU
movement of
key taient with
common process
and metrics
• Single design,
with variations
in practices as
necessary
• Mixed
administration
P&G, PepsiCo, IBM,
Danone, Canon
III. HYBRID
(LOOSELY
RELATED
PORTFOLIO)
Driving better
strategies and
more ambitious
targets: few
synergies
• Facilitating some
scale benefits
and some best
practices across
otherwise
Standalone
businesses
capitai, talent
and knowledge
• Limited planned
movement of
talent across
units at senior
levels
• Harmonized
variations in
design with
business unit
administration
GE, Unilever, Tyco,
Philips
IV. HOLDING
COMPANY
(CONGLOMERATE)
Structuring cheap
finance, buying iow.
selling high
• Appointing the best
people to run the
businesses
• Business units return
financiáis to parent
• No common
processes
• Multiple cultures
• No movement of
talent across units
i>v oyifci^i^iv^o
expected
• High variability:
no need for
harmonization
Berkshire Hathaway,
Private Equity
Capabilities represent critical organizational
strengths that help the businesses to compete
in their markets. These will often vary across
a portfolio of business units in a large diversified
company (and design choices should
accommodate these differences). Capabilities
determine what behaviors and actions should
be encouraged and rewarded.
The competitive talent (labor) market drivers
define the price of acquiring and retaining
defined sets of talents, based on market forces
globally and locally.
These three drivers provide the guardrails
by which a company should set its rewards
system philosophy and objectives and influence
the design of compensation delivery
mechanisms.
Rewards philosophy and
objectives
The core elements of rewards systems design
are: 1) base pay; 2) variable compensation;
3) fringe benefits; and 4) compensation governance
including performance management.
Issues that are often addressed in compensation
philosophy and objectives include:
• Should compensation be a driver or a reenforcer
of behavior?
• Where does the firm wish to position
itself in the labor market (at what
percentile)?
• What portion of total rewards will be
distributed in cash, equity and social
benefit programs?
• How much leverage should variable
rewards have (how much pay should be at
risk at different levels of the organization)?
• Where and how will compensation design
and delivery be governed?
These rewards strategy decisions tend to be
stable over time. As a practical matter, they
represent the boundaries that organization
designers need to work with as they consider
aligning star points. Increasingly, they are
influenced by the realties of competing for
key talent in fields such as engineering, creative
design and general management.
Changes in core compensation policy should
only be made to change culture to fit new
market environments.
Compensation-delivery
mechanisms
Ck)mpensation-delivery mechanisms include
components such as base salary administration,
job evaluation, market pricing,
performance management and delivery of
variable pay programs. These mechanisms
should be adjustable, within controls suited
to the operating governance model of the
company, and tailored to the needs of major
business units.
Variable compensation delivery can include
short-term bonuses and long-term incentives
such as options and equity and are
normally tied to achievement of critically
defined metrics. While the design of these
programs will be common in integrated
companies, the administration of these plans
can be adjusted to support a business model
or strategy or capabilities to execute the
strategy. A business unit that realigns itself
from a set of regional profit and loss units
to global products or markets must be able
to align the metrics for new performance
expectations, and then adjust weights in the
bonus formula, within limits, to drive new
(global) behavior. At a minimum, adjustments
must be made to minimize the
destructive impact of programs that continue
to support the old organization.
The Design Milestones
Process
Kates and Kesler have defined an organization
design process centered around five key
milestones (Kesler & Kates, 201 I ). The milestones
represent a series of design decisions
that are made in a logical sequence. In the
model, two arrows labeled “operating governance
model” and “capabilities” span all five
steps in the process. Organization design
decisions are anchored to these two foundational
elements. These elements should guide
design decisions about rewards systems just
as they influence structure, process and people
decisions.
The design questions related to metrics and
rewards at each milestone are highlighted in
Exhibit 3 (p, 42). The design work related to
metrics and rewards at phase in the process
is discussed below.
VOLUME 34/ISSUE 4 — 2011 41
Milestone One: Business Case
The first step in the milestone model is to
create a clear case for organizational change
to either support a new business strategy or
to close a performance gap. In this diagnostic
step, leaders and designers should ask:
“How are current metrics and rewards contributing
to the current problem?” Examine
the current measures used to hold key players
accountable. It is often revealing to line
up the score cards of regional managers
with those of the global unit heads and
functional leaders. Individual performance
targets and quarterly business review metrics
should be examined for alignment
against the strategic goals of the business.
A gap may exist in the way behaviors are
incented relative to new capabilities the
business needs to create. These data points
should be factored into the diagnostic
“problem statements” that emerge from
interviews, focus groups and other qualitative
analysis.
