Crafting a Human Resource Strategy to Foster Organizational Agility
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CRAFTING A HUMAN RESOURCE STRATEGY
TO FOSTER ORGANIZATIONAL
AGILITY: A CASE STUDY
Richard A. Shafer, Lee Dyer, Janine Kilty,
Jeff Amos, and Jeff Ericksen
A decade ago, the Chief Executive Officer of Albert Einstein Healthcare Network (AEHN),
anticipating a tumultuous and largely unpredictable period in its industry, undertook to convert
this organization from one that was basically stable and complacent to one that was agile, “nimble,
and change-hardy”. This case study, while briefly addressing AEHN’s approaches to business
strategy and organization design, focuses primarily on the human resource strategy that emerged
over time to foster the successful attainment of organizational agility. Although exploratory, the
study suggests a number of lessons for those who are—or will be—studying or trying to create and
sustain this promising new organizational paradigm. © 2001 John Wiley & Sons, Inc.
Introduction
Constant marketplace discontinuities, coupled
with an accelerating pace of change, are making a mockery of traditional business and organizational models, so the search is on for
new, more agile paradigms. Most of the emphasis so far has been on business strategy
(e.g., Brown & Eisenhardt, 1998) and broad
organizational forms (e.g., Amos, 1998;
Fradette & Michaud, 1998; Goldman, Nagel,
& Preiss, 1995). Relatively little attention has
been given to human resource issues. As a result, almost nothing is known about designing a human resource strategy (HRS) to enhance marketplace and organizational agility
(Dyer & Shafer, 1999).
Further, despite a mounting body of statistical evidence suggesting that HRSs can
make substantial contributions to organizational effectiveness, there is still much to learn
about how these strategies work in specific
situations (Dyer & Shafer, 1999). Theorists
(e.g., Wright & McMahan, 1992) stress the
importance of vertical fit (i.e., a logical connection between the components of HRS on
the one hand and important organizational
competencies and strategic capabilities on the
other) and horizontal fit (i.e., synergy among
the various components of HRS). But how do
organizational decision-makers conceptualize
the key components of HRS? How do they
think about—and strive to make—the linkages
implied by the notions of vertical and horizontal fit?
To help fill these knowledge gaps, we conducted an in-depth study of the HRS that
emerged in a healthcare organization that specifically set out to transform itself into an agile organization.1 Here, following a brief foray
into the study’s methodology, we describe the
organization’s approach to business strategy
Human Resource Management, Fall 2001, Vol. 40, No. 3, Pp. 197–211
© 2001 John Wiley & Sons, Inc.
As a result,
almost nothing is
known about
designing a
human resource
strategy (HRS) to
enhance
marketplace and
organizational
agility.
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and then, in greater depth, the key components of its HRS, paying particular attention
both to outcomes (agile attributes) and to initiatives and activities used to pursue these
outcomes, as well as to important linkages
indicating vertical and horizontal fit. By way
of conclusion, we posit a number of potential
implications for future research and practice.
emerging depiction of the organization’s HRS
was as complete and accurate as we could
make it (Eisenhardt, 1995). (For a more thorough description of the study’s methodology,
see Shafer, 1997.)
The Methodology
The study was conducted at Albert Einstein
Healthcare Network (AEHN), a private, notfor-profit organization located in Philadelphia,
Pennsylvania. In the early 1990s, the
organization’s newly appointed Chief Executive Officer (CEO), foreseeing a turbulent
decade for the industry, embarked on a major,
multiyear initiative designed to transform
AEHN from a stable acute care hospital to an
agile (“nimble, change-hardy” in his words),
comprehensive, and fully integrated
healthcare network (see Figure 1). Given a
dynamic and uncertain environment, he reasoned, the only way AEHN could hope to
achieve and sustain a competitive advantage
in its chosen marketplaces was to forge an
organization capable of unparalleled flexibility, adaptability, and professionalism.
In practice, the CEO’s vision translated
into an effort to develop and continuously refine three strategic capabilities that in hind-
Following Yin’s (1994) guidance for embedded case study design, we used information
from various sources (e.g., the literature,
thought leaders, consultants) to develop a preliminary model to guide data collection. Then
over a two-year period (1995–1997) data were
gathered through semistructured interviews
with 19 key informants, through informal discussions with several additional employees,
through first-hand observations of numerous
events (e.g., meetings and training sessions),
and through reviews of archival materials.
Consistent with the tenets of developing
“grounded theory” (Glaser & Strauss, 1967)
the preliminary model, as well as data collection processes, were continuously amplified
and revised as new information was obtained,
coded, and analyzed. This process continued
until data convergence suggested that the
The Organization: Business Strategy and
Results
FIGURE 1. A Vision of Rapid Growth and Organizational Transformation in a Turbulent Healthcare Environment.
Crafting a Human Resource Strategy to Foster Organizational Agility
sight we have labeled initiate, adapt, and deliver (see Table I).
TABLE I
AEHN’s Three-Pronged Approach to
Crafting Emergent Business Strategies.
