THE ORGANIZATION FUNCTION
IN THE ITALIAN CONTEXT
A STUDY PERFORMED BY POLITECNICO DI MILANO SCHOOL OF MANAGEMENT ON
BEHALF OF THE ORGANIZATION NETWORK “HANGAR 612”
INDEX
1.
INTRODUCTION ......................................................................................................................................... 2
2.
OBJECTIVES AND METHODOLOGY OF THE STUDY .................................................................................... 2
3.
STATE OF THE ART ABOUT THE ORGANIZATION FUNCTION ..................................................................... 3
4.
3.1.
A LOOK AT THE ACADEMIC LITERATURE ........................................................................................... 3
3.2.
THE STRATEGIC ROLE OF THE ORGANIZATION FUNCTION ............................................................... 3
3.3.
THE EVOLUTION OF THE ORGANIZATION FUNCTION ....................................................................... 4
3.4.
THE ORGANIZATION FUNCTION IN SMALL FIRMS ............................................................................. 4
3.5.
THE ROLE OF ORGANIZATION FUNCTION IN BIG FIRMS ................................................................... 5
3.6.
THE LINK WITH THE HUMAN RESOURCES FUNCTION ....................................................................... 5
THE PILLAR MODEL .................................................................................................................................... 6
4.1.
5.
THE CONFIGURATIONS OF THE ORGANIZATION FUNCTION ............................................................. 7
THE SURVEY ............................................................................................................................................... 8
5.1.
THE STEPS TAKEN TO DESIGN THE SAMPLE ...................................................................................... 8
5.2.
3.2 THE DESIGN OF THE QUESTIONAIRE ........................................................................................... 9
5.3.
THE SAMPLE..................................................................................................................................... 10
5.4.
THE DATA ANALYSIS ........................................................................................................................ 10
5.5.
THE RESULTS OBTAINED .................................................................................................................. 11
5.5.1. THE METHODOLOGY ADOPTED TO ANALYZE THE RESPONSES ....................................................... 11
5.5.2. THE DESCRIPTION OF THE SAMPLE ................................................................................................. 12
5.5.3. THE ORGANIZATION FUNCTION IN THE BIG ITALIAN FIRMS ........................................................... 13
5.5.4. THE ACTIVITIES OF THE ORGANIZATION FUNCTION ....................................................................... 16
5.5.5. THE RELATIONSHIPS WITH THE OTHER FUNCTIONS ....................................................................... 19
5.5.6. THE ORGANIZATION FUNCTION ROLE IN THE STRATEGIC ACTIVITIES ............................................ 19
5.5.7. THE STRATEGIC TRENDS AND FUTURE CHALLENGES FOR THE ORGANIZATION FUNCTION ........... 21
6.
THE RESULTS ............................................................................................................................................ 22
6.1.
THE METHODOLOGY ADOPTED FOR THE CLUSTER ANALYSIS ........................................................ 22
6.2.
THE CLUSTERS .................................................................................................................................. 23
BIBLIOGRAPHY ................................................................................................................................................. 27
1
1. INTRODUCTION
This report aims at presenting the research developed by the School of Management of
Politecnico di Milano in collaboration with the Organization Network “Hangar 612” to identify the
features and peculiar aspects of the Organizational Function.
2. OBJECTIVES AND METHODOLOGY OF THE STUDY
The Organization Function is assuming nowadays an increasing relevance for its strategic role
within firms. In fact, it often supports the Top Management in the strategic plans development,
designing the organization in such a way that the firm can be ready to face new competitive
challenges.
The objective of the study presented in this report was to investigate the structure, the
priorities and the best practices adopted by the Organization Function in the most important
companies working in Italy. Moreover, a great relevance was attributed to understanding its role in
innovation and improvement projects, and its involvement in business strategic processes. The
study was intended to provide a comprehensive picture of this Function, usually not easily
identifiable and well known in the Italian context.
The research project was carried out by the Politecnico di Milano School of Management and
developed within the initiative proposed by the Organization Network “Hangar 612”1. This
professional network is composed by Change Management, Business Transformation and
Organization Directors of some big Italian firms and it decided to start this research project to
increase its knowledge about the issues the Organization Function faces and to share the emerging
best practices.
The research was carried out through the implementation of a survey, which involved 285
person in charge of the Organization Function belonging to Italian medium-big companies (often
with more than 500 employees and a turnover higher than 250M€) operating in the manufacturing
and services sectors. The response rate obtained is equal to 20%, showing the good level of
reliability of the study. Analysing the different answers and the correlations between the firm’s
dimension and all the other parameters, a model based on the state of Organization Function was
proposed.
Along with the results coming from the survey, the researchers studied the Organization
Function features also in literature, looking for models or papers explaining its role and trying to
find a confirmation of the conclusions achieved through the survey’s results. Unfortunately, the
Organization Function is difficult to clearly identify and there are not so many studies about it, so
testifying the existence of a big gap in the literature. Although, the research testifies the strong
relation between the Organization Function and the Human Resources one. Consequently, the gap
was partially covered by the literature addressing models related to the Human Resources Function,
oriented towards the management of organizational tasks.
1
http://www.hangar612.org/
2
3. STATE OF THE ART ABOUT THE ORGANIZATION FUNCTION
In this section, the main finding in the literature about the Organization Function and the Human
Resources Function are presented.
3.1. A LOOK AT THE ACADEMIC LITERATURE
The Organization Function is the organizational unit whose aim is to design and manage the
entire structure of the firm and its business processes. In addition to this, the Function deals with the
sizing of the firm’s organizational units and of the tasks that the employees are expected to
accomplish. The Organization Function is assuming more and more strategic relevance in the Italian
scenario because it represents an active and frequent support to the Top Management, during its
strategic decision-making. Moreover, this research project is focused on medium-big firms, which
are characterised by an internal complexity that justifies the presence of this type of function.
Unfortunately, the literature is still lagging behind on this topic and it is very difficult to find
academic articles related to the Organization Function. Indeed, only some academic and
practitioner references were found to outline the strategic role of this function. However, due to its
importance in firms, especially in the big Italian ones, it is relevant to give attention to this
particular organizational unit.
