Beyond Org Charts: What it Takes to Make Your Organizational Design Successful

Transcription

1 Beyond Org Charts: What it Takes to Make Your Organizational Design Successful Hard-Earned Wisdom from a Consulting Industry Veteran By Kelly Bolin, PhD Vice President, Human Capital Management, In our experience, one of the few remaining sources of competitive advantage lies in a company s organizational design. We describe org design as the unique ways in which a group or organization structures its work and motivates its people to achieve its strategic objectives. Drawing on the more than twenty-five years of experience across many companies and industries, we ll present some hard-earned gems of wisdom that will help you gain advantage over the competition through org design. The basic process we ll cover is: DETERMINE THE NEED KNOW THE RULES PICK A STRUCTURE KEEP IN MIND Assess whether org redesign is the right approach for you. Understand what org design is meant to do and what it isn t. Know the traditional org structures and how to blend them. Be aware of these gems of wisdom during your process. At our core, we are business people with a heart. At our Envision core, we transforms, are business grows, people and enriches with a heart. clients, employees, and Envision communities transforms, by engaging grows, and with enriches them to clients, create employees, positive change. and communities by engaging with them to create positive change. Denver Envision New Business York Consulting Milwaukee Denver inquiries@envision-bc.com New York Milwaukee inquiries@envision-bc.com 1

2 Determine the Need When is redesign appropriate? All too often, org redesign is the default response to various issues in a company. So, to keep it simple, here are several worthwhile reasons to redesign your organization: Changes in Strategy. When a change in strategy requires significant changes in company performance, often there is a need for major org design changes. Growth. As organizations grow, they often outgrow their current structure, resulting in overburdened workflow or over-taxed people. Changes in the Type of Work. As a result of market shifts, new technology, or cost pressures, sometimes a company is required to shift and redesign its core work. Staffing Changes. As a new leader or new team take charge of an organization, the arrangements that used to fit the needs, skills, talents, and capacities of the previous team may no longer make sense. Cultural Change. When you want to shake up behaviors, changing the org structure is often a powerful reinforcement. Org Design can be a tool to reshape company culture. Ineffective Org Design. Sometimes poor performance/unproductive outcomes warrant org redesign. Know the Rules It is important to build your org design on solid ground. A poor design could result in cynicism and decreased leader credibility. To maximize odds for success, the foundation of our approach begins with some rules of the road: 1. Structure follows strategy. Org design must grow out of and be perfectly aligned with a clear vision, expressed via a strategic plan with an operational set of strategic objectives. 2. Org design should deliver benefits of scale by leveraging shared resources, expertise, and technology. 3. Org design decisions should balance two important aspects of design: (1) the effectiveness of meeting company performance objectives, and (2) the org design s impact on people, both at an individual and group level. 7 SYMPTOMS OF AN INEFFECTIVE ORG DESIGN 1. Lack of Role Clarity. Individuals or groups are uncertain about what is expected of them. Roles may overlap or work may fall through the cracks. 2. Work-Arounds. The organization overcomes design problems by working outside the existing structure. 3. Coordination Issues. Work across business is left unfinished or groups are unclear about accountabilities. Some areas feel out of step with the rest of the organization. 4. Unresponsiveness. Parts of the organization can t keep up with market changes. 5. Conflict. Groups have ongoing friction. 6. Underutilized Resources. Group functions or individual skills are not being fully utilized. 7. Process Flow Issues. Work flow is slow and ineffective; bottlenecks are often present. 4. Org design should promote information to be processed more efficiently, accelerating the right information to the right people at the right time. 5. The effectiveness of an org design should be judged in part by how it manages interdependence between groups, or how well groups share information with other groups. 6. Impactful design must be holistic. This is not just shuffling boxes and names. To achieve real and lasting benefits, the org design must reinforce behaviors from all interrelated directions. This includes looking at metrics and rewards, decision-making, performance management, culture, roles and responsibilities, accountabilities, job/team design, and leadership development. Referencing these rules throughout your design process will help you continually evaluate the effectiveness of your approach. Too many organizations end up wasting their time when the end product doesn t unleash improved competitive strengths. Know the rules to avoid falling into that trap. 2