Three Strategic Capabilities
Initiate. This refers to the capacity to find and
quickly exploit opportunities to expand the
breadth and depth of AEHN’s reach and care
(i.e., by developing new services, consummating strategic alliances, purchasing and absorbing strategically located clinics and outpatient
services, and the like). Correspondingly,
AEHN had to become better at facing up to
and executing spinoffs and shutdowns of overlapping and redundant services as quickly and
smoothly as possible.
Adapt. Simultaneously, AEHN sought to
improve its capacity to anticipate or otherwise
quickly discover and then rapidly deal with
external threats to its aspirations. As Figure 1
suggests, these threats were many, varied, and
unrelenting. Over the years they included cutthroat competition in a market that sometimes
had a 50% overcapacity of bed space; constant
changes in government policy (especially with
respect to Medicare and Medicaid which together accounted for about 75% of AEHN’s
revenues); the growing influence of HMOs
and PPOs; ongoing industry consolidation
through mergers, acquisitions, and bankruptcies; and an endless influx of new and expensive medical technologies.
Deliver. AEHN also had to enhance its
capacity to operate effectively and efficiently
on a day-to-day basis. Sometimes its various
initiatives and adaptations helped here; for
example, some strategic alliances not only
broadened the range of services offered but
also resulted in greater bargaining power visà-vis third party payers (helping to enhance
revenues) and improved economies of scale
(helping to control costs). To a large extent,
however, the requisite improvements in operational excellence derived from AEHN’s ability to minimize the effects of the distractions
associated with constant turmoil and change
and, thus, keep employees at all levels clearly
focused on the organization’s raison d’etre—
delivering the highest possible level of patient
care while, at least, breaking even financially.
The Results
Between 1990 and 1997, AEHN not only
transformed as the CEO had hoped but also
grew very rapidly. Patient counts increased,
and revenues more than doubled while the
total number of employees declined slightly,
indicating a dramatic increase in productivity. By the mid-90s, indices of patient satisfaction were at an all-time high; AEHN was
garnering recognition from journals and accrediting agencies for its innovativeness and
unique culture, and key financial indicators,
such as costs per discharge, were running as
much as 30% below those of major competitors. In sharp contrast to industry trends,
AEHN managed to operate in the black every
year between 1991 and 1997. (In 1997, AEHN
became a founding member of the Jefferson
Health System, a consortium of three complementary healthcare providers in the greater
Philadelphia area.)
Early on, both AEHN’s CEO and Vice
President of Human Resources realized that
the organization’s culture, characterized at the
time as paternalistic, stable, and comfortable,
had to change. So they set out to craft, through
trial and error, an HRS designed to develop a
workforce capable of simultaneously creating
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and learning to operate and flourish in a dynamic organization. Our retrospective view of
the process they used to craft the HRS and
our depiction of its content are shown at the
top and bottom, respectively, of Figure 2. What
follows is an elaboration of the models’ main
components and principal linkages.2
Agile Attributes: Behaviors and Personal
Competencies
Clearly, AEHN’s three-pronged approach to
business strategy required a radical redefinition of requisite employee behaviors. The desired outcome (admittedly never fully realized)
was to reach the point where every employee
could and would contribute to enhancing the
strategic capabilities of initiate, adapt, and
deliver by constantly improving his/her capacity to:
1. Seek out and help pursue new business opportunities
2. Anticipate potential threats to the
network’s current and future operations and take action to minimize their
probable effects
3. Consistently deliver world-class services while carefully controlling costs,
irrespective of the continuous changes
FIGURE 2. AEHN’s Human Resource Strategy.
taking place in and around the organization (see the right-hand side of
Figure 2)
To encourage and facilitate these behaviors,
AEHN eventually settled on the need to develop
five personal competencies across all levels and
types of employees (again refer to Figure 2):
1. Business-driven (dedicated to developing AEHN as an agile integrated
network, as well as to achieving narrower specialty area, functional, or
subunit goals)
2. Values-driven (instinctively living the
organization’s core values)
3. Focused (able to set priorities and
develop world-class solutions while
willingly accepting personal accountability for those actions as well as for
the results obtained)
4. Generative (able and willing
proactively to apply new knowledge
and skills in a constant search for innovative solutions)
5. Resilient (comfortable with ambiguity and taking calculated risks and able
to bounce back quickly and easily
when a situation changed or things
went wrong)
Crafting a Human Resource Strategy to Foster Organizational Agility
Inculcating these new agile attributes (behaviors and personal competencies) was a tall
order given the organization’s stable and paternalistic past. To move forward, AEHN relied
heavily on five key human resource initiatives
and a host of attendant human resource activities, to which attention is now turned.
Key Human Resource Initiatives and
Activities
The five key human resource initiatives were
(1) achieving contextual clarity, (2) embedding
core values, (3) enriching work, (4) promoting personal growth, and (5) providing commensurate returns. Three of the five—embedding core values, enriching work, and promoting personal growth—were clearly articulated
by AEHN, while the remaining two—achieving contextual clarity and providing commensurate returns—were identified during the
research process by identifying patterns in the
objectives and content of the organization’s
human resource programs and practices. Here
we discuss each of the five initiatives in terms
of its major goal(s), its explicit or implicit relationships with the five personal competencies (as shown in Figure 2), and its defining
human resource programs and practices (as
indicated in Figure 2 and shown more fully in
Figure 3).