3.2. THE STRATEGIC ROLE OF THE ORGANIZATION FUNCTION
Over time, an evolution occurred in the function considering the different roles taken within the
firm and its areas of competence. In details, the Organization Function is a staff function concerned
with the management of:
 The firm structure;
 The business processes;
 Some aspects related to human resources;
 Some technological issues.
Its aim is to provide services to both the Top Management and the other organizational units,
and it is a pivot between strategic and operational activities because it can translate strategic
decisions in operative plans. For this reason, the Organization Function resides at the so-called
“organizational” level, between the strategic and operative ones.
Strategic level
Organizational
level
Operative level
Figure 1: The "organizational" level of the Organization Function
Before explaining the evolution occurred for this function and its competence areas, a
clarification is on order. An important aspect to remember is that the organizational activities are
strictly related to activities and projects belonging to different areas. This is the reason why the
activities of the Organization Function are sometimes perceived as activities done for a specific
scope, on demand. This, in turn, can lead to a discontinuity in the workload of the function and to
the related difficulty in allocating adequate priorities and resources to the activities. Because of this,
3
in different cases the Organization Function does not exist but a task force is designed to face the
firm’s organizational aspects, or they are outsourced to consultancy companies.
3.3. THE EVOLUTION OF THE ORGANIZATION FUNCTION
‘60s: Administrative
Function
End ‘60s: HR
management
•Human resources
management
•Planning
•Finance
•Human resources
management
•Industrial relationships
End ’70s: Organizational
Function
•Information organization
•Production Organization
•Organization of the Direction
•Organization of units
Figure 2: The Evolution of the Organization Function
Following Tacchi (1979), the evolution of the Organization
Function occurred considering the different tasks it has to
face in the firm. Especially considering the end of the ‘70s,
complexity and uncertainty increased involving different
actors with different aims. The need to integrate different
realities and to harmonize all of them in the same
organization, made necessary the creation of the
Organization Function. Some of the reasons why the
Organization Function was necessary are related to the Figure 3: Complexity and uncertainty
management of economies of scale; the introduction of new
technologies; the increase in firm’s dimensions; the globalization trend; the need of more control;
the customer centric perspective; the increase of service markets; the implementation of the
business process approach through the organization.
Nowadays, the Organization Function can be found in the firms under different names, as state
by Adamuccio (2005). Some examples are: Organization; Organization and Organizational
Development; Organization and Human Resources; Organizational Systems and Technologies; and
Development and Procedures. Or, again: Change Management; Business Transformation; and
Organizational Development.
3.4. THE ORGANIZATION FUNCTION IN SMALL FIRMS
Usually small firms do not have an Organization Function. In fact, the Top Management, the
Technical & Production Direction, the HR or the Administrative Function directly manage the tasks
related to organizational issues. All the aspects linked to the “Organization” and “Organizational
control systems” are in the hand of the functions listed above. This decision is the result of a more
conservative and centralized way of manage the firm, typical of small companies.
4
3.5. THE ROLE OF ORGANIZATION FUNCTION IN BIG FIRMS
As already mentioned, in big firms the Organization Function is a staff function especially linked
to the Top Management at whom it provides specific support. From its birth (1979) and up to the
latest years, its activities have been changed accordingly to the needs expressed by the firms.
Table 1: The tasks of the Organizational Function over time.
•
•
•
•
Tacchi, 1979
Information organization
Production organization
Organization of the
Direction
Organization of units
Airoldi and Decastri, 1983
• Structure
• Information systems
• HR
•
•
•
•
Adamuccio, 2005
Structure
Procedures and
processes
HR
Technology
Considering the work of Adamuccio (2005) and going more in details for the competences areas
of the Organization Function some explanations can be added:
 STRUCTURE. In this case, the function implements: organizational check-in within the firm to
overcome organizational critical aspects; analyses to organize the macrostructure and the
related responsibilities to be aligned with the objectives of the firm, the internal activities
and the external environment.
 PROCEDURES & PROCESSES. Optimization of operational processes flow, based on the
activation of methodologies and procedures whose aims are the efficiency and the
rationalization of the workload, both individual and of the unit; monitoring the output of the
internal actors; management control systems (about costs, effectiveness and efficiency
parameters); involvement of the functions interested in the organizational issues. Usually,
the person in charge of the Organization Function direction is the strategic process owner,
whereas the other organizational analysts are the operational process owners.
 HUMAN RESOURCES. The Organization Function has to deal with: the management and
development of the employees (training, incentives systems, careers development); studies
oriented to investigate the motivation at work and to promote the employees
empowerment; management of different leadership approaches, business culture and
organizational learning; dimensioning of resources correlated to the scheduling. On the
contrary, all the administration concerning the employees is very often outsourced.
 TECHNOLOGY. In this area, the function has to align the information systems to the business
objectives (in order to have the Information Systems as a support to business processes); to
optimize the organizational, operational and informatics processes; to monitor the IT
evolution to propose updated hardware and communication systems.
3.6. THE LINK WITH THE HUMAN RESOURCES FUNCTION
Due to the lack of knowledge on the Organization Functions, we decided to focus also on the
literature and models related to the Human Resources Function (HR). There are many reasons that
testify the decision to study the link between these two functions.
5
First, in the majority of the cases the Organization Function reports to the Human Resources
Function. Moreover, both play a strategic role, especially in big firms, contributing to the creation of
the firm competitive advantage. In addition, they are both staff function. Moreover, nowadays the
HR function is also keen on tasks related to the organizational design, the core activity of the
Organization Function. This happens especially since when the HR became a business or strategic
partner. The competences required for both functions are quite similar. They must know not only
the specific tasks of their function but have a holistic view of all the business.
