Designing the Modern Organization

How many organizations truly understand how to best utilize human resources to improve business performance?  In The Practice of Management, Peter Drucker discusses the unique characteristics of the human resource as compared to other resources used within an organization.  While the employer has specific expectations of worker performance, the worker, i.e. the human resource, also has expectations of the employer.

The effective organization must create an environment that fosters fulfillment of both sets of expectations.  Human Resources, along with management, must utilize the staffing function to ensure that human resources are used wisely.

The Role of Human Resources

The role of Human Resources is growing in importance, as organizations become more knowledge-based.  In knowledge-based industries, an organization’s success depends on the knowledge, skills and abilities of employees.  In the industrial age, work was more production-based and required people with manual skills. If that employee left the organization, new people could be taught or trained to replace them.

This type of organization could view workers as a direct expense.   The value of an employee could be calculated based on his/her time and how efficiently he/she produced a certain product.  In today’s information age, employees whose talents are contained within them, such as knowledge, interpersonal skills, communication skills and ability to learn, are valued.  Global marketization and advanced technology contributed to this shift from a touch labor force to knowledge work. (Bohlander, 1998)

Organizations now realize that they can gain competitive advantage through people, not just processes. That is why successful knowledge-based organizations view employees as an asset and an investment.  A successful organization must maintain an organizational design that allows HR to manage human capital and be a strategic part of the planning process.To meet the HR needs, an organization should be structured to allow HR to fulfill its many roles and responsibilities. The role of HR falls under four main areas, according to Managing Human Resources. (Bohlander, 1998)

The responsibilities of the HR manager include:

1. Advise and counsel
To do this, HR managers must have knowledge of internal employment issues such as polices, labor agreements and employee needs, as well as awareness of external trends such as economic, demographic and legal issues.  This is perhaps the most important role HR plays in a knowledge-based organization.  Through this role, HR is an important component in the strategic planning process. HR must anticipate where the company is going and be expected to understand changing demographics and expectations of the workforce.  It defines one of the major differences in HRM and Personnel management – contribution to long-term strategy, not just short-term business plans.

2. Service
This includes the responsibilities of recruiting, training, and hearing employee concerns and complaints. It also involves communicating with senior management in a strategic role which involves tracking the skills of the workforce to the long-term needs of the organization.  In addition, HR encourages personal mastery and development of individuals, not just job-specific training.

3. Policy formulation and implementation
This concerns drafting policies concerning work procedures and practice.

4. Employee advocacy
This involves listening to the employees’ concerns and representing their needs to managers.  Increasing attention is being given to the personal needs of employees due to the growing diversity of the workforce and society’s demands that organizations be socially responsibility in their treatment of employees.  HR management includes being aware of racial, gender, cultural and social issues and trends and being responsive to employee needs.

Organizational Design

The organizing function of management involves making assignments for the accomplishment of tasks to individuals and groups by delegating authority, assigning responsibility and requiring accountability.  (Drucker 1954) The role of HR, as described above, cannot be fulfilled unless HR has the ear and the support of management. Whether it be a traditional or non-traditional work design, the organization must be structured so that HR plays a significant role in top management planning and working with senior management to create a vision for the future of the company. In addition, the design must encourage the development of the line manager’s competency in motivating and developing employees.

The business organization of the 21st century is expected to depart considerably from the traditional top-down design of the past.  The organizational design of the future will reflect the realization of companies that they belong to a network or a web that includes many other players. This model has been given a number of descriptions, including employee-empowered, flat, flexible and shared services. It has also been called ‘molecular,’ in reference to the shift from the rigid, hierarchical organization to a more free-formed and fluid structure. (Greco, 1998)   The term also suggests that the organization is made up of interrelated components that are essential to the effective functioning of the whole. In such a setup, employees come together whenever and wherever needed and disband to join other work groups when the need arises.

In a non-traditional flat organization, people need to be trained at early career levels to be managers, which also means they need to take initiative and be more self-directed . The challenge for these organizations is to create a cascading of leadership, so that there’s leadership at the top, but also leadership down at the bottom, all sharing a common goal. The challenge of HR is to build that kind of leadership throughout the organization, through selection and recruitment, training, executive development, staff development, and strategic planning. HR will also play a role in helping managers set objectives that give employees greater accountability. In order to create leaders, people must be empowered.  HR can further these efforts by developing a plan for measuring and rewarding behavior that encourages empowerment and self-management.

Strategic Planning

As organizations plan for the future, Human Resources (HR) professionals must take on the strategic role of anticipating where the company is going to be down the road and understanding the changing demographics and expectation of the workforce. Essentially, HR is the guardian of information as to who the best people in the organization are and what their talents are.  HR must track the skills of the workforce and match them up with the organization’s needs.  In addition to being knowledgeable about the organization’s workforce, the strategic role of HR involves being knowledgeable about the labor force outside the organization. In order to effectively be a part of the strategic planning process, HR must perform environmental scanning.   Environmental scanning is the monitoring of the major external forces influencing the organization. (Bohlander1998)  Some environmental factors may include: economic factors, competitive trends, technological changes, political issues, social issues, and demographic trends.

Organizational Staffing

HR has traditionally played a role in ensuring the right number and type of employees is available to implement a business plan.  In addition, HR can proactively identify and initiate programs needed to develop future strategies.  A key part of HR’s strategic planning role is the staffing function.  Staffing involves forecasting demand for labor, performing supply analysis and matching the demand for the labor with the supply. Forecasting demand requires knowledge of the business plan and the quantity and quality of labor needed to meet the objectives.  Supply analysis involves determining if there are sufficient employees within the organization to meet demand and determining the potential employees available on the job market.  In order to balance this supply and demand of labor, HR must incorporate the following elements into a staffing plan: recruiting, selecting, training and developing.


According to “The Living Company” by Arie de Geus, the average corporation does not live up to its full potential due to its inability to adjust to changing conditions in an uncontrollable world.  Often, managers have failed to look at the organization as a community of human beings, and focused too heavily on policies and practices and producing goods and services.  Human Resources is the key to creating the “community of human beings” that make up a successful living organization.

A living organization is defined by its capacity to learn and change.  Successful companies are constantly looking for better ways to organize themselves, their work processes and support systems, workforce composition, competencies and culture.   In order to do this; organizations must become learning entities to better adapt to a rapidly changing global market. Employees of a learning organization must embrace learning as a way of life. A successful organizational design combines the experience of management and the expertise of HR specialists to plan for the future and develop the talents of employees to their greatest potential.


Bohlander, George W., Sherman, Arthur, Snell, Scott. Managing Human Resources, South-Western College Publishing, Cincinnati, Ohio.

DeGues, Arie. The Living Company, Harvard Business Review.

Drucker, Peter. The Practice of Management. New York: Harper Collins.

Greco, JoAnn. Designing for the 21st Century, Journal of Business Strategy.  University of Phoenix online library

Kline, Peter & Saunders, Bernard. Ten Steps To A Learning Organization, Great Ocean Publishers, Arlington, Virginia.

Leonard, Bill, What do CEOs want from HR?, HR Magazine, v43 n12 p80(7). University of Phoenix online library

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