Achieving Contextual Clarity
AEHN went to great lengths to assure that
employees at all levels clearly understood the
gist and essentiality of (1) the CEO’s vision
for the organization, (2) the organization’s
progress (or lack thereof) toward achieving the
vision, and (3) the links between their individual and collective actions and the performance of the total enterprise. It was reasoned,
as shown in Figure 2, that a firm grasp of environmental and organizational realities would
serve to enhance employees’ dedication to the
network’s overall agility and success.
The techniques used to achieve contextual clarity (see Figure 3) were fairly standard,
but the messages were clearly new and delivered with an unusually high level of intensity.
Using the rubric “Surround Communication”,
every device from bulletin boards through
employee newsletters and special forums to
focused training sessions was rejuvenated and
revised. Long-neglected bulletin boards, for
example, were routinely peppered with stories
of local, regional, and national developments
in the healthcare industry. New postings involving unexpected consolidations and closings of nearby facilities were used to invoke
thoughts of the “Wow, that could happen
here!” variety. Bulletin board banners regularly
asked, “Are you ready for change? Are your
FIGURE 3. Human Resource Initiatives and Related Activities for Organizational Agility.
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skills ahead of the game?” Employee newsletters substituted social fare with substantive
stories; a representative article titled “Nursing Role Changes: Where Will You Fit In?”
featured vignettes of nurses who had retooled
and successfully moved on to meet new challenges and make enhanced contributions in
critical areas.
Nary a piece of formal communication
failed to mention, in one way or another, the
CEO’s vision for AEHN and, when appropriate, why it was essential for the organization’s
long-term success. Frequent “Tooling-up
Expos” brought employees together with representatives of management to share performance information and address questions of
concern. Training opportunities were created
for employees to learn how to read and interpret the wide range of performance and financial data regularly being made available.
Workshops on “survival tactics in times of
TABLE II
AHEN's Core Values.
change” were made accessible to employees
at all levels.
Embedding Core Values
Early on, AEHN’s CEO unilaterally established a set of core values for the organization
(see Table II). The goal of the follow-on human resource initiative was to assure that all
employees knew about, understood, shared,
and lived these core values.
The CEO viewed the core values as central to his culture change initiative. He believed that in a period of constant change,
values serve as “skyhooks” for people to hang
onto and use to build trust. Others came to
reason that a firm set of core values uniformly
applied would also encourage employees to
identify with the organization as a whole and
thus to be more business-driven and more
comfortable in acting independently and tak-
Crafting a Human Resource Strategy to Foster Organizational Agility
ing personal responsibility (see the linkages
shown in Figure 2).
Accordingly, in the early years, embedding and sustaining core values became the
central human resource initiative in AEHN’s
drive to agility. Initially, the values served as
the centerpiece of a team-building effort designed to convert AEHN’s 14 top executives
from a group of individuals who sometimes
worked together into a fully functional team.
For almost a year, the executives spent time
clarifying and debating the core values (minor changes were made in the CEO’s original version), developing an understanding of
how living the core values would contribute
to the pursuit of AEHN’s vision and to the
enhancement of organizational agility, completing gap analyses to assess the extent to
which the executives were living the core
values as individuals and as a team, closing
existing gaps through individual and team
actions, and creating a process for cascading
the core values down through the organization (see Figure 3).
In the cascading process, references to the
core values were weaved into virtually every
form of employee communication. Special
video tapes, audio tapes, scripts, print pieces,
and e-mail messages were created and made
available for supervisors and managers to use
in preparing and conducting employee meetings and training sessions. Managers, supervisors, and trainers were coached on the
content, meaning, and application of the core
values. Organization-wide “Breakthrough Objectives” were established around selected core
values. One such objective, for example, titled
“First Impressions Last”, was created to insure that the first few seconds of every interaction with patients, family members, and the
like reflected the core value of compassion.
This, like all “Breakthrough Objectives”
—with great fanfare—was widely communicated. Supervisors and team leaders used
games and contests to implement the objectives, aided and abetted by help clinics, guidebooks, support services, and even mentors.
Progress was tracked through such informal
measures as small, random surveys of patients
and family members, and the results were fed
back to appropriate employees or units to encourage further action planning.
Simultaneously, following the lead of the
top management team, each level of the organization performed gap analyses to uncover situations in which everyday individual and team
behaviors in various units failed to live up to
the core values and, where necessary, conducted action planning and follow-up activities to close the gaps. This process involved all
levels of the organization including administrative and physician leaders (n = 90), middle
managers (n = 150), supervisors (n = 300), and
eventually front-line staff and volunteers. In one
activity, teams set a goal of removing one “dead
moose” from the organization. A “dead moose”
was defined as something that was widely
known, clearly inconsistent with the core values and pursuit of organizational effectiveness,
and generally ignored. Strong messages reverberated throughout the organization as these
“undiscussables” began to fall, and perhaps no
more so than in a few instances when highly
placed leaders were identified as “dead moose”
and, following unsuccessful attempts at rehabilitation, were terminated.