Focusing on the HR, this function plays an important role also as change agent. In fact, it deals
with supporting and influencing the organizational projects to translate in reality the strategic plans
about organizational issues. In order to face properly these issues, the HR must have a deep
knowledge on talent management, project management and change management, all surrounded
by the complete knowledge about the firm business. All this required knowledge is fundamental if
the HR is the business or strategic partner. Before, the strategic functions dealt with the
organizational design and only during its implementation HR intervened as a support, while
nowadays, with its role of business partner, the HR must support the organizational design
especially in:
 The definition of the problem (looking at priorities and alignment with the firm strategic
targets, propose criteria useful for the competitive advantage creation through the
capabilities enrichment);
 The use of organizational design frameworks (such as the Star Model of Galbraith, where
this model is usually used as a point of reference to make organizational planning choices.
Its parameters are structure and processes, typical of Organization Function activities,
people and rewards, typical of HR one, all lead by the strategy);
 The involvement of the right person in the processes; the integration between the
organization and the talent management (in order to enrich employees that can thus enrich
organizational capabilities);
 The implementation of changes (considering and identifying key success factors, the timing
and the task sequence flow).
In conclusion, considering the continuous interaction and link between the Organization
Function and the HR and the absence of detailed studies focused on the Organization Function, the
research was based taking as point of reference the Human Resource Function.
4. THE PILLAR MODEL
The next model has been kept as a point of reference to understand the design the
Organization Function considering the results obtained from the survey analysis. The following
paragraph puts in evidence just the theoretical model used as backbone in the analysis. The results
obtained are shown later in chapter 6.
6
4.1. THE CONFIGURATIONS OF THE ORGANIZATION FUNCTION
Here the aim is to identify homogeneous configurations for the Organization Function,
considering some characteristics that indicate the strategic and proactive state of the organizational
unit.
First, considering the strong link between HR and Organization Function, many different HR
models were studied. Three useful models have been chosen, the ones of Brockbank (1999), Costa
e Gianecchini (2005), and Ruona e Gibson (2004), because these models outline different
configurations of the HR Function through the analysis of specific variables.
The following variables are those used the HR configuration, coming from the three models.
These variables have been used to identify the different configurations for the Organization
Function:
 The types of activities done by the function (strategic vs operative);
 The degree of involvement of the function in the strategic activities and the involvement of
the person in charge of the function’s direction in the Top Management’s meetings;
 The interactions with the others functions;
 The proactive or reactive role, especially in innovation and improvement projects;
 The positioning of the function within the firm;
 The objectives and the evaluation systems adopted by the function;
 The centralization of the function;
 The hierarchical level of the person in charge of the function’s direction.
Considering these variables, the researchers looked for different groups of organization
functions differentiated on strategic and reactivity levels. Since these clusters were identified, the
successive analyses were about understanding if the outlined configurations influence the
positioning and the centralization degree, in the organization chart, of the Organization Function.
For example, a strategic role is more often testified by the function being a direct report of the CEO
and being at a corporate level. Moreover, the study wanted to understand if also the hierarchical
positioning of the function’s Director changes accordingly to the different configurations.
Using these numerous variables and taking also in the account Ulrich (1997) model based on the
different roles of HR Function, the configurations are expected to be collocated on a continuum
between two extremes with usually the following features:
7
STRATEGIC & PROACTIVE
ORGANIZATION
FUNCTION
OPERATIVE & REACTIVE
ORGANIZATION
FUNCTION
•The function is a direct report of the CEO
•Corporate level
•Responsable's hierarchical positioning at higher level
•High value added activities and long time horizon
•It is directly involved in taking strategic decisions
•Identification of projects that can anticipate future needs
•The function is a direct report of others functions
•Collocated in each business unit
•Responsable's hierarchical positioning at lower level
•More focused on less value added activities and short time horizon
•Not very involved in taking strategic decisions for the firm
•It acts in response to the tasks imposed by the Top Management
Figure 4: Strategic & proactive function vs. operative & reactive Organization Function
5. THE SURVEY
In this section, the survey is described. Moreover, analyses and emerging results are presented.
5.1. THE STEPS TAKEN TO DESIGN THE SAMPLE
The following are the steps we performed to define the target sample for our survey. First, a list
of firms was defined as formed by 1348 Italian companies, with more than 500 employees2 and
operating in the manufacturing or services industries. This sample of firms was identified using two
databases: one provided by the Research Department of the Milan Chamber of Commerce3 and the
AIDA4 database. From the obtained list of firms, we excluded those linked to the Public
Administration as they are too peculiar and have to deal with specific constraints and variables.
Once defined the sample, the 1348 firms were grouped considering three dimensions: the
geographic area where they work (Italian region); the number of employees (divided in the
following ranges: 500-999, 1000-1199, 1200-1299, 1300-1399, 1400-1499, 1500-1999, more or
equal to 2000); and the industry (using the ATECO codes). The following table synthetize the
distribution of the firms in the sample.
2
The threshold of 500 employees was defined because usually the Organization Function is found in big firms.
http://www.mi.camcom.it/servizio-studi-e-supporto-strategico The Research Department of the Milan Chamber of
Commerce which conducts researches related to the local economy and to the different industries.
4
https://aida.bvdinfo.com AIDA is a database that contains information and balance sheets of all the Italian firms. It is
provided by Bureau van Dijk (BvD).
3
8
Table 2: Distribution of the sample
Employees
500-999
1000-1199
1200-1299
1300-1399
1400-1499
1500-1999
>=2000
Total
Manufacturing
North
Centre
South
238
51
18
33
9
2
12
2
3
9
3
0
6
1
0
30
4
4
51
12
6
379
82
33
Services
Centre
118
28
7
4
7
9
40
213
North
270
56
15
12
11
42
136
542
South
69
10
2
2
5
6
5
99
Total
764
138
41
30
30
95
250
1348
The next step consisted in the search of information needed for the sending phase. Specifically,
all the important data (name, surname, address email) related to the person in charge of the
Organization Function were searched. In case these data were not found, because they were not
available or because of the absence of that person, the personal data of the person in charge of
Human Resources, Change Management, and Business Development Functions were searched.
Next to this list, 107 smaller firms (with less than 500 employees, but more than 300) were
added to the contact list because the Organizational Network “Hangar 612” was interested in them.
