Organization Assessment and Design Process

Organizational Process

Develop and Prioritize Design

Principles

Identify Stakeholders

Identify Stakeholder Needs/Expectations

Create Design Principles

Prioritize Design Principles

Develop Alternatives

Evaluate Using Design Principles

Develop Advantages/ Disadvantages for each alternative

Confirm Organization Mission, Strategy, Goals

Create and Evaluate Org Structure Alternatives

Identify Stakeholders

Questions to Determine:

• Who will have new responsibilities?

• Who will change how they access/receive their work?

• Whose role, status, or power will change?

• Who are upstream/downstream from the change?

• Who must accept the change for it to be successful?

• Who might be affected unintentionally?

• Who is affected externally?

• Who is associated with the change and should be “in the loop?”

Identify Stakeholders Needs/Expectations

Sample Stakeholders and Expectations:Studio• Build creative XXXX• Develop faster speed to market• Embed repeatable processes• Ensure steady pool of talent and resources

Tech Services• Ensure XXXX in a cost-effective manner• Develop new processes to support XXXX

Marketing• Launch all XXXX in a timely manner• Develop thoughtful marketing programs to maximize return on investment

Sales• Meet or beat all sales forecasts• Maximize revenue

Sample Design Principles

We want to design an organization where we have:

• Quicker speed to market on the XXXX platforms

• Minimal bureaucracy in all decision-making processes

• Clear line of authority and control over all aspects of a XXXX

• Thoughtful XXXX based on objective marketing

requirements data

• Ability to act and implement quickly following a decision

Organizational Architecture

Evaluate Current State

– How is the organization currently structured? Draw and/or examine current organization charts

– What are the strengths and drawbacks of this structure? (focus on timelines, issues, effort or steps involved, and other relevant metrics)

– How are the business processes helped or hindered by the current structure?

– How do employees feel about the current structure?

– How might a different structure eliminate or improve on weaknesses in the current one?

Organizational Architecture

Review Possible Organizational Structures

There are five basic choices (plus hybrids) for design alternatives:

– 1. Functional: Units are formed according to major technical or professional function performed

– 2. Product Based: Units are formed around each of the major products (or services)

– 3. Customer or Geographical Area-Based: Units are formed around the characteristics or location of customers or markets

– 4. Business Process Teams: cross-functional teams structured around the major work processes

– 5. Matrix: Units are formed where individuals have accountability to two managers: one functional and one project/product

– 6. Hybrid: Units are formed which mix and match the above structures to create the best fit to their environment

Elements of Organizational Structure

• Lines of Authority/Reporting Relationships

• Explicit Roles and Responsibilities

• Actual Performance Measures

• Communication and Information Flow (Knowledge

Sharing)

• Rewards and Incentives

Evaluate Design

• Assess fit to business strategy/goals, check against design principles, get feedback from key stakeholders– Review the final design architecture -- structure and

supporting systems -- descriptions. How well does it fit in support of business strategy and in enabling the organization to achieve goal?

– Does the organizational architecture meet all of the design principles? If not, which ones had to be compromised and why?

– What do key stakeholders have to say about the resulting organizational architecture?

– When are regular evaluations going to take place, quarterly? Who owns the process?

Organizational Architecture

Advantages and Disadvantages of Functional Architecture

Advantages

• Promotes skill specialization

• Reduces duplication of scarce resources and uses resources full-time

• Enhances career development for specialists within large departments

• Facilitates communication and performance because superiors share expertise with their subordinates

• Exposes specialists to others within the same specialty

Disadvantages

• Emphasizes routine talks, which encourage short time horizons

• Fosters parochial perspective by managers, which limits their capacities for top-management positions

• Reduces communication and cooperation between departments

• Multiplies the interdepartmental dependencies, which can make coordination and scheduling difficult

• Obscures accountability for overall outcomes

Organizational Architecture

Advantages and Disadvantages of Product-Based Architecture

Advantages

• Recognizes sources of interdepartmental interdependencies

• Fosters an orientation toward overall outcomes and clients

• Allows diversification and expansion of skills and training

• Ensures accountability by departmental managers and so promotes delegation of authority and responsibility