Interdisciplinary teams (“Think Tanks”)
were formed to examine the extent to which
AEHN’s human resource policies, programs,
and practices were consistent with and reinforced the core values. Over time, extensive
changes were made in several areas:
•
•
Selection: Under the rubric “Hiring
the Best”, the selection process was
revised to add an assessment of applicants’ core values by means of situational interviewing. Values
discrepancies, as much as competency
deficiencies, were grounds for rejection. Interviewers were primed with
set questions and interviewing tips and
were also trained on interviewing techniques. (Several new hires indicated
that they had been influenced in their
decisions to join AEHN in part by the
clear values communicated during the
selection process.)
New Employee Orientation: A half-day
session was added to the standard new
employee orientation process to explain and demonstrate the meaning of
the core values and to stress the importance of living them day-to-day.
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Managers,
supervisors, and
trainers were
coached on the
content,
meaning, and
application of
the core values.
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•
•
•
… even in such
areas as the
cafeteria there
were very few
employees who,
when asked,
could not both
verbalize the core
values and give
specific examples
of how said
values played out
in their work.
•
Training: Considerable values-related
training occurred, as noted above. In
addition, the content as well as the
announcements of some technical
training programs (as well as virtually
all nontechnical training programs)
were revamped to show how the subject matter linked to one or more of
the core values.
Performance Management: This system was totally revamped to focus
heavily on behavioral manifestations
of the core values, as well as on demonstrations of technical and managerial competencies and desired results.
A voluntary 360º feedback process was
instituted to assist supervisors and
managers in assessing behavior-values
gaps and to provide developmental
tools and coaching where needed.
Promotions: Over time, as the core values became embedded, promotion
procedures were revamped to reflect
the same criteria and rigor that were
applied to new hires. As a result, living the core values became a de facto
hurdle for individuals being considered for promotion to or through supervisory or managerial positions.
Rewards and Recognition: This area
was intensively studied, but for reasons noted below, only relatively marginal changes were made (beyond the
effects of the previously noted changes
in the performance management and
promotion processes).
Eventually, the core values became used
as one means (a) of attracting potential alliance partners and (b) of assessing the degree
of cultural fit between AEHN and these organizations (more on this later).
No survey was ever taken, but managerial
estimates suggested that as a result of these
many activities approximately 70% of exempt
and 50% of nonexempt employees, respectively, truly understood, shared, and consciously lived the core AEHN values day-to-day
on the job. (The outside researchers generated higher estimates based on informal discussions with employees at various locations;
even in such areas as the cafeteria there were
very few employees who, when asked, could
not both verbalize the core values and give
specific examples of how said values played
out in their work.)
Enriching Work
The goal here was to have employees at all
organizational levels performing work that reflected three general principles:
1. Aligned with AEHN’s vision and the
broad behavioral outcomes of initiate,
adapt, and deliver
2. Consistent with the core values
3. Expanded to develop and utilize multiple competencies
At the time of this study, some 15–20% of
the employees at AEHN were involved in work
redesign experiments. (It was estimated that
as many as 70% had been so involved at one
point or another during the transformation.)
These experiments generally took one of three
forms (as shown in Figure 3).
•
•
Flexible Assignments: Here employees
continued to use the same or a similar set of technical competencies but
applied them in different locations
throughout the network (e.g., during
the course of a day or week physical
therapists might work in two, three,
or even four distinct units with a wide
variety of patients). The primary driver
behind flexible assignments was the
need to meet fluctuating staffing requirements while keeping headcount
under control, but the practice also
helped to broaden perspectives, enhance social networks, promote organizational learning, and encourage
employee flexibility.
Blended Assignments: Past practice
had created many situations at AEHN
in which routine services (e.g., taking
vital signs, drawing blood, administering tests) were each performed by different specialists. Several experiments
were conducted in which various combinations of such tasks were compressed into one assignment, called
Crafting a Human Resource Strategy to Foster Organizational Agility
•
Patient Care Associate. Following
the necessary training, then, each
PCA would take responsibility for
delivering the full range of relevant
services to a smaller, defined set of
patients. This not only facilitated the
delivery of care in a manner more
consistent with AEHN’s core values
(e.g., on a more personal basis) but
also created more autonomous, challenging, and interesting work for the
employees involved.
Team-Based Work: The idea here was
to look for opportunities to create
teams of care givers to provide a full
range of routine services focused on
the patients in a particular unit.
These teams were essentially selfmanaged and thus had the flexibility
to assign and carry out tasks on their
own volition to provide “seamless,
patient-focused care”. Experimentation along these lines was limited, primarily to certain magnet services
(e.g., cardiac care), but where fully
implemented team-based work resulted in improved care, enhanced
patient satisfaction, and lower costs
(since it took fewer people to provide
the essential services).