To sum up, the final contacted sample (i.e., formed by the firm for which we had the email
address of the manager in charge of the Organization Function, or the closest function) count 285
firms, out of a total sample of 1455 firms.
5.2. 3.2 THE DESIGN OF THE QUESTIONAIRE
Pilot Test
July 2014
Second
change at the
survey
June 2014
First draft
First change
at the survey
May 2014
Focus group
April 2014
February -March
2014
To design the questionnaire used in the survey, first, through focus group and brainstorming,
the Organisation Network “Hangar 612” proposed the most interesting aspects from their
perspectives to investigate. The research team set up successive meetings to revise the questions
and it performed a pilot test to receive feedbacks useful for the improvement of the questionnaire.
Obviously, in this phase the direct involvement of the Organization Directors was fundamental not
only for the content of the questions, but also for the comprehensibility of the language adopted,
remembering that the survey was sent to professionals of the Organization area and not academics
people. Basing on feedback and responses of the pilot test, we improved the questionnaire and we
arrived to its final version.
Last change
Survey start
Figure 5: Timing of the questionnaire's design
The questionnaire, coherently aligned to the research objectives, was structured in the
following six sections:
9
 General information about the firm (e.g., the sector; a rough estimation of turnover and
number of employees to understand the enterprise dimension; etc.).
 Information about the Organization Function (e.g., the position occupied in the organisation
chart; the frequency of the function involvement during the Executive Committee; the
professional background of the people working in the function; etc.).
 The activities of the Organization Function (to understand the areas in which the function
operates, which tools and systems are used, and so on).
 The relationship with the other functions in the firm (looking at the frequency and at the
degree of interactions).
 The role of the Organization Function in firm’s strategic activities (to investigate if the
function has a reactive or proactive role for the innovation and improvement projects,
looking both at the past and at the future).
 Strategic trends and future challenges that the function has to face (here the respondents
were asked to write down their opinions and ideas about these potential issues).
The questionnaire was composed by different typologies of questions such as multiple choices
and open questions and the respondents could fill in it through the online platform SurveyMonkey5.
The questionnaire was sent to managers following this time scheduling:
 July 2014 – First survey sending through email
 Begin of September 2014 – First email reminder
 End of September 2014 – Second email reminder
 Begin of October 2014 – Third email reminder
 Begin of November 2014 – Reminder by phone call
All the people contacts and the relative answers were registered in an Excel file, tacking trace of
the relation between the researchers and the interviewers (such as the number of completed
answers, the date in which to send the reminders, etc.).
5.3. THE SAMPLE
As aforementioned 285 Organization Function’s Directors were contacted through email and 258
emails achieved successfully the Directors, on the contrary the others 27 emails were rejected.
Considering 258 emails sent, 53 complete questionnaires were obtained, corresponding to a
response rate equals to 20,54%, which is definitely a high number for this kind of academic
research. More details about the sample and the answers received are outlined in the following
paragraphs.
5.4. THE DATA ANALYSIS
The data analysis was composed by the following three phases:
1. The first one is an explorative phase, devoting to describe in details the sample of firms
whose Organization Function’ director answered to the questionnaire and to find out the
principal aspects concerning this Function. It is basically a descriptive statistics.
5
www.surveymonkey.com
10
2. The second phase is based on a cluster analysis. The aim is to discover different
configurations of the Organization Function, defined considering its strategic and proactivity
levels.
3. The last phase is totally focused on describing the configurations.
Especially for the last two phases, the research team used statistics tools such as significance
analysis and a two-step cluster analysis. In details:
 To understand the significance of the distribution for the single continuous variables the
ANOVA test was used.
 On the other hand, for the significance of groups composed by variables the MANOVA tests
were executed.
From a statistics point of view, if the tests are significant for the 90% or 95% or 99%, the
conclusions are:
 For the ANOVA tests, the mean of the analysed variable is different among the
different clusters.
 For the MANOVA tests, the clusters identified are different because of the
combination of their variables.
 For the single continuum variables, significant at 95% or 99%, a Post Hoc test was
elaborated to underline whether the chosen variable strongly changes in the different
clusters.
 For the variables linked to the categories, a Chi-Squared test was performed to understand
whether a relation exists between these variables and the clusters. In case the significance
of the Chi-Squared test is around 90%, 95% or 99% it means that a relation exists.
5.5. THE RESULTS OBTAINED
The results exposed below refer to the first phase of analysis. It consists in a descriptive analysis
of the sample and its main questions, in order to give an overview of the main characteristics of the
Organization Function in Italy. The paragraphs related to the description of the results are
organized considering the different sections composing the survey.
5.5.1. THE METHODOLOGY ADOPTED TO ANALYZE THE RESPONSES
To analyse and describe the sample of responses, first, for each variable in the survey dataset
descriptive statistics (mean, standard deviation, frequency, minimum and maximum values) were
computed. The characteristics of the Organization Function were then studied using pie charts and
histograms graphs, always without forgetting missing data.
Looking at the questions oriented to understand the role of the Organization Function in the
strategic activities (questions number 26, 27, 28), an important attention was paid to identify the
possible presence of strategic trends, observing both the answers for the past scenario and the
future one.
For the open questions, a specific approach has been adopted to guarantee an efficient
interpretation and the relative analysis. In particular, the approach was oriented to outline macro
topics specified more often by respondents, achieving the possibility for these themes to elaborate
11
their frequency (especially adopted for questions number 9, 23 and the last three about the
strategic trends).
5.5.2. THE DESCRIPTION OF THE SAMPLE
The first section of the survey is related to general information about the enterprise. In this
regard, the sector in which the firms operate, according to the ATECO classification, shows the
predominance of manufacturing areas (40%), followed by the financial and assurance industry
(18%) and by gas/electricity suppliers (8%), as noticed in the figure 6 below.
16%
2%
40%
18%
-
6%
40%: Manufacturing activities
8%: Financial activities
16%: Other
8%: Gas/ electricity supplier
4%: Wholesaler & retailers
6%: IT & Communication Systems
6%: Professional activities
(scientific & techniques)
2%: Logistics & Storage
6% 4% 8%
Figure 6: Distribution of the firms in the sample basing on the industry
Most of the firms are multinational (75%), quoted in the stock exchange (58%) and belonging to a
group (92%). Moreover, the 36,36% of the sample is also the parent company of the group.
