Organization De-LayeringDo you have the agility to compete?

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The consumer products industry in ASEAN has grown significantly in recent years. That’s good news.

The bad news, however, is that many companies have grown in unwieldy ways from a structural perspective. Many are now asking if their organizational structure is sleek enough to meet future needs in this competitive landscape. In many cases, “de-layering” can make that structure more efficient, with fewer reporting layers and greater spans of control. With this new structure, companies become fitter and better able to pursue revenue growth and increased market share.

RAPIDLY GROWINGCONSUMER CLASS

RISINGINCOMES

INCREASEDURBANIZATION

$770 BILLION IN NEW CONSUMER SPENDING*

* In the ASEAN region

over the next few years.

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THE CHALLENGES OF GROWTH

The consumer packaged goods (CPG) industry in ASEAN has enjoyed spectacular growth over the past decade—especially within the past five years—and prospects for the future remain strong. In fact, an Accenture report last year found that robust consumption fueled by a rapidly growing consumer class, rising incomes and urbanization will generate $770 billion in new consumer spending in the ASEAN region over the next few years.1

But, are companies poised to seize these market opportunities from a structural perspective? Do they possess enough agility? The answers are unclear. Rapid growth has challenged companies due to marketplace complexities. ASEAN companies compete in demographically complex regional markets, requiring the creation and marketing of a wide range of products over increasingly diverse channels. At the same time, competition has increased dramatically as more multinationals look to ASEAN due to the saturation of other markets. Mergers and acquisitions are also causing many business uncertainties.

In addition to market challenges, the nature of work from an organizational perspective is changing. Innovation and change have become major catalysts for growth, and digital technologies are driving the future of work. The workforce has become more extended and different forms of employment are emerging, with many people working across traditional boundaries.

At a time when it is relatively easy for companies to buy certain resources, they are having difficulty differentiating themselves in the area of talent. Talent has become the new DNA of competitive advantage, and companies are investing more in their people and in developing distinctive capabilities.

Innovation and change have become major catalysts for growth, and digital technologies are driving the future of work.

Introduction

RAPIDLY GROWINGCONSUMER CLASS

RISINGINCOMES

INCREASEDURBANIZATION

$770 BILLION IN NEW CONSUMER SPENDING*

* In the ASEAN region

over the next few years.

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DE-LAYERING FOR EFFICIENCY AND EFFECTIVENESS

CPG companies should be looking at their organization structure with an eye towards greater efficiency and effectiveness in talent management, and ultimately in becoming more customer-centric. For example, where in the organization can we drive out costs while maintaining business continuity and growth? How do we re-structure to become more customer-centric? Are we out of shape and spending too much on non-value adding activities? Are we set up properly to develop differentiated capabilities?

The primary focus here is on whether a company’s structure is optimized to meet its future needs in a competitive landscape. In many organizations, there may be ten to fifteen layers between the C-suite and the front lines making the leadership too far removed from the end consumer. In a specific area like marketing, for example, this could mean a marketing director may find it challenging to devise marketing strategies that truly resonate with consumers.

CPG companies should be looking at their organization structure with an eye towards greater efficiency and effectiveness in talent management, and ultimately in becoming more customer-centric.

Organization de-layering looks at both the

efficiency and effectiveness of a company’s

existing organization structure.

EFFICIENCY

Span of control and layers: Is the span of control and management layers optimized to facilitate effective managerial control and faster decision making?

Size: Does the organisation size reflect simplification through the elimination of duplication and redundancy.

Customer focus: Is the organization structure aligned to support customers? Does it drive customer focus and proximity?

EFFECTIVENESS

Clarity of focus: Does the organization design clearly articulate who does what and when for key decisions and activities?

Standardization: Does the organization structure incorporate standard business processes and reporting and communication?

Centralization: Does the organization drive scale and specialization and is there potential to create a center of excellence and shared services?

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Although the ideal span of control will vary from company to company, one can see sometimes dramatic results by increasing the span of control. As shown in Figure 1, keeping the organization layers to five while increasing the span of control from five to eight means management can support six times the number of people, enabling managers to focus more on value-adding initiatives. This is evidence of the fact that even if a CPG company is growing, it does not necessarily have to increase the number of reporting layers but can remain leaner from a structural perspective while supporting more employees. This results in bringing management closer to the end consumer, eliminating duplication of roles and improving communication channels.

SIZE OF THE PRIZE

The delayering approach can also help in right-sizing an organization using “return on talent” as an efficiency metric. We established efficiency metrics for each corporate function and then translated those into the numbers of FTEs required based on the metrics. Note that the figures generated are not factored for complexity (location, SKUs, brands, channels, distributor model, etc.) or sub-functions such as administration and legal.

A RAPID APPROACH TO DE-LAYERING

To minimize disruption to a company in the fast-moving CPG industry, Accenture takes a rapid five-week approach to organizational restructuring and de-layering.

The work begins with identifying, mobilizing and aligning teams and HR leads. To establish a baseline, we perform data collection around organizational charts, costs, and productivity. The result is a business case based on input from the company along with a set of prioritized recommendations.