Work redesign experiments contributed to
the development of three of the five personal
competencies (refer again to Figure 2). First,
they encouraged employees to be more collectively focused as they set team priorities and
action plans and learned to live with the results. Second, they induced employees to be
more generative by making it obvious that
current knowledge and skills would very likely
be inadequate as work continually evolved.
And, finally, constant experimentation served
to reinforce the norm of continuous change
and the need for greater employee resilience.
Virtually all of AEHN’s experiments in
enriching work were initiated and carried out
by employees (outside consultants were rarely
used). In time, then, the process became institutionalized. Employees in positions that
had not been radically reworked were encouraged to be on the lookout for opportunities to
“work the process even as they were process-
ing the work”. And, whenever a position (not
currently or recently involved in work redesign) became vacant, a team was used to determine if the position could and should be
revamped to bring it more closely into compliance with AEHN’s three basic principles of
work redesign.
Beyond these efforts, AEHN also strived
to involve as many employees as possible in
other offline, more or less temporary teams.
At any given time, several task forces were
in place analyzing, designing, or implementing new policies, programs, procedures, and
practices. Again, in addition to accomplishing essential work, this activity served to
foster important agile attributes (focused,
generative, and resilient) and also helped to
allay anxieties about the new, more agile way
of operating.
Promoting Personal Growth
Through this initiative AEHN hoped to reach
the point where all employees were taking
personal responsibility for their own development, not only to enhance performance in
current assignments, but also to prepare for
whatever the future might bring. The message
(delivered through the various components of
“Surround Communication” noted above) reinforced the agility challenge:
In a constantly changing world, standing still
is tantamount to becoming obsolete and,
thus, expendable; those who hope to succeed with AEHN, therefore, have no real
alternative but to do everything possible to
stay well ahead on the learning curve.
Thus, as shown in Figure 2, while this
initiative was intended to encourage employees to be more generative and resilient, it was
also specifically framed in a way that clearly
emphasized individual accountability.
Still, AEHN was committed to helping
employees succeed in their development efforts and took several steps to help them do
so (as shown in Figure 3). Development needs
for current assignments were identified
through the aforementioned performance
management system and the 360º feedback
process as well as by a separate process for
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… constant
experimentation
served to
reinforce the
norm of
continuous
change and the
need for greater
employee
resilience.
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HUMAN RESOURCE MANAGEMENT, Fall 2001
AEHN invested
heavily in
training.
tracking proficiency in technical competencies (to make sure these weren’t diminished
as a result of performing enriched work). Development needs for future assignments were
less easily identified, although efforts were
made to keep employees abreast of anticipated
experiments with work redesign, emerging
treatments and technologies, likely new lines
of business, and so on. A career planning process was also developed to provide templates,
tools, and resources (including coaches) to
help employees clarify career aspirations, identify competency gaps, and develop development plans. The inevitable caveat: Given the
dynamics of healthcare in general and AEHN
in particular, there was a distinct possibility
that the competency requirements of aspiredto positions may well change, even if the positions themselves should happen to survive.
Thus, employees were strongly encouraged to
“stay attuned”.
AEHN invested heavily in training. There
were a fair number of standard classroom programs, especially to meet recurring needs, both
technical and otherwise. Real-time workshops
and brown bag sessions became standard fare
to help employees keep abreast of rapidly
emerging developments. Self-study programs
were purchased or developed as resources permitted, but because of the premium placed on
the need to learn and apply new knowledge
quickly, much of the requisite training was done
the agile way—on the job, on the fly (always,
of course, with a keen eye on maintaining quality). Finally, the various development activities
were supplemented by a job posting system that
served as much to encourage employees to take
initiative in reaching out for development opportunities as it did to fill vacant positions.
As suggested, the success of the personal
growth initiative rested on a policy of zero
tolerance of employees who failed to pursue and eventually succeed at needed development. Truth be told, it was only after a
couple of “dead moose” had been let go that
the implications of this initiative became
thoroughly internalized.
Providing Commensurate Returns
AEHN sought to provide all employees with
monetary and nonmonetary returns that were
perceived as generally equal to their increasing contributions to the organization. There
was, of course, a genuine desire to do everything possible to see that employees were
treated fairly. In addition, there was a concern that noncommensurate returns (and perceptions of inequity) would undermine the
positive effects of the other key human resource initiatives (as suggested in Figure 2),
primarily by making it more difficult to attract and retain employees with requisite
technical competencies and the desired personal competencies.
On balance, AEHN put less emphasis on
monetary than on nonmonetary returns. This
seemed to be dictated in equal measure by
cost constraints, a tendency to downplay the
role of pay as a motivator of healthcare professionals, and real uncertainty about how
to design a pay system that would promote
organizational agility.
