An organization is defined as a group of people working towards a common goal. An effective organization is one that delivers on its common goal consistently with the resources available. Clarity, Competency, Consistency and Efficiency are hallmarks of an effective organization. While simple in theory, this is something that most organizations grapple with. One key component of this is the Organizational Structure (also known as Boxes and Wires). The structure is put in place to provide formal authority for decision-making and drive accountability. The structure enables an organization to perform five critical functions of management – planning, organizing, staffing, directing and controlling.
Building an effective organization structure is a leadership competency. A Leader that I admire a lot once shared that “No structure is permanent and no structure is perfect. You need to keep adjusting it to build an effective organization.” So, how do we know if our structure has a problem? Here are five simple signs that may be helpful
- You need sign off from three or more people for a single decision – The evolution of matrix structure, fueled by Global Operating Models have created a complex operating environment – a mix of functional experts and business revenue owners. Multiple parts of the organization are focused on multiple priorities and some of them may be at odds with each other. The matrix structure distributes the ‘power’ to make decisions and aims to drive a ‘healthy tension’ (functional maximization vs business optimization). However, when decisions need to be signed off by three or more people, you have an ineffective structure. This is reflected in the ‘time to decide’ metric. Decision delays and multiple reviews where same information is shared are great examples of ineffective structure.
- You have more than eights levels or layers of hierarchy- I have done a ‘blank sheet approach’ with number of senior leaders. I start by asking them to pen down their ideal levels or layers of hierarchy starting from the top. Each level has to have a distinct responsibility. The typical 7 levels for large multinational, multi-product organization that they come up with are – CXO – Business/Functional Global Leader – Product/Department Leader – Senior Manager – Manager – Supervisor – Execution Level. This is then compared with actual levels/layers in hierarchy and we are typically off by 2 or more levels. Typical rationale provided include – talent pipeline, development roles and career opportunities. All are valid reasons. However what started as a short term focus become a permanent fixture and creates a tall hierarchical structure. What these additional layers create is an overlap or dilution of responsibilities and accountabilities. A simple way to measure this is to look at the number of layers/levels that are present in a meeting. If you look around and find two or more levels in the same review meeting, you know you have a problem.
- “When was that decided, nobody told me” – Any time you hear this, you know your structure has inefficiency. The power of management is in its ability to coordinate efforts. The key is effective communication. When you have multiple stakeholders focusing on multiple priorities at differentiated speed, there are bound to be ‘misses’. Your processes and structure should be able to ensure effectiveness of communication. While there is a ‘want’ to be ‘informed about everything that goes on’, what people ‘need’ is ‘information that impacts achievement of their goal’. If you are spending time in this communication tsunami and seem to be going around in circles with it, you know you have an ineffective structure.
- “I need to check with my boss for this decision, let me get back to you” – This statement is like a slow spreading cancer for an effective organization. The Managers and Leaders are expected to make decisions to further the organization. That’s their primary duty. So any forum, meeting or review where critical decisions need to be taken, leaders in the room should have the courage and competence to decide. If they are not, something is wrong. It could be a person dependency or structural redundancy. Either ways it is not a healthy sign.
- “Let me introduce myself and explain what I do” or “We need a new position” – A common mistake Leaders make is to confuse new work (job) with a dedicated role (position). Each new type of work does not mean a dedicated new role. It should be explored whether this work can be done with existing resources. While dedicated role has its advantages – like focus, clear accountability – it also comes with its baggage. People are not certain about what the new role will accomplish and how it will change current interactions. It takes precious time away from critical priorities and directs them to settling the new role. This is typical in a global operating model or a matrix organization where functional areas create their own set up rather than leveraging existing structure.
Any time you find yourself in a situation that is described above, it’s time to pause and reflect. Building an effective organization is a ‘Leadership’ competency, one that is becoming highly valuable in today’s complex business environment.
(Views expressed herein are my own. It does not represent any organization)
From Sanjay Gawde: http://sanjay gawde
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