The business case milestone is complete once
a set of design criteria has been articulated.
Later, in most cases, adjustments to rewards
and metrics will play a role in achieving these
design criteria.
Milestone Two: Strategic Grouping
Once the business case is spelled out, the next
set of decisions in the design process is to
define the basic structure of the organization.
Put another way, what basic grouping of
work do we believe will best create the capabilities
necessary to deliver the strategy?
Metrics can play an important role in helping
the leadership team choose the best primary
grouping logic (function, product, geography
or customer). Robert Simons has argued the
power of measures as a force for strategy
alignment and renewal (Simons, 2005). A
creative way to puzzle through the pros and
cons of each option is to ask the question:
“What lens do you want your leaders looking
through as they make decisions? What data
should inform their work and how they track
progress?” In Gillette’s razor business, the
focus is brand not product. Brand metrics
drive brand leaders to embrace cannibalization
and planned obsolescence of older
models to continue innovation into newer
shaving systems with a higher value proposition
and price points for blades. Roles and
metrics aligned by product would likely drive
very different behaviors.
Once a basic structural choice is identified,
metrics should be listed for each of the proposed
organizational units or groups.
Without a basic summary of the accountabilities
of each unit, it is difficult to know
what is being proposed. For example, a unit
called “marketing” may take many different
forms ranging from media and communications
to product management to profit and
loss management.
Metrics also play a useful role in testing
whether the strategic grouping concept
EXHIBIT 3: THE FIVE-MILESTONE DESIGN PROCESS (WITH REWARDS SYSTEM DESIGN QUESTIONS)
42
oject Pha
Q.
M
O
0)
*.» w 0) – ^
^ a!
o3 ^
•a c
1 “”
• Capabilities

3usiness Case ^
& Discovery A
1 Strategic ^
1 Grouping ^1 Integration .
*
1 Talent & 1
1 Leadership J
1
1 ^
1 Transition
1 J á
^ ^ Operating Governance Model
We ore c/eor
on the problem
to solve
Are pay and metrics
aligned with the
strategy or do they
contribute to the
case for change?
In what way?
2. We have made
a basic structure
choice that
supports the
strategy
What measurement
lens should managers
use to make the best
business decisions
(e.g., customer.
product, brand, region)?
What should the
accountabilities be
for each major unit?
Where should we
create line of sight for
the P&L?
3. We have tied the
pieces together —
designed the points
of linkage across
boundaries
How should rewards
systems and metrics
help create integration
among the units
(especially in the
matrix)? Where should
pay for performance
contain a team or unit
element? Which team
or unit, and with how
much leverage?
4. We have staffed
the critical roles to
carry out the work
and build talent
for the future
What are the “pivot”
jobs in this new
organization and what
do we have to pay to
attract and retain that
talent? What business
dashboard will the
leadership team use?
What should the
accountabilities of key
roles be? How should we
structure incentives to
drive the right behaviors
in the new roles?
5. We are prepared
to measure, learn
and adjust
How will we manage
the pay of new job
incumbents (and
others affected) in
this restructuring?
What reporting
systems must be
developed to
implement this
new organization?
PEOPLE & STRATEGY
makes sense. Who owns the P&cL in this
new organization is often an early point of
discussion as alternative design choices are
debated. Engaging the GEO and the GIO in
discussions at this point always makes
sense to gain their input and to give each an
opportunity to begin to form new thinking
about how to support a realignment of
P&L reporting.
iVIilestone Three: Integration of
the Design
In this design stage, the work shifts to linking
together the separate organizational
units that have been planned. A clear, common
rewards philosophy and set of goals
will act as an integrating force in the culture
of a company, often demonstrating a
lot about what leadership values. In itself,
this can be a positive force. But it is
not enough.
The call for “boundaryless organization” at
GE, IBM and elsewhere has become an
urgent matter of working across geographies,
functions and business units to go
faster and to gain the benefits of scale. Some
common examples of integration needs
include the following:
• Divisions in GE share common
infrastructure under a single enterprise
executive for Ghina to maximize presence
and influence with regulators
and customers.
• Goca-Gola uses communities of practice
in talent development to grow general
managers across its worldwide operating
units.
• Govidien uses a key account organization
to work across business units to bring one
face to large health care customers.
• Functions are aligned into crossfunctional
product category teams at
Green Mountain Goffee Roasters to
speed consumer-centric innovation.
• Tyco’s valve and control product units are
placed under a single vertical market
executive to bundle products and services
sold into the oil and gas market.