Considering that the targeted firms are the Italian ones, the 80,95 % referred to the parent
company location in Italy does not astonish. The other locations of the parent companies are: 7% in
Switzerland; 5% in Germany; 5% in France, and 2% in Luxembourg.
Other two key variables investigated, considering the values of 2013, are the turnover and the
number of employees. The first one related to the single firm, and not to the group, is distributed as
showed in the following pie chart at left (figure 7). The distribution is quite homogenous, with a
predominance for firms whose turnover is more than 3000 M€. In addition to this, the 38,64% of
firms realize most part of its turnover in Italy, as expected by the choice of the sample. Focusing on
the number of employees for the single firm, also in this case the distribution of the sample is quite
homogenous. The slight predominance is represented by the firms with 1000-5000 employees
(32%). Besides, the 77,55% of the total firms has more than 500 employees, so it guarantees that
the analysis is centred on medium-high size firms.
12
<250M€
18%
29%
250 – 500 M€
1.000 – 5.000
5.000 – 10.000
16%
1.000 – 3.000 M€
18%
500 – 1.000
24%
12%
500 – 1.000 M€
14%
21%
< 500
16%
32%
> 10.000
> 3.000 M€
Figure 7: Firms' turnover (left) and number of employees (right)
Observing the enterprise macrostructure, as described by figure 8, the two organizational
structures more adopted are the hybrid (30,19%) and the functional one (26,42%); near these two
logics, also the matrix structure is quite used (24,53%). On the contrary, the divisional solution is
not so diffused among the sample. In addition, the maximum number of hierarchical levels varies
from 2 up to 9, with an average of 4,32 levels. This shows a medium high organizational complexity.
Moreover, one question was focused to understand whether firms give functions in outsourcing and
in case of positive answers, which are these functions. This kind of outsourcing seams not to be a
relevant factor, in fact only 51,02% of the firms use it. For this set, the functions usually mostly
outsourced are Information Systems (54,17%) and Employees Administration (33,33%).
20
16
15
14
13
10
5
5
5
0
Functional
Divisional
Hybrid
Matrix
Missing
Figure 8: Firms' organizational structure
At the end of this section, a more general question was asked to understand the scenario that
the firms have to face and so to better collocate them. More in details, the respondents had to
evaluate four characteristics in relation to the market they face: dimension (in term of growth and
number of competitors), intensity of internal rivalry and rate of technological innovation. All the
variables obtained an average value between 3 and 4, so we can conclude that targeted firms
operate in a quite turbulent environment.
5.5.3. THE ORGANIZATION FUNCTION IN THE BIG ITALIAN FIRMS
The second section of the survey focuses on the core topic of the research, investigating the
general information about the Organization Function reality. Going into details, the first question is
related to the name used to indicate the Organization Function inside each firm. In fact, it is quite
common to find this Function identified through different names. The 66,67% is referred to the
13
name Organization, 23,81% indicates the HR and 19,05% used the term Organizational
Development.
70.00%
67%
60.00%
50.00%
40.00%
30.00%
24%
20.00%
12%
14%
19%
5%
10.00%
5%
2%
2%
0.00%
Figure 9: Terms used to indicate the Organization Function
The Organization Function is definitely located at corporate level, as outlined by the 73% of the
respondents. Only the 20% said that the Function is present in each Business Unit, while the
remaining 7% affirmed its presence both at corporate level and in each single B.U.. This result
highlights the strategic importance that the Organization Function has within the firm. Moreover,
always analysing its placement, quite often it is reports directly to the HR Function (70%). This result
is very important because it outlines one more time the strong relation between the OF and the HR,
as already highlighted in the literature part. However, sometimes it reports directly to the CEO
(18%) or to the Information Systems Function (4%).
20%
At corporate level
7%
Both corporate & in single B.U.
73%
In single B.U. (decentralized)
Figure 10: Organization Function's location in the firm
Looking at the resources involved in the function, the respondents were asked to roughly
estimate the number of Full Time Equivalent employees (FTE) and the number for employees
involved but with another type of contract. For the former, the answers received have as minimum
value 1, as maximum 60 and a mean of 7,84 FTE employees. For the latter, the minimum is 0 and
the maximum 15, with a mean of 1,09 indicating employees with another typology of contract.
These values outline the fact that the Organization Function has a limited dimension.
14
Focusing the attention on the Organization Function Director, the first question was about the
hierarchical level occupied within the firm. Considering as 0 the level to which the CEO belongs, the
mean is 2,2 hierarchical levels. This result is as expected, indeed very often (82% of the times) the
function reports to another function but it is still in a high position.
30
24
25
20
15
15
10
5
7
6
0
1
0
4
5
0
0
1
2
3
Missing
Figure 11: Organization Function's hierarchical level
In addition to this, a question was aimed at understanding the frequency at which the OF
Director was involved during the Executive Committee. The respondents had to choose between a
time scale going from 1 (never) up 5 (regularly). The mean of the results is 2,90: this number
indicates a medium involvement during the Top Management meetings. Moreover, this value is
aligned with the previous results, referring to the hierarchical level occupied by the OF.
Always considering the OF Director, another question was about the number of years this person
was in charge of this position. Specifically, they had to indicate the number of years spent in their
actual firm and the number of total experience, always considering that role. For the first case, the
mean is 4,02 years, while for the total experience it is around 10,49 years. The Directors’
professional backgrounds are mostly related to HR (38%), Organization (19%) and Management
Consulting (27%). These answers confirm the strong relation existing between the HR and the
Organization and also the important link among the competences necessary for the professionals of
the two functions.
Organization Function
5%
19%
HR
Information Systems
27%
Linee Function
Audit/Compliance
0%
38%
3%
5%
3%
Quality
Management Consulting
Other
Figure 12: Directors' Professional background
The professional background was also investigated for all the employees working in the
Organization Function. Analysing the mean of the answers received, most of the times they come
from Organization (3,50), HR (3,29), Management Consulting (3,22) or other Line Functions (2,90).