On the nonmonetary side, enriched assignments and enhanced opportunities for
development were thought to provide many,
and especially the most important-to-retain
employees with valued intrinsic rewards (such
as a sense of challenge, achievement, and
growth). Beyond these things, AEHN put a
great deal of emphasis on “Recognize, Appreciate, Celebrate”, an umbrella concept encompassing an array of activities designed around
the core value of reliance on each other (as
described in Table II). The idea was to catch
people doing things right and shower them
with positive feedback and awards in highly
visible ways. A toolkit and accompanying workshop were developed both to encourage and
to make it easy for supervisors, peers, and even
patients to acknowledge and laud positive contributions to the cause. Some activities were
unit- or team-based; these included, for example, public postings of such things as letters from satisfied patients and the written
results of quality service audits and certification reviews. Other activities were more individual in nature; examples included “pat on
the back notices” and a “celebration of a risk
taken award” (given for a good effort irrespective of result). Supervisors were constantly
reminded of the need to allocate adequate time
in meetings and elsewhere to making sure that
desired employee behaviors were consistently
Crafting a Human Resource Strategy to Foster Organizational Agility
reinforced, and they were routinely evaluated
on how well this responsibility was carried out.
In contrast, for the reasons noted above,
AEHN treated pay as a lag variable in the
transformation to agility. Only relatively minor changes were made to the basic pay plan
that had been in place for many years (a jobbased system with pay levels pegged to the
midpoint of the market and pay increases determined by a combination of ability to pay,
cost-of-living adjustments, and merit). Broadbanding was introduced to simplify the system and to introduce an element of flexibility
to facilitate work redesign. The previously
noted changes in the performance management system brought the organization’s core
values into play in determining individual pay
increases. From time to time, a few positions
were reevaluated to reflect sustained changes
in work redesign and occasionally the pay levels of a few high performing individuals with
rare technical skills were significantly adjusted
by pegging their rates to the 75th rather than
50th percentile of the market.
As this study was drawing to a close, there
was (again) concern that these piecemeal adjustments were not fully meeting the goal of
providing commensurate returns (and fostering, or at least not interfering with, the development of the various personal competencies).
Specifically, it was felt that not enough was
being done to:
•
•
•
Reward employees for organizationwide results (given the desire for employees to be more business-driven)
Systematically recognize the increased
responsibility associated with enriched work
Reward team performance in those instances where team-based work had
taken hold
Thus, in keeping with the prevailing philosophy, a task force was formed to examine
these issues.
Summary
The five key human resource initiatives were
pivotal to AEHN’s pursuit of organizational
agility for three main reasons. First, they were
business-based (i.e., characterized by vertical fit). The logic, as shown at the top of Table
I, proceeded from AEHN’s drive for marketplace agility through the three strategic capabilities and related behavioral outcomes
(initiate where possible, adapt when necessary, and deliver always) to a manageable
number of desired personal competencies
and the five key human resource initiatives.
Designing or redesigning human resource
programs specifically to achieve these initiatives, then, assured that there was a clear line
of sight between them and AEHN’s emergent
business strategy.
Second, over time the five key human resource initiatives achieved a high degree of
synergy (or horizontal fit). Consider, for example, the case of the enriching work initiative (which to our mind is generally focal in
efforts to enhance organizational agility—see
Dyer & Shafer, 1999). At AEHN, as noted,
two of the (three) principles that guided the
work redesign experiments were explicitly
based on key human resource initiatives
(achieving contextual clarity and embedding
core values). In turn, as the work redesign
experiments proceeded, the employees involved gained a clearer perspective of the vision, the business, and, to a lesser extent, the
core values (which collectively provided
“skyhooks” on which employees could base
their actions as they learned to function relatively autonomously in enriched assignments
and in teams). Further, the possibility or reality of having to perform enriched work reinforced the human resource initiative of
promoting personal growth as employees were
increasingly encouraged to seek out the training and development they would need to keep
up or even get ahead of the game. Of course,
employees who were particularly aggressive in
their development efforts were the ones who
were most likely to attain, and function effectively in, enriched assignments and teambased work. Finally, enriched work served in
part as a source of non-financial (or intrinsic)
rewards to employees and in part as a source
of increased earnings as AEHN was moved to
reevaluate many of the positions involved, thus
bolstering the initiative having to do with providing commensurate returns. In turn, the
prospect of increased returns made the en-
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207
The five key
human resource
initiatives were
pivotal to
AEHN’s pursuit
of organizational
agility for three
main reasons.
208
•
HUMAN RESOURCE MANAGEMENT, Fall 2001
New paradigms
of business
strategies and
organizations—
such as
marketplace and
organizational
agility—in turn
require new ways
of thinking about
HRS.
riched work more attractive to many employees, which then encouraged more work redesign experiments. The litany of synergistic
relationships could go on and on (e.g., the
heavy emphasis on vision and values enhanced
trust levels which, in turn, helped employees
be more comfortable with the idea of assuming greater responsibility in their work and for
their own personal development; embedding
core values in performance assessments influenced employees’ monetary returns which,
in turn, helped reinforce the core values; and
so forth and so on). The important point, however, is this: Notwithstanding the importance
of each key human resource initiative, AEHN’s
real bang for the buck appears to have emanated from the mutually reinforcing effects
of these initiatives (coupled, of course, with
the high degree of vertical fit noted above).