There are many ways to create integration,
ranging from establishing networks and councils
to creating robust planning processes and
linking units together with smart pay programs
and measures. It is in Milestone 3 that the bulk
of the compensation alignment effort needs to
occur. The compensation-delivery mechanisms
TABLE 2: HOW REWARDS AND METRICS CAN HELP SUPPORT INTEGRATION
DESIGN NEEDS
• Communities of practice in thr _ . • i
talent development to grow general managers
across its worldwide operating units
• Functions are aligned into cross-functional
product category teams to speed consumer^
centric innovation
• Product units are placed under one market
executive in order to bundle products and
services sold into a vertical market
• Key account organization works across
business units to bring one face to large
customers
• Divisions share common infrastructure under
an enterprise executive for China to maximize
presence and influence (cost effectively)
an objective related to companywide talent
development
• All members have category team objectives
• Incentive formula includes category as well as
division and enterprise performance
• Complementary P&Ls set for product and
vertical market units
• Managers are measured on total value of key
customer order
• Division and enterprise account reps share
credit in scorecard for sales
• Incentives reinforce higher value bundled sales
• Set some shared objectives for country and
divisional leaders and give both a substantial
stake in enterphse performance in the country
have the potential to be powerful integrative
forces in integration challenges like those listed
above. Gapabilities and operating governance
(two of the strategic drivers in rewards design)
should influence which integrating tools to
apply (including rewards and metrics) and how
to apply them. Let’s look at the logic stream for
rewards and metrics as integrators in organization
design (see Table 2).
standpoint, but if you miss your operational
performance metrics, your total pay will be
dramatically reduced. This focuses managers
on their operational results, which is how the
company differentiates itself in the marketplace.
In short, hit your operational goal and
your pay is doubled. Meet your P&L numbers
but not your operational metrics and
you could lose your job.”
Leaders and compensation people often err on
the side of narrow line-of-sight for its supposed
motivating effects.
Variable Compensation
The importance of aligning management
incentives with desired organizational capabilities
should not be underestimated.
Variable pay is the “so-what” — the payoff
— of well-crafted metrics. A senior HR executive
at a well-known logistics company
characterized the power of management
bonus programs in getting people’s attention
around a critical capability:
“Gompensation here is focused on operational
excellence. It tracks to our advertising
message. A huge portion of compensation is
tied to performance metrics, to a lesser extent
financial metrics. Your pay is tied to 99.998
percent successful delivery metrics. You can
hit your numbers from an operating profit
One important consideration is the relative
weighting of financial goals and other operatingobjectives
with other priorities. Integration
at the enterprise level is reinforced by a single
balanced scorecard approach that dictates
broad categories of measurement that are
adaptable to divisional needs.
Another key challenge is the need to balance
the inherent tension between a) establishing
clear line-of-sight between a manager’s variable
pay and her own outputs versus; and
b) encouraging more collaboration based
more on unit or companywide results and
payouts (integration). Leaders and compensation
people often err on the side of narrow
line-of-sight for its supposed motivating
effects. This argument is often exaggerated, >•
VOLUME 34/ISSUE 4 — 2011 43
and, in any case, integration and collaboration
become more difficult when there are
smaller units of measurement for variable
pay.
Performance Management
Larry Bossidy and Ram Charan (2002)
made the case that performance management
in high-performing companies is a
business process, not a human resources
process. PepsiCo, P&G, Honeywell and others
are known for their goal-deployment
rigor through core business processes that
cascade objectives down and sideways
across the businesses. New business teams
and other organizational startups should be
launched with deliberate efforts to create
linkage among the targets of those who
depend on each other in the new structure
to achieve business results.
tegic capabilities. Creative designers at Apple
and Nike are paid based on market pricing of
jobs. Software engineers at Google are paid
at levels necessary to compete with Facebook
and others in the same talent market. GE and
other companies continue to market price
division general management roles, especially
for executives that have global experience,
because these pivot roles have an outsized
impact on results.
From the point of view of compensation
strategy, benefits represent a substantial cost
of total compensation and therefore must
be considered as a strategic cost. Organizations
derive little if any behavioral change
from this portion of compensation, but benefit
programs can be an important factor in
attracting and retaining the right talent, and
their design can help or hinder the portability
of talent around the world or across lines of
The redesign of an organization can fundamentally
change roles and responsibilities
in a manner that creates perceived winners
and losers. It is easy to give people more
money when they are promoted. It is often
less clear how to treat pay and perks of
those with diminished roles. Human
resources should have a clear practice to
guide pay decisions as organization implementation
takes place.
Our research indicates practices vary widely
in this regard. In some companies, immediate
downward adjustments are made. In others,
a “red circle” treatment may last for a transition
period of one or two years. Still others,
in order to avoid adverse cultural reactions,
may protect people indefinitely. Clearly those
organizations with broad banding approaches
to job evaluation have greater flexibility in
this regard.