We work next to review the baseline, assessing efficiency and effectiveness of the existing organization structure by function and sub-function. This enables us to deliver a desired or “to be” structure, including the ideal number of layers and the span of control. Using a series of workshops, additional input from management is obtained and a detailed action item list for the organizational transition is created. Effective communication planning and change management is essential at this stage given the change that needs to be embraced and absorbed by employees. Finally, execution of the new structural design is implemented, looking all the while to other things that must be accomplished from either a technology enablement point of view or an HR enablement point of view.

FIGURE 1 Optimizing the number of layers and the span of control can make the organization structure leaner and more agile

TOTAL AMOUNT OF PEOPLE SUPPORTED BY MANAGEMENT

LAYER/SPAN OF CONTROL

ORGANISATION LAYERS

ONE

TWO

THREE

FOUR

FIVE

FIVE SIX SEVEN EIGHT

781 1555 2801 4681

MORE CONTROLLESS CONTROL

1 1 1 1

5

25

125

625

6

36

216

1296

7

49

343

2401

8

64

512

4096

7

FIGURE 1 Optimizing the number of layers and the span of control can make the organization structure leaner and more agile

TOTAL AMOUNT OF PEOPLE SUPPORTED BY MANAGEMENT

LAYER/SPAN OF CONTROL

ORGANISATION LAYERS

ONE

TWO

THREE

FOUR

FIVE

FIVE SIX SEVEN EIGHT

781 1555 2801 4681

MORE CONTROLLESS CONTROL

1 1 1 1

5

25

125

625

6

36

216

1296

7

49

343

2401

8

64

512

4096

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DE-LAYERING IN ACTION

Accenture worked with a large fast-moving consumer goods company with subsidiaries in ASEAN and North America to design and implement our five-week approach to de-layering and optimizing organization design. Using our proprietary tools and processes we assessed the current organization layers and span of control for supervisors, then engaged company leaders to identify opportunities for delayering by:

• Understanding the current scope of work

• Identifying redundancy of work in terms of supervision

• Identifying individual contributor roles not aligned to team head

As a result of this work, Accenture identified supervisory roles that could be consolidated or eliminated to improve span of control and achieve cost savings. We re-designed the organization structure to create simplified reporting and communication lines for improved efficiencies. , The company was then able to increase its span of control from a range of two to four to a range of six to nine across different functions.

We re-designed the organization structure to create simplified reporting and communication lines for improved efficiencies.

BENEFITS

As this example indicates, organization

de-layering can deliver numerous benefits:

BETTER DECISION MAKING

De-layering can result in fewer levels of separation from the end consumer. It can eliminate redundant roles and unproductive steps, and provide a clearer basis for decision making with better understanding.

ENHANCED ACCOUNTABILITY

De-layering can standardize activities, eliminate non-valued added activities, and remove duplicate roles. It can also create cascaded KPIs with clearer ownership of actions.

FASTER, MORE RELIABLE COMMUNICATION

Following the de-layering process, organizations can have clearer two-way communication because of fewer reporting layers, and also less distortion of ideas as they move up the organization.

BETTER MORALE

With a more optimal span of control, companies find that there is less micro-management by supervisors, and more empowerment of employees while giving them broader responsibilities.

Right-sizing your Organization for the New ASEAN MarketsGrowth coupled with rapid changes in the way business is evolving has propelled companies to pursue organizational optimization through structural redesign

Accenture’s Rapid Approach

1 2 4 53Establish clear baseline

Analyze efficiency/effectiveness

Communicate plan

Hire/fire/reskillObtain business buy-in

• Identify, align HR leads/teams

• Collect data on Org • Develop baseline with

full cost and benefits

• Analyze employee e�ciency and cost e�ectiveness

• Confirm targets, guiding principles

• Refine transformation business case

• Build and launch communication plan

• Capture technologyroll-out

• Conduct kick-o� meeting, align with business leads

• Run HR workshop to include specificities

• Finalize sta�ng decisions

• Support people transition

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5

25

125

625

781 HC

5 direct reports per manager

LAYE

R/SP

AN O

F CO

NTRO

L

Forces driving this changeTalent is the new DNA of competitive advantage

Cost Strategies are the source to fuel growth

Digital is driving the future of work

Compliance to varied laws is a key objective

Innovation is a catalyst for growth

M&As are causing business chaos and uncertainties

8

64

512

4,096

1

4,681 HC

8 direct reports per manager

The Benefits of De-Layering• Org Alignment – Strategic plan cascades down

quickly so company operates as one unit

• Clarity – Increased span of control leads to clearer basis for decision making with better understanding

• Productivity – Do more with fewer people

• Better morale – Less micro-management and more employee empowerment

• Customer Intimacy – Management able to better understand customer needs

Optimizing the Layer and Span of Control can support up to 5000 HC to bolster a company’s revenue growth in ASEAN

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CONCLUSION

CPG companies have a powerful opportunity to win the loyalty of millions of new ASEAN consumers. To do so, however, they must overcome market and competitive challenges while becoming more agile. Optimizing the organization structure, de-layering the organization and increasing span of control can make a company more responsive to market change. It can also bring management closer to the consumer, driving not only better service, but product innovation as well.

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REFERENCES1 https://www.accenture.com/us-en/insight-

asean-limited-time-offer-cpg-companies

CONTACT US

Mike Sweeney m.sweeney@accenture.com

Ashima Wadhawan ashima.wadhawan@accenture.com

ABOUT ACCENTURE

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 375,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.