15
It is definitely less frequent the Information Systems (2,08), Quality (1,55) and Audit/Compliance
areas (1,63)6.
4
3.50
3.30
3.27
2.89
3
2.00
2
1.77
1.58
1.33
1
0
Figure 13: Employees' professional background (on average)
5.5.4. THE ACTIVITIES OF THE ORGANIZATION FUNCTION
The third section of the survey investigates the activities performed within the Organization
Function. The aim was to identify the areas of responsibility, the tools used and some notions about
the business processes.
First of all, the Function is involved mostly in activities related to projects (63%) and for the 37%
to recurring activities. Considering the areas of responsibility, the Organization Function works for
100% on Organizational Development/Business Transformation. In addition to this, the OF is also in
other areas of responsibilities, as shown in the graph below (figure 14).
120%
100.00%
100%
80%
60%
51.16%
41.86%
32.56%
40%
27.91%
20%
6.98%
0%
Organizational
Development/Business
Transformation
HR
Operative Excellence
Compliance
Information Systems
Figure 14: Organizational Functions' areas of responsibilities
6
The given values were ranked between 0 and 5, where 0 indicates never and 5 very often.
16
Quality
Studying more in detail the different activities, the research team asked to score from 1 (never)
to 7 (a lot of time) a series of activities to understand the time dedicated by the Function to them.
The main activities are the one represented in the graph below (figure 15).
5
4.5
4
3.6
3.6
3.4
3.1
3
2
1
0
Macrostructure
Planning
Strategy
Deployment & BI
Procedures
Support to IT
projects/BPR
Support to Hr and
job design
Figure 15: Organizational Function's main activities
The tools most used by the Function are shown in the following figure 16. Moreover, the
respondents were also asked to give a score to the performance of these tools (from 1 to 5): the
publication systems are the ones more adopted both for the organisation chart and for the internal
communication. For the efficiency side, the workflow systems and the tools designed ad hoc are the
tools with the highest performance from the OF Directors’ viewpoint. On the contrary, the lower
performance is attributed to Business Intelligence systems.
17
80%
71.43% 70.73%
70%
60%
48.72%
50%
43.59% 42.50%
37.50%
40%
33.33%
28.95%
30%
23.68%
20.00%
20%
10%
0%
Figure 16: Organization Function's tools
Another important aspect are the business processes. Firstly, only the 55,10% of the firms have a
repository where all the processes of the firm are collected. So this factor seams not to be a crucial
one. In addition to this, for the 77,77% of times the Organization Function is the function more
involved. In fact, it drafts, verifies or formalizes the processes flows. Considering the existence of
the process owner, also this variable seams not be crucial. Only the 56,25 % of the firms said to
have them clearly identified within the company. In the 66,67% of times, the process owners
belong to Line Functions, 18,52% to Business Unit and 14,81% Staff Functions. Although one of the
OF responsibility area is based on business processes, no one asserted the existence of process
owners inside the Organization Function.
0%
18%
18%
In the Organization Function
In Staff Functions
In Line Functions
In Business Units
64%
Figure 17: Process owners' location in the firm
Another surprising result is for KPI. The 75% of the firms said that KPIs are not clearly formalized.
This could be justified thinking at the nature of OF’s activities. Actually, these activities are less
18
standardized and operative, so it is difficult to define performance indicators. The 25% of the
respondents gave as example of KPIs used both qualitative and quantitative indicators, especially
based on costs, time and quality. In case of activities based on projects, the 60,36% of the firms
affirms not to use them. The difference is linked to the fact that it could be easier to identify ad hoc
KPIs for the specific project.
5.5.5. THE RELATIONSHIPS WITH THE OTHER FUNCTIONS
In the fourth section of the questionnaire, the focus is on the relationships between the
Organization Function and all the other functions within the firm. In addition to this, also the OF
involvement in making organizational decisions is studied.
Considering the frequency of interactions between the functions, the respondents had to give a
score between 1 (never) to 7 (a lot of times). The means of the results are shown in blue in the
graph below (figure 18). It emerges that the OF interacts quite a lot with all the other functions,
because of its nature. In fact, the Organization Function takes care of tasks that involve the entire
firm, as already outlined during the discussion about the main activities of OF. The highest
interactions are with the CEO/Top Management, Human Resources (if different from the OF) and
the Strategy Function. In the same graph, in red, the Functions that mostly take autonomously
organizational decisions are presented. As expected, we notice that the CEO/Top Management has
the highest value. The HR, Strategy and Sales follow it, all of them with similar frequency values.
The other functions have the mean around or under 4, so they rarely take autonomously these
decisions. That is one reason why the Organization Function is necessary for a firm. Also in this
section, the strong link between OF and HR is showed.
6
5
4
3
2
1
0
Figure 18: Organization Function's relations with other functions
5.5.6. THE ORGANIZATION FUNCTION ROLE IN THE STRATEGIC ACTIVITIES
The aim of the fifth section is above all to investigate whether the Organization Function has a
reactive or proactive role for the innovation and improvement projects, looking both at the past
and at the future.
19
Understanding the OF involvement in innovation and improvement projects can help to see how
much its involvement is oriented towards more or less proactive levels. The Directors had to give a
score from 1 (never) to 5 (always), considering the frequency with whom the function initiates,
manages or is not involved in the projects. As shown in the graph (figure 19), for the last 3 years
and for the next 3, most of the times the projects are initiated in the other functions of the firm and
then the OF is involved. In addition, as future trend, the OF will receive more power as initiator and
manager of the projects. For both past and future, few answers were given related to the absence
of its role.
