Business today require structure and organisation in order to grow. However, we tend to look at organisational structure as something that should be ‘best in class’ rather than achieving business goals. Structures also need to be reviewed regularly against the ‘fit for purpose’ criteria in order to be effective.
After 20 years’ reviewing and defining organisational structures, it has become clear to me that the lens used to review the structure is fundamentally flawed. As a young fund banker in the 90’s I spent many hours listening to heads of departments presenting the ‘new innovative’ structure and thinking ‘am I the only one who sees this as just more of the same’?
As I progressed up the corporate ladder I promised myself I’d never have anyone in the room saying that about my design. Challenge it by all means, but don’t consider it the same old design.
What is the organisation trying to achieve?
Structures are usually considered due to some upcoming change:
• Increase in volumes of work
• Cost reductions
• Inefficiencies causing loss of business or errors costing money
• Loss of key staff due to being disillusioned with management/opportunities
Once Managers understand what they are trying to fix, only then can they begin with the end in mind.
Start top to bottom and fill in the middle at the end.
The middle or bulk of the organisation structure is the easy bit. It’s the bit where you can save all your cost, make flexible if your growth plans are clear or can be developed to ensure all business objectives are achieved.
So why start at the top? That’s simple, firstly set out what the goals are and agree a Senior Manager owner e.g. Head of operations, Head of finance etc…then you can decide on one of two approaches:
1. The Senior Manager needs to plan the next three years and present it to his colleagues for both challenge and inter-dependencies.
2. The Manager below the Senior Manager produces the plan once they have been briefed on the objective. Then the manager presents to the senior team.
I personally prefer option 2. Why? Because the manager then not only owns the implementation, but it’s their design. Having a complete understanding is far better than any plan imposed upon them.
Why now go to the bottom? This is where the actual day-to-day work is done. If you’re a service provider or producing products you need to produce! Not manage, plan or develop structures, JUST do! At the bottom the design has to be one that uses lean learning. Learnings such as getting the most productivity from individuals or teams. Using daily peak and trough analysis to best allocate people and resources. The supervisor level needs to be fully engaged in this process otherwise you once again risk dictating your understanding as to what is required to produce without really understanding the challenges of the job.
Where all the fat, the inefficiency, the hiding and the cultural issues boil.
Once you have a full understanding of what the day job is you can then address the middle of the structure with a simple approach ‘what support do the top and bottom need to achieve their goals’? I once had a manager who asked me in the middle of a business transformation meeting ‘will this take long I’ve a day job’? Whilst there was an obvious lack of understanding as to their role in this comment it also opened my eyes to what managers were actually doing. They were operatives not managers. This meant the bottom was not set correctly or if it was it was being interfered with by non-supporting managers.
If a manager is not working on people development, client relations management, settling disputes or looking to the future he/she is not managing, they are senior operatives. Yes, this is simplistic and on occasion exceptions will need to be made, but in the general build the middle as the support not the day job.
The support needs to be up as well as down. For Senior Managers to lead they need the information. They need to understand on a regular basis what their managers are managing, escalating and ignoring. The key tool for the middle is Management Information Systems (MIS). The bottom need support to ensure they can achieve the day job with the correct tools.
To summarise: design your structure involving all levels, set to achieve company goals and with flexibility for the future.