• Heightens departmental cohesion and involvement in work

Disadvantages

• May use skills and resources inefficiently

• Limits career advancement by specialists to movements out of their departments

• Impedes specialists’ exposure to others within the same specialties

• Puts multiple-role demands upon people and so creates stress

Organizational Architecture

Advantages and Disadvantages of Matrix ArchitectureAdvantages• Makes specialized, functional knowledge available to all projects• Uses people flexibly, since departments maintain reservoirs of specialists• Maintains consistency between different departments and projects by forcing communication

between managers• Recognizes and provides mechanisms for dealing with legitimate, multiple sources of power

in the organization• Can adapt to environmental changes by shifting emphasis between project and functional

aspects

• Disadvantages• Can be very difficult to introduce without a preexisting supportive management climate• Increases role ambiguity, stress, and anxiety by assigning people to more than one

department• Without power balancing between product and functional forms, lowers overall performance• Makes inconsistent demands, which may result in unproductive conflicts and short-term

crisis management.• May reward political skills as opposed to technical skills

Organizational Architecture

Advantages and Disadvantages of Process-Based Architecture

Advantages• Focuses resources on customer satisfaction• Improves speed and efficiency, often dramatically• Adapts to environmental change rapidly• Reduces boundaries between departments• Increases ability to see total work flow• Enhances employee involvement• Lowers costs because of less overhead structure

Disadvantages• Can threaten middle managers and staff specialists• Requires changes in command-and-control mindsets• Duplicates scarce resources• Requires new skills and knowledge to manage lateral relationships and teams• May take longer to make decisions in teams• Can be ineffective if wrong processes are identified

Key Design Considerations

Management Structure: Levels and Span of Control

• Determine the appropriate Management Hierarchy for the chosen alternative structure: How many levels of management are appropriate? Will it be a flat or tall management structure? In which units?

Benefits RisksFlat Structure - Faster, better communications - Fewer opportunities for

advancement- Faster decision-making

Tall Structure - Management load is less per - Communication is slower and less accurate

- Greater promo opportunities - Decisions take longer

Key Design Considerations (cont.)

Management Structure: Levels and Span of Control

• Determine the Span of Control -- the number of individuals who report to one manager? Where does it make sense to be narrow or broad -- to increase or decrease the span of control?

Benefits RisksNarrow Span - Managers have more time for - Cost of management is greater of Control management

- Workers get more individual attn - Slower coordination among work groups

A narrow span might be most appropriate in cases: Where the work to be supervised is complex, unpredictable and needs close coordination; where workers are unskilled or inexperienced or where the manager is expected to perform significant individual contributor work in addition to supervising.

Benefits RisksBroad Span - Cost of management is lower - Management task is more difficult of Control - Workers encouraged to develop - Workers who need close

supervision skill/initiative and make own decisions don’t get it- More direct communications up and down

A broad span might be most appropriate in cases: where the work is straightforward and there are standard rules and procedures to guide workers ; where workers are highly capable; where other forms of support (I.e. staff experts) are available or where groups are relatively autonomous (I.e. process teams)

Key Metrics Considerations

Performance Measurement Systems– Determine WHAT aspects of the organization’s performance need to be measured.

• Based on the goals, key success factors and business processes of the organization, what should be measured and what are the measures? (Examples: profitability, competitiveness, efficiency, effectiveness, quality, volume, innovation, quality of work life, etc.) Involve employees, and internal/external customers.

• Prioritize the chosen measures -- those that are critical to the organization -- concentrate on what’s really important to the survival and growth of the business. Choose between 5 and 10 final measures.

– Determine WHERE to measure:• Always measure the outcomes of the key business processes of the organization.• Measure processes as well as outcomes when: there is a clear connection between how each step is done and the

final outcome, it is likely that there may be mistakes made during the process, and/or when making mid-process corrections will avoid flaws in the end product or service

• For each of the chosen measures, define where in the business process the measurement will be made.– Determine HOW to measure

• Determine for each chosen measure: How often, and under what conditions will each measure be captured and tracked? How will qualitative measures be captured? Who will do the measuring? How will it be tracked and reported? What will be the feedback techniques and reporting tools that will ensure that real time feedback is part of the work and close to the process?

– Establish STANDARDS for each chosen measure• Define the baseline standards of performance and improvement targets for each measure• Establish the appropriate level of ownership to each measure and it’s standard. Who is accountable to meet

standards?– Establish HOW reported measures will be acted on

• Define how deviations from standards will be addressed for each measure. Who will need to be informed?• Define how this information will be used to reinforce good performance and correct poor performance.• Define the specific consequences for sustained improvements as well as for slipping performance to those who are

accountable for the performance of the processes being measured.– Establish WHO owns the responsibility for the measurement process going forward