5
4
3
3.35
2.73
2.83
2.88
3.29
3.50
1.64
2
mean last
3 years
1.31
1
mean next
3 years
0
OF initiates & manages Projects born in other Projects born in other
projects
functions & OF
functions & OF is
manages them
directly involved in the
project team
OF has no role
Figure 19: Organization Function's role in innovation and improvement projects
Another focal point is the involvement of Organization Function in the strategic activities such as
change management and strategic planning projects. For strategic projects about radical change
(see the different typologies on the horizontal axis of the following graph, figure 20), the degree of
Organization Function involvement among these projects was asked, evaluating it basing on a score
from 1 (never) to 5 (very often). Obviously, the mean of the scores has been calculated for the
projects that the respondents crossed before as projects activated within the firm. As expected, the
OF is especially involved in the organization redesign, business transformation and BPR both in past
and future. It is interesting to notice that for the future perspective, also in these answers, there is
an increasing trend for the involvement in all the strategic projects, especially for Merger &
Acquisitions. This testifies the increasing Organization Function importance.
20
5
4.13
4
3
3.46
3.43
3.45
3.80
4.14
3.31
3.22
2.75
2.87
2.84
2.67
3.46
4.41
2
mean last 3
years
mean next 3
years
1
0
Figure 20: Organization Function's involvement in strategic projects
Looking at the strategic planning projects, the Organization Function is more involved in multiyear planning of the function and in processes on annual budgeting, both for the past and for the
future years. Also in this question, an increasing trend about the OF involvement is seen, especially
for the industrial planning and the periodic formal meeting with the Top Management.
5
3
4.09
3.76
4
3.39
3.92
3.65
3.28
2.79
2.78
2
mean last 3
years
mean next
3 years
1
0
Industrial planning
Pluriannual planning of
the function
Annual budgeting
Periodic formal meeting
with the Top
Management
Figure 21: Organization Function's involvement in strategic planning projects
5.5.7. THE STRATEGIC TRENDS AND FUTURE CHALLENGES FOR THE
ORGANIZATION FUNCTION
In the last section, three open questions are about the strategic trends and the future challenges
for the Organization Function. In this analysis, the answers were grouped looking at the recurrent
themes, searching for the presence of significant trends.
Looking at the more relevant topics managed within the firm, for the past and the future, the
answers outline an increasing trend on:
 Service excellence;
 Operative excellence;
21
 Radical and Incremental improvement.
On the contrary, a decreasing trend is present on:
 Management of the structure;
 Efficiency and Effectiveness.
These trends can be understood thinking at the future of the function. In fact, it will be more
linked to strategic issues, as the improvement and the excellence, rather than operative tasks like
the ones linked to the management of the structure. Moreover, the operative tasks could be
outsourced.
Always considering past and future, the more relevant organizational models or tools used to
facilitate business challenges outline the increasing trend on instruments adopted for the
continuous improvement and the processes management support. On the other hand, a decreasing
trend is on tools linked to the management of the structure. These results are aligned with the
answers obtained in the previous question.
About the future challenges that the Organization Function would have to face, the recurrent
answers are mostly linked to strategic activities, such as:
 Business transformation;
 Strategic & proactive role of the function;
 Continuous improvement;
 Change management;
 Organizational flexibility.
Also these topics give evidence about the function tendency to assume a more strategic and
proactive role.
6. THE RESULTS
The second and third phase of the analysis is a cluster analysis and a study on the model
presented in paragraph 4, using the results obtained from the survey.
6.1. THE METHODOLOGY ADOPTED FOR THE CLUSTER ANALYSIS
The aim is to identify clusters for the Organization Function, based on variables showing its
strategic and proactive degree. From the list of variable explained when talking about the HR
configuration models (see paragraph 4.1), the key variables chosen for the study are:
 The types of activities done by the department (if strategic or operative);
 The degree of involvement of the function in the strategic activities and of the person in
charge of the function’s direction to take part in the Top Management meeting;
 The proactive or reactive role of the function.
The two fundamental steps taken for their study are their Factor Analysis and the related
computation of the indicator about the function’s proactivity degree. The steps were adopted
studying deeply the questions about the variables listed above.
The Factor Analysis is based on the identification of the principal components in the answers,
using an extrapolation methodology and the Varimax rotation methodology (who minimize the
components complexity giving more weight or less weight to the variables, looking at their
22
variance). Then the researchers calculated the mean and the reliability coefficients for the factors
outlined. In conclusion, the main variables adopted for the cluster analysis are:
 Strategic factor, which refers to the strategic activities hold by the Organization Function
and the OF Director involvement in the Top Management Team;
 Strategic tools factor, all the strategic planning tools adopted and the OF involvement
degree in the strategic planning processes;
 Proactivity degree, which represents the proactive role of the Organization Function.
All these variables were standardized in order to eliminate the differences due to different scales
adopted.
The Cluster Analysis began with the identification of the number of clusters. Through statistics
tools, for this study the clusters number that best fit to the data is four. Basing on these cluster, the
number of enterprises presented is well distributed among them; there is only a higher presence
for the fourth cluster. The MANOVA, ANOVA and Post-Hoc Test were elaborated on the four
clusters to clearly identify the characteristics for each group, looking for their significance and
reliability also from a statistics point of view.
6.2. THE CLUSTERS
The four configurations determined are perfectly aligned with the HR models. These
configurations are allocated on a continuum from an operative and reactive function up to a
strategic and proactive one. In the next lines, the overall description and comparison between the
clusters is shown. After the brief description of the general information about how the firms
composing the sample are distributed in the clusters, some of the variables studied in the survey
are represented in a table.
Considering the sectors, in case of the cluster operative & reactive there is a higher presence for
the manufacturing enterprises. On the contrary, for the other clusters, the services are the main
sectors.
Manufacturing
Service
Operative
Proactive
Operative
Reactive
Strategic
Reactive
Strategic
Proactive
Figure 22: Configurations’ distributions basing on the industry
23
For the turnover, the cluster operative & proactive is definitely the one with the highest presence
of firms with the high turnover. In fact, the firms with more than 1000 M€ of turnover are inside the
cluster for the 81,79%.