The third, and final, pivotal part played
by the key human resource initiatives was in
helping AEHN focus its choice of human resource programs and practices. As time progressed, the initiatives (and emerging
synergies) came to be used to evaluate both
existing and proposed programs and practices;
those that made or promised to make significant contributions (preferably to more than
one initiative) were retained or undertaken,
while those that didn’t were scuttled (unless
they were legally or otherwise mandated).
Further, the initiatives (as well as the personal
competencies and focal behaviors) helped in
assessing progress and in deciding when and
how to make necessary refinements and adjustments (a process that was, as noted above,
taking place around pay as this study ended).
Lessons Learned
Clearly, the need to compete in increasingly
dynamic environments requires new paradigms to replace the mature models that dominate much of today’s thinking about business
strategies and organizations. New paradigms
of business strategies and organizations—such
as marketplace and organizational agility—in
turn require new ways of thinking about HRS
(Dyer & Shafer, 1999). Notwithstanding its
limitations (noted below), we believe that the
present study holds a number of lessons that
are potentially important for researchers and
practitioners who are, or will be, studying or
trying to create and sustain agile organizations
in the years ahead.
Lesson 1: Organizational agility doesn’t
just happen; it has to be deliberately pursued—albeit in an emergent way.
Given the uncertainties of the healthcare industry, AEHN’s CEO and Vice President of
Human Resources realized both the essentiality of organizational agility and the futility of undertaking detailed planning in such
an unpredictable environment. They were
also unwilling to rely on unbridled emergence, so they sought a middle ground (endorsed by more recent researchers such as
Brown & Eisenhardt, 1998). They staked out
a vision and a set of core values, as well as a
vague concept of a “nimble, change-hearty”
culture, to provide a modicum of guidance.
Then they let the strategic capabilities (initiate, adapt, deliver), specific business strategies, and supporting HRS emerge over time
as circumstances dictated and allowed. Today, the path to organizational agility is
somewhat clearer thanks to the accumulating body of relevant theory and research
(Dyer & Shafer, 1999), but any organization
setting out on this path must be prepared to
leave plenty of room for experimentation.
Lesson 2: Guiding models facilitate the
formation of an agility-oriented HRS.
The process model shown at the top of Figure
2 helped all the pieces come together at
AEHN. It incorporated the notion of vertical
fit by clarifying a line of sight from the three
strategic capabilities back through a set of agile
attributes (behaviors and personal competencies) to a set of key human resource initiatives that, in turn, were used to choose and
design various human resource programs and
practices. Over time, as a result of experimenting with the process model, AEHN (again,
partly explicitly and partly implicitly) derived
a corresponding content model (shown at the
bottom of Figure 2) by specifying desired behavioral outcomes and personal competencies,
requisite human resource initiatives, and specific human resource programs and practices.
Crafting a Human Resource Strategy to Foster Organizational Agility
This content model, which admittedly is a
stylized version of some very complex decisions and events, may or may not hold up
over time or across aspiring agile organizations, but AEHN’s experiences strongly suggest that even the pursuit of vertical fit is very
helpful to human resource strategists. In and
of itself it serves to clarify thinking, focus
effort, speed implementation, enhance organizational learning, and (above all) foster
business relevance.
Lesson 3: A limited number of integrated
or synergistic human resource initiatives
define an agility-oriented HRS.
AEHN, as noted, settled on five key human
resource initiatives. This proved to be a manageable and apparently sufficient number to
effectuate an effective agility-oriented HRS.
Those making the key decisions consciously
searched for synergies, or horizontal fit, to
form an integrated, nonoverlapping set that
would instill the desired personal competencies. To oversimplify only slightly, efforts to
achieve contextual clarity and embed core values served to focus attention on the CEO’s
vision and on the ways in which employees
could add value through their own activities,
while the vision and core values provided an
element of stability in an otherwise rapidly
moving world. Enriching work and promoting
personal growth, in turn, fostered focus and
provided both the rationale and space required
for employees to be generative and resilient.
Providing commensurate returns (especially,
as noted, the nonmonetary component) served
to reinforce employees who, initially, exemplified the organization’s core values and, later,
made important contributions to emergent
strategies, willingly gravitated toward enriched
work, eagerly pursued personal growth opportunities, and effectively delivered high quality, cost effective services.
Our findings suggest that for clarity and
parsimony agility-oriented (and probably
other) HRSs should be framed and studied
around a limited number of desired outcomes
and initiatives (or principles) rather than
around an inevitably larger number of programs and practices (Becker & Gerhart, 1996).
We believe that such parsimonious models can
produce both the flexibility (here initiating
and adapting) and efficiency (here delivering) that marketplace agility demands, but
the specifics remain to be verified. Certainly,
the human resource initiatives that emerged
at AEHN are in some ways consistent with
those proposed by other, more generic human resource strategies such as the high involvement work system (Lawler, 1992;
Pfeffer, 1998), but there are some major differences as well. AEHN’s model included
business-based behavioral outcomes and specific personal competencies as desired outcomes. It also put considerable emphasis on
human resource initiatives having to do with
achieving contextual clarity and embedding
core values. It is possible that these two human resource initiatives are particularly salient in agile organizations (versus more
bureaucratic organizations focusing on costs,
quality, and the like), primarily because of
the high need for “skyhooks” that foster trust.
