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“HR, Tear Down Those Walls”… and Increase Decision-Making Speed By 45%

by
Dr. John Sullivan
Jul 9, 2012, 5:56 am ET

Imagine proposing to your CEO that you could improve the speed of organizational decision-making by 45% and do it within a few months. Your CEO would undoubtedly be shocked that such a major improvement was possible in this critical business impact area, but I assure you that they would want to hear more about your solution.

Exterior of GlaxoSmithKline offices at Franklin Plaza, Philadelphia

This is because slow decision-making can have millions of dollars of negative business impacts, including missed business opportunities, slower product time-to-market, increased project costs, and losing the first-entry competitive advantage. Fast decision-making is especially important in the area of talent management because slow decision-making will severely frustrate your innovative and creative employees, and this frustration might lead to serious problems in motivation, innovation, recruiting, retention, and your employer brand image.

Decision-making Is One of the “Big 3″ People-management Outputs

If you’re a strategic HR person, you already know that there are three major outputs or results that HR can produce. They are:

  1. Increasing workforce productivity – Where the goal is to increase the economic value of the outputs produced by your employees, compared to the labor costs required to produce them.
  2. Increasing innovation — Where your workers create innovative new products or produce quantum improvements in product features and business process.
  3. Improving decision-making — Where you increase the speed and/or the quality of important business and people-management decisions. Expedited decision-making is essential if your firm is to dominate the marketplace.

No One Is in Charge of Improving Decision-making

In this article, I am focusing on the third output factor: decision-making. Organizational decision-making speed is the average number of weeks that it takes to make major decisions (i.e. $1 million dollars or above). Speedy decisions are important because rapid decision-making (often with imperfect information) is a key differentiator between agile firms and bureaucratic ones. Although HR leaders are aware of the need to improve decision-making speed, in most organizations, there has literally been no one in HR who is formally in charge of tracking and then improving decision-making. To make matters worse, decision-making is a complex area and there have been no available quick, easy, and effective solutions to improving decision-making speed. At least up until now.

The Solution – an Open-space Working Environment Increases Decision-making Speed

I’ve been researching and writing for years about the impact of physical space on productivity, collaboration, and innovation. I recently completed a major piece on “the death of the cubicle.” If you’re not familiar with it, an open space work environment is designed to maximize interaction, energy, and cross functional collaboration. It does that by eliminating almost all offices, cubicles, and barriers between employees who work in an office-type setting. Up until now, the available data from “next practice” firms like Google has shown that an open space environment has a dramatic and measurable impact on collaboration and thus innovation. But now, additional metrics from the global healthcare leader GlaxoSmithKline has added to the available hard data supporting the value of open space office design. It found that:

  • Its workplace design didn’t fit how their work was being done – Its research supported the research of others when it showed that only 35% of its work activity took place in offices and cubes, yet it was dedicating 85% of its space to cubicles and offices.
  • Costs were reduced — Because the open space environment requires significantly less total office space, real estate costs were measurably reduced.
  • Workers like it – Edward Danyo, its manager of workplace strategy, noted that “within two weeks most folks say they wouldn’t go back to cellular space.”
  • Dramatic improvement in decision-making speed — But most important of all, the new open office design dramatically increased decision-making speed. “It’s about creating environments so people can do their best work, and we’ve seen a 45% increase in the speed of decision making.” A 45% improvement is a breathtaking accomplishment in any field, but especially in decision-making.

Open Office Action Steps to Consider

If you decide to take action to improve the impact of your physical workplace design, here are some steps that you should consider.

  • Set goals — Set strategic HR goals to dramatically improve decision-making speed and quality (as well as workforce productivity, collaboration, and innovation).
  • Develop a business case – Work with the CFO to outline how you can jointly prove the business impact and ROI of the new office design.
  • Measure decision-making speed – Work with the COO and CFO to come up with a reliable measure for organizational decision-making speed and quality.
  • Benchmark – Benchmark the results and the workplace environment designs at best-practice firms, including Google, Facebook, Zynga, Twitter, and GSK to learn from their successes and failures.
  • Consider these workplace elements – Include in your workplace design features like: employee worktables with no barriers; quiet zones/rooms; “walk to” standing whiteboards (areas where there are white boards on many of the walls in the buildings so you can easily walk up to one at any time when inspired); standup desks; cul-de-sac collaboration areas; café areas to interact informally; walking patterns to increase cross-functional interactions; and both traditional and ad hoc meeting rooms.

Final Thoughts

Living in the Silicon Valley, I am fortunate to have the opportunity to work with and research truly great high-tech companies like Google, Apple, or Facebook. When you advise these industry-dominating firms, you become accustomed to dramatic results in the area of people management. But when I discover a 45% increase in any people management area, even I am shocked and pleasantly surprised, and even more so in this case because the dramatic improvement is in such a difficult area to impact like decision-making. To make the results even more impressive, they came from a global healthcare firm, rather than a Silicon Valley high-tech firm.

I understand why busy HR and talent management leaders don’t jump at every opportunity to improve people-management, but you simply have to make time to look into any solution that has the potential for improving decision-making speed by 45%. No matter what industry or the size of your firm, the time to act is now.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

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