Unorthodox concepts in HR : Part 8 - ‘Type N’ and ‘Type O’ organizations!

In this post, we will continue our exploration of Unorthodox concepts in Human Resources/People Management. Here we are exploring concepts that are unlikely to be found in ‘respectable’ text books (and also not taught in ‘premier’ business schools) but are very much real in the paradoxical world of people management (See ‘The attrition principle’,  'In the valley of attrition' , 'Sublimation of vision statements' , 'Computer-controlled Manager Empowerment', ‘Training the Victim’ ,‘Two plus Two personality profiling’ and 'Herophobia' for the previous posts in this series).

Based on my experience as an employee and as a management consultant, I have noticed an interesting pattern. Some organizations are optimized for newly hired employees (‘Type N’ organizations) whereas some organizations are optimized for tenured/'old' employees(‘Type O’ organizations). Of course, there are organizations that are equally good (or equally bad!) for all the employees! However, ‘Type N’ and ‘Type O’ organizations are quite common!

One easy way to determine the type of the organization is to see how employee engagement scores vary with tenure. Yes, the dividing line between ‘new’ and ‘old’ varies across organizations  I have seen organizations where you become an ‘old employee’ as soon as you complete one year and I have seen organizations where you will be considered to be a ‘new employee’ till you complete about five years. While the median tenure of employees in the organization has some impact on this ‘new-old dividing line’, it is usually a matter of organization psychology and is not directly derived statistically!

In ‘Type N’ organizations, 'not being burdened by the past' is a great advantage. So, the new hires, especially new leaders, have the advantage. These tend to be organizations that believe that new employees are hired to solve particular problems or to seize particular opportunities that the existing employees have failed to do. In these organizations, ‘tenure’ seems to have psychological association with ‘inability to drive change’. They might even consider many of the existing employees to be part of the problem! Hence, new hire has an advantage, so long as he/she is considered ‘new’. The difficulty is that the ‘new’ employee can move to the ‘old’ category quite quickly (and even get fired fairly quickly). If this happens mainly because of an underlying/unstated assumption that ‘new is good’, this ‘new-old-out-new’ cycle can repeat!  

'Type O' organizations tend to believe that one needs to understand the organization context deeply before one can really contribute, especially at senior levels. So, tenure is valued. These also tend to be organizations where it takes quite a bit of time for a newcomer to figure out how the organization really works. In these organizations, often the effective style of influencing tends to be ‘indirect’ (almost like billiards- you hit something so that it goes and hits the target as compared to hitting the target directly)! This doesn’t mean that ‘Type O’ organizations don’t value performance. It is more matter of a newcomer taking time to figure out how to perform better. Things get progressively easier as you spend more time in the organization. In a way, it is like batting on a difficult wicket. It takes time to ‘get your eye in’ but things become much easier after that. It becomes so wasteful to 'throw your wicket away' (leave the organization) after having done all the hard work to 'get your eye in'.  

Now, let’s look at an interesting question :  “Can the organization type change?” The answer is ‘Yes’. This happens mostly when there is a leadership change at the CEO level and sometimes at CXO level. A new leader, hired with a transformation agenda, can view most of the tenured employees as ‘part of the problem to be solved’ and hence might replace them with external hires. If a critical mass of ‘new people’ are brought in (and ‘old people are vilified), the organization can move from Type O to Type N. Now, two scenarios can happen. The first one is that newly hired people and the CEO/CXO stays on for a long time and the organization starts drifting towards Type O. The second scenario is that the new CEO/CXO keeps on replacing may of the people (including many of the newly hired people) as soon as they become ‘old’ (e.g. after 1-2 years) and hence the organization continues to be Type N.

In 'Type O' organizations, the leadership (especially at CEO/CXO levels) tend to remain remarkably stable  and that increases the probability that the organization continues to be 'Type O'. It is when a 'Type O' organization under-performs for a long time that a 'Type N' CEO is brought in, and the possible shift to being a 'Type N' begins. If the new 'Type N' CEO doesn’t have sufficient powers, he/she can easily get lost in the system or the system might even reject him/her. This ‘reaction’ of the system can be one of the reasons why the new CEO might be tempted to make a lot of people changes. Of course, there are indeed wise 'Type N' CEOs who are very selective and fact-based about the people changes!

So what does this mean? It definitely makes sense to figure out if you are joining a 'Type N' or 'Type O' organization. It is part of the psychological alignment required on what good looks like! Obviously, it makes sense to join a Type O organizations only if you are willing to sweat it out for a long period – significantly beyond the 'new-old dividing line' in the organization. Since they are optimized for new people, it is easier to join type N and to come up to speed faster. But the danger is that of the transition from ‘new’ to ‘old’. So, one must join for the right reasons (beyond the organization being 'Type N'). Remaining a bit of an outsider can definitely help,  especially in driving change.  Of course, being a bit of an outsider while being a full member of the organisation is a delicate balancing act!

Any comments/ideas?