At any rate, this appears to be a reasonable
hypothesis to pursue.
Lesson 4: Key human resource initiatives
guide the choice of human resource programs and practices.
Over time, AEHN used the key human resource initiatives to guide the choice of human resource programs and practices (except
those that were legally or otherwise mandated). This worked in two ways. First, shortcomings in achieving the initiatives (e.g., the
concern about not providing commensurate
financial returns) indicated a need to improve
existing programs and practices or to devise
new ones (e.g., the pay system). Second, current or proposed new programs or practices
were analyzed for probable effects on the human resource initiatives and retained or implemented only if they appeared to be relatively
low cost ways to pursue one or, preferably,
more of them. This put a premium on programs and practices that had a high probability of having a major impact (such as “Surround Communication”). In brief, focusing on
few human resource initiatives not only served
to rationalize the choice of programs and practices but also helped decision-makers eschew
the fads, folderol, and putative best practices
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209
Enriching work
and promoting
personal growth,
in turn, fostered
focus and
provided both
the rationale and
space required
for employees to
be generative
and resilient.
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•
HUMAN RESOURCE MANAGEMENT, Fall 2001
that so often plague the practice of human
resource management.
The foregoing lessons, of course, were
derived by a team of researchers replete with
a particular set of individual and collective
lenses and perspectives. They are based on
data from a single case study of an imperfect
organization that appeared to do many things,
but obviously not everything, right and it was
an organization that operated in a unique in-
dustry during a particular period of time. It
remains to be seen to what extent, if any at
all, the lessons derived from this experience
hold up across methodologies, organizations,
industries, and time. At this juncture, then,
we simply hope that they will prove helpful to
researchers in planning future studies and to
managers out there in the rapidly changing
world who by design or chance find themselves
in active pursuit of organizational agility.
RICHARD A. (DICK) SHAFER is Associate Dean for Corporate Relations and Executive
Director of the Center for Leadership in Dynamic Organizations at Cornell University’s
S.C. Johnson Graduate School of Management. He is also President of Organizational
Agility Associates, a consulting firm specializing in organizational design and change
management. Prior to joining Cornell he was a Partner at Deloitte & Touche and before
that held senior executive positions at Corning, Inc. His recent research and consulting
activities focus on developing an organizational model for creating agile organizations
built to deal with continuous, unpredictable marketplace change.
LEE DYER is Professor of Human Resource Management in the Department of Human Resource Studies and the Center for Advanced Human Resource Studies, School
of Industrial and Labor Relations, Cornell University. His teaching, research, and
consulting interests focus on organizational agility and human resource strategy.
His publications on these and related topics include more than a dozen books and
monographs, the most recent of which is a co-authored volume titled People in eBusiness: New Challenges, New Solutions (2000). He was elected a fellow in the
National Academy of Human Resources in 1994 and currently serves as a Trustee
of the Academy’s Foundation.
JANINE KILTY is Director, Worldwide Human Resources and Vice President, Commercial Group at Eastman Kodak. As such, she has overall responsibility for the human
resource functions of Kodak’s Commercial Group, which represents over $6 billion in
revenues. Prior to joining Kodak, she served as Senior Vice President of the Albert
Einstein Healthcare Network (which is the subject of this study). In addition to her
more than 20 years experience in human resources and healthcare management, she
also served as a consultant with a large national labor relations consulting firm.
JEFF AMOS is an Account Manager with Trilogy Software currently working on the Ford/
Trilogy joint venture where he applies his knowledge of agility and fast cycle time management techniques within teams that are creating a common e-business platform for
Ford. His Ph.D. dissertation research at the University of Texas at Austin resulted in a
recently published book titled Transformation to Agility: Manufacturing in the Marketplace of Unanticipated Change. He was elected a fellow of the IC2 Institute, University
of Texas, in 1999.
JEFF ERICKSEN holds an MBA from the S.C. Johnson Graduate School of Management
at Cornell University and is currently an M.S./Ph.D. candidate in Human Resource
Studies at the School of Industrial and Labor Relations at Cornell. His thesis research
focuses on the mobilization, development, and performance of spontaneously formed
teams in novel, emergent settings.
Crafting a Human Resource Strategy to Foster Organizational Agility
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ENDNOTES
1. Financial support for this study was provided by
the Center for Advanced Human Resource Studies, School of Industrial and Labor Relations,
Cornell University and by the Agility Forum,
Lehigh University. We are indebted to an anonymous reviewer and to Schon Beechler for providing numerous helpful comments on earlier
drafts of this article.
2. Readers will note many similarities between the
content model presented here and the model
presented in Dyer & Shafer (1999). But, the two
are not identical. This is because the former is a
depiction of the approach used by AEHN,
whereas the latter is a broader, more generalizable model that is based partly on the research
conducted at AEHN but also on additional research conducted elsewhere.
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