Implications for
The sill urnan resources function need to Human Resources
be bridged, and compensation, organization effectiveness
and staffing people need to be partners in the
organization design and implementation process.
Milestone Four: Leadership
and Talent
In this milestone, the new organization
design is staffed. This is a window of opportunity
to upgrade leadership and other talent
in the new organization. The temptation to
fill new roles with legacy players should be
avoided (CLC, 2010). Companies continue
to battle for critical skill sets that remain in
short supply and now on a global scale. In
the fourth phase of organization design, the
human resources executive must be thinking
about how to use pay to attract and retain
needed talent.
The combination of base pay, variable compensation
and benefits (i.e., total
compensation) needs to be market-driven,
with each component weighted by the organization’s
compensation philosophy. Rarely
will the organization design influence the
design of base pay programs. It may, however,
influence matters such as job evaluation
and merit guidelines. Some newly created
positions may be considered “pivot” jobs
(Boudreau and Ramstad, 2007) due to their
disproportionate impact on the building strabusiness.
If the operating governance model
of the enterprise is a “holding company,” this
is not important; but if the intent is a more
integrated model, where leadership talent
can be moved across boundaries, a common
platform of benefits may be quite important.
Organization design has become a core competency
for the human resources organization
throughout the past five years. But this capability
should not be the sole domain of
organization effectiveness professionals.
Human resources executives should bring
compensation professionals into the organization
design process early. The core
compensation philosophy and goals should
be considered with more attention to the
operating governance model of the company.
Pay systems can be separated into those eleRewards
and metrics should cease to be the orphan
in Galbraith’s famous Star Model.
Milestone Five: Implementation
The development of the business dashboard
and agreement on management routines for
quarterly and annual business reviews are
critical elements transition planning. Implementation
of complex organization
realignments often takes many months or
more. Rarely do leaders and designers get it
completely right the first time. It is critical to
begin using the new metrics to track results
and be willing to make adjustments in the
design over time.
ments that remain relatively fixed and
common over time versus those delivery
mechanisms that can be adjusted to fit the
needs of different business units trying to
build unique competitive capabilities, linked
to their strategies.
The silos within the human resources function
need to be bridged, and compensation,
organization effectiveness and staffing people
need to be partners in the organization design
and implementation process. HR generalists
PEOPLE & STRATEGY
I
should become skilled activists in developing
metrics and helping to cascade husiness
objectives up and down and across the organization
in the launch of new teams.
Rewards and metrics should cease to be the
orphan in Galbraith’s famous Star Model.
This box of tools is much too important to
be ignored in our efforts to build more agile,
capable organizations to compete in today’s
markets.
References
Hossidy, L., Charan, R., and Burck, C. Execution: The
Discipline of Getting Things Done. New Yorkr Crown
liusincss, 2002.
Boudrcau,John W. and Ramstad, Peter M. (2007). Beyond
HR: The new science of human capital. Camridge, MA:
Harvard Business School Press.
“Managing Leadership Performance Risks.” Corporate
Leadership Council, Corporate Executive Board Company,
February 2010.
Galbriath, Jay R. (1975). Designing complex organizations:
An executive hriefing on strategy, structure, and
process. SF, CA: Jossey-Bass.
(liilbraith, J.R. Designing Matrix Organizations that
Actually Work. San Francisco, Calif.: Jossey-Bass, 2009.
(i.ilbraitli. Jay R. and Kates, Amy (2007). Designing your
Organization: Using the Star Model to solve 5 critical
design challenges. SF, C;A: Jossey-Bass.
Kerr, Steven (1975). On the folly of rewarding A, while
Uopmfi im R. Academy of Management Journal, 18,769-8.1
Kesler, G. and Kates, A. (201 1). Leading organization
design: How to make organization design decisions to
drive the results you want. SF, CA: ¡ossey-Bass.
Simons, R. Levers Of Organization Design: How Managers
Use Accountability Systems For Greater Performance
And Commitment. Cambridge, Mass.: Harvard Business
School Press, 2005.
Michael H. Schuster, J.D., Ph.D., is a
professor of management strategy and
chair of the U. S. Coast Guard Academy’s
Management Department. He
is also managing partner at Competitive
Human Resources Strategies, LLC
(CHRS), a consulting firm based in
Narragansett, R.I. He can be reached
at mschrs@cox.net.
Gregory Kesler is a managing partner in
the consulting firm Kates Kesler, based
in Wilton, Conn. He writes and lectures
extensively on the subject of organization
design. He can be reached at
gregisikateskcslcncom.
Join your colleagues in
February 23-24 , 2012
Tampa Convention Center
Tampa, Florida
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Succession Planning & High
Potential Development
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