3 Pick a Structure How you group work in your new org design has significant impact on whether you ll achieve your intended objectives. The way you group work can either optimize information sharing across teams or create barriers that impede cross-team interaction. While there are many ways to group work, three of the most common we see are: Grouping by Activity the kind of work they do, defined by skill, discipline, or function Your strategy is to beat competition by becoming a low cost producer. Activitybased grouping provides economies of scale and controls costs. Grouping by Output the product or service they produce, regardless of job Your strategy is based on product differentiation. Output-based grouping focuses resources on product innovation. Grouping by User or Customer who will be the end users of their product or service. Your strategy involves staying close to your customer or market. Userbased grouping enables understanding of end-toend customer experience. The best org design not just one of the above. It s not just top-down or bottom-up. The best org design takes the organization s needs into account and is usually a hybrid of multiple approaches. 3

4 Keep in Mind Nearly three decades spent helping organizations through redesigns has created the benefit of many lessons learned along the way. Below are some gems of wisdom we can offer to any organization embarking on this task. Understand current lay of land before jumping into design. The first step to take should be a comprehensive organizational assessment. The following information at the beginning is critical: Understanding of the org strategy and specific strategic objectives. Information about how the organization actually operates. This involves understanding how information flows, what is required by whom and how quickly. Identification of current problems that the redesign should correct. The best design processes involve people who fully understand the organization and its work. It s critical for both the senior team and a core of lower level managers to be involved in the process. In many organizations, mid to lower-level managers are positioned better than the senior team to understand how the organization really works. You will have a significantly better chance of success if the people responsible for making it work feel they are shaping the solution. Develop design criteria and generate alternatives. In the early stages, create a series of statements that provide the criteria for evaluating various org design alternatives. Then, when developing design options, create and iterate alternative designs to assess against the design criteria. The best designs are those that emerge from the widest range of alternatives. Don t underestimate the operational details. Extensive operational design is required along with detailed attention to business process workflows, resources, reporting relationships, and human capital practices. Be sure to perform a thorough analysis of the impact of change on all stakeholder groups. This will identify where operational design needs to be done and what issues it should address. Even the best designs can be derailed by poor implementation and change management. One of the most common reasons redesigns fail is the assumption that the job ends with the announcement of the new design. In reality, that s where much of the toughest work begins. Implementation requires careful planning, close monitoring, and dedicated change management, or managing the human side of change. Effective change management is not a one-time event but rather ongoing throughout the life of the program, applying a structured process and set of tools to minimize disruption and resistance. There are no perfect designs: the process requires the weighing of choices and the balancing of tradeoffs. Each design alternative offers different strengths and weaknesses, different points of emphasis, different priorities, and different core competencies. Because most of today s organizations must focus simultaneously on several strategic objectives, hybrid designs are increasingly effective. But note: hybrid models are more difficult to manage than simpler, more traditional arrangements. Org design can be an effective way to achieve new business outcomes and gain competitive advantage. With the world constantly adapting, redesign of the organization must be a fact of life. Constant change is the new norm, and thus constant org redesign will become a fixture in the workplace. The challenge will be to develop effective, flexible structures that that can accommodate scale and change seamlessly. This ability to adapt will be a differentiator between firms that fizzle and those that thrive. 4

5 ABOUT ENVISION & THE AUTHOR, founded in 2009, transforms, grows, and enriches people and organizations. The company is headquartered is in Denver with offices in the Milwaukee, New York, and New Jersey. It is made up of consultants and thought leaders from the best of big firms, such as McKinsey, Deloitte, and Accenture. Recently Envision also completed a merger with Strong-Bridge Consulting to further expand its services. Inc Magazine recently named Envision one of the Fasted Growing Companies in America. Connect with Envision on LinkedIn. Dr. Kelly Bolin is Vice President and Practice Leader for the Human Capital and Org Design service areas at. Prior to Envision, Kelly held leadership positions with PricewaterhouseCoopers, Mercer HR Consulting and Ernst & Young Management Consulting. For more than 25 years, he has advised many companies in the areas of organization design and development, human capital strategy, organization change strategies, cost reduction, and process redesign. Kelly has led org design efforts saving millions in over 25 companies that include Pepsi, Hewlett Packard, AT&T, and Sun Microsystems. Kelly holds a B.A. degree in Psychology from Pepperdine University, a MS and Ph.D. in Organizational Behavior from the California School of Organizational Studies in Los Angeles. Connect with Kelly on LinkedIn. At our core, we are business people with a heart. At our Envision core, we transforms, are business grows, people and enriches with a heart. clients, employees, and Envision communities transforms, by engaging grows, and with enriches them to clients, create employees, positive change. and communities by engaging with them to create positive change. Denver Envision New Business York Consulting Milwaukee Denver inquiries@envision-bc.com New York Milwaukee inquiries@envision-bc.com 5