80%
70%
60%
50%
40%
< 250 M€
30%
250-500 M€
20%
500-1000 M€
10%
1000-3000 M€
0%
>3000 M€
Operative
Proactive
Operative
Reactive
Strategic
Reactive
Strategic
Proactive
Figure 23: Configurations’ distribution basing on the turnover
For what concern the number of employees, the highest percentage is represented by the
clusters that are Organization Function reactive, where most of the firms have a number of
employees between 1000 and 5000.
70%
60%
50%
40%
< 500 employees
30%
500-1000 employees
20%
1000-5000 employees
10%
5000-10000 employees
0%
Operative
Proactive
Operative
Reactive
Strategic
Reactive
Strategic
Proactive
>10000 employees
Figure 24: Configurations' distribution basing on the employees
The following table represents the effective link between the configurations and the variables,
using the Chi-Quadrato Test coefficient. This coefficient can vary from 0 to 1, where 1 is the highest
value that shows the strongest relationship between the specific variable and the configuration.
Table 3: Relation between configurations and some main variables
VARIABLE
LEVEL OF DEPENDENCY
VARIABLE – CONFIGURATION
Sector
24
Turnover
Number of employees
Turnover realized in Italy
Enterprise macrostructure
Placement in the organization chart (ex: as report of the
CEO, etc..)
Organization Function collocation (ex: corporate level or in
each B.U.)
Hierarchical level occupied by the OF Director
Directors’ professional backgrounds
Number of years the OF Director is in charge of
Full Time Equivalent employees
Involvement in the strategic projects
□ Low dependency: values from 0 to 0.3
□ Medium dependency: values from 0.4 to 0.6
□ High dependency: values from 0.7 to 1
As the table 3 shows, the relationships are quite balanced between cases of dependency and
independency. Some links are obvious such as in the case of the Organization Function collocation,
remarkable differences among the four clusters are not present. However, as expected, the
strategic configurations are quite often a direct link to the CEO. Always for the strategic
configurations, the hierarchical level of the Director is high. On the other hand, in the operative
configuration, the level is lower. In addition to this, considering the involvement in strategic
projects, for the strategic clusters the involvement is definitely higher than in the operative ones.
These relationships are strongly dependant and in fact, the coefficients have high values (red lines
in the above table).
A special remark must be done for what concern the areas of responsibility for the activities
performed by OF and its main activities. Looking at the areas of responsibility, the Chi-Quadrato Test
reveals low-medium coefficients. The level of dependency is higher in case of Information Systems
and Compliance. In fact, the operative configurations have higher number of cases belonging to
Information Systems areas and very few are present in the strategic ones. The Compliance tasks are
more active in the operative & proactive and in the strategic & reactive than in the other two
configurations. However, all the responsibility areas (Organizational development, Compliance,
Quality, HR, and Information Systems) are present in each of the four configurations.
As expected for the activities performed, the strategic configurations are usually more involved
in the workforce planning and organizational design than the operative ones.
To sum up, we can see the different configurations represented together on the axis concerning
proactivity levels and strategic activities (figure 25). A note to remember, both the axis have the
scale from 1 to 6. This is important because, as we can notice from the graph, the proactivity levels
within the enterprises are not so high. Moreover, the dimension of the circles testifies the number
of the firms, which answered at the survey, present in each configuration. The most crowded
25
configuration is the strategic proactive (40%). On the contrary, the other three configurations
collect mostly the same percentage of firms inside (20%).
4
Proactivity levels
OPERATIVE
PROACTIVE
STRATEGIC
PROACTIVE
3
2
STRATEGIC
REACTIVE
OPERATIVE
REACTIVE
1
1
2
3
4
Strategic activities
5
6
Figure 25: The four configurations
In the following figure 26, the peculiar characteristics of each configuration are outlined. All the
features came from the analysis performed through the survey submission.
26
OPERATIVE
PROACTIVE
• Usually it is responsable of Audit and Compliance areas;
• Not involved in strategic pianification for workload and for human resources budgeting,
neither in high value added activities;
• Involved in BPR and improvement of business processes;
• It initiates and manages improvement and innovativion projects;
•Usually the Function is a directly linked to HR or to IS and the Director's hierarchical level is 2nd
or 3rd
•Usually it is present in service companies with more than 1000 employees and the turnover
>3000 million €
OPERATIVE
REACTIVE
• Low level of implication in the firm's strategy, in fact not directly involved in
improvement/change management projects;
• Present in the meeting with Top Management with not high frequency;
• Mostly focused on Organizational Development, HR management and Information Systems
areas;
• Usually the Function is a directly linked to HR and the Director's hierarchical level is 2nd or 3rd
• Usually manufacturing companies with <=5000 employees and turnover <= 1000 million €
STRATEGIC
PROACTIVE
• Involved in Organizational Development, Operative Excellence and HR areas;
•It makes and manages the projects about improvement and change;
• Involved in high value added activities, such as strategic workforce planning;
• High involvement in Business Transformation, Organizational Redesign, BPR;
• The Director is at 1st or 2nd hierarchical level and the Function is usually linked directly to the
CEO or HR;
• Usually present in service companies, both firms with <250 mln€ turnover & <1000 employees
and >1000 mln € turnover and > 5000 employees
STRATEGIC
REACTIVE
• High level of strategic activities with high added value;
• Especially involved in Operative Excellence, Compliance and Organizational Development
areas;
• Higly involved in BPR and Organizational Redesign;
• Present in the meeting as important support in the pianification but not directly “decider” for
the improvement projects;
•The Director is placed at the 2nd hierarchical level and the Function is usually linked directly to
the CEO or HR;
• Usually service company with <=5000 employees and with 250-3000 million € of turnover
Figure 26: Description of the four configurations
BIBLIOGRAPHY
Adamuccio, L., 2005. La Funzione Organizzativa ed il controllo organizzativo: ruolo e competency per
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http://www.bloom.it/adamuccio4.htm
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Airoldi, G., Decastri, M., 1983. Le funzioni di organizzazione in impresa. Giuffré, Milano, 1983, pp. 34.
Brockbank, W., 1999. If HR were really strategically proactive: present and future directions in HR's
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Costa, G., & Gianecchini, M., 2005. Risorse Umane: persone, relazioni e valore. Prima edizione a cura
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