There is no perfect organisation design, if there was then there would be a template and every organisation would apply it to their business.
The optimal organisation design for any organisation is dependent on its context; its history, corporate strategy, resources and constraints. Therefore, there is no “off-the-shelf” package available.
Organisation design can be a source of competitive advantage, as it can enable the organisation to become more responsive to its environment, more efficient and quicker at getting new products to market.
As a result, when undertaking an organisation re-design project it is necessary to have a design phase where multiple potential options for the future design are considered.
The reason for developing more than one option is for the potential to:
To create viable design options outside of understanding the work of the organisation you will also need the following;
· Design criteria — these should be established at the start of the project, they shouldn’t in isolation attempt to articulate the solution, but do start to shape the “solution space” from which a future design will be created. They should be clearly defined statements that are agreed and signed off by stakeholders to ensure there is a secure foundation from which to build the design from
· Comparator Organisations — every organisation is different however there is value in understanding what other organisations are doing both in the same industry and in other fields- but be careful not to chase fads what works for one organisation may not work for yours. You should first attempt to identify three designs of comparable organisations (to inform the development of the options) and then one comparator for each design option that is being considered (to assist the evaluation)
· As-is — it is likely that the existing design is a result of evolving needs over time and doesn’t currently reflect the original intent nor the optimal current design (hence the reason for reviewing the organisation design). However reviewing the as-is does provide the opportunity to understand what works, what doesn’t and the issues that are been encountered (so they can be designed out).
· History — to develop new design options you need to understand the history of the organisation and lessons learned from previous attempts at a redesign either of the whole organisation or of a business unit — this exercise will also help to understand the culture of the organisation and the potential ‘fit’ of a future design
· Interactions — you need to understand how people across the organisation work with each other and how information flows in order to minimise costly hand-overs and co-ordination meetings — this is a crucial step in reducing individual complexity and reducing the cost of “getting stuff done”. This can be done through accountability mapping and network analysis
Sample of a accountability map — note the complex web of accountabilities (and this is a simplified version!)
· Leadership alignment and commitment — This should have been secured at the contracting stage, however it is worth re-assessing the commitment of the leadership team to a organisation redesign and the extent that they share expectations and a common vision for the organisation — an empowered and committed business sponsor is vital to drive this work forward
Developing and understanding this insight and sharing it with key stakeholders will provide you with a rich set of information from which to build a set of feasible design options.
Evaluation of design options
Once a set of options (typically 3–5) have been developed, they need to be objectively evaluated — it is crucial that key stakeholders play an active part in this process, in order to ensure commitment to the preferred design.
There are a number of products that can be used to help the decision making process:
· Simple pros and cons analysis — under this approach the positive and negative attributes of the design option are listed (this can be done by the design team or by stakeholders in a design workshop), the drawbacks of this approach is the limited ability to compare across options, the potential for bias and the lack of ‘weighting’ each attribute based on its relative value
· Easier/ Harder/ Change model — this is broadly the same as the pros and cons model except three specific questions are used for each model, with stakeholders adding their perspective to each question:
What does this design make easier?
What does this design make harder?
What needs to change in order to make this model work?
· Options comparison matrix and analysis — this analysis aims to increase objectivity of decision-making by assessing each design option on a range of criteria and assigning a score (from -5 to +5), the results from this exercise can then be applied to a range of decision making criteria
Sample options analysis for two design options
· Scenario testing — (a.k.a. “stress testing”) this process involves subjecting the proposed design models to potential organisational scenario’s and assessing each models ability to provide an optimal response (this could be a risk management scenario or even scenario testing a potential customer journey) at the very minimum you should be testing the “fit” with other parts of the organisation (if it is a partial redesign) in technical terms you need to assess what is happening at the interface between different business units.
As a result of this evaluation process you should have a preferred design option that can now be subjected to further validation (e.g. more robust financial analysis) and trialling.
This approach has worked for me and helped me get closer to the answer, what do you think and what alternative approaches do you take to develop potential OD design options?
A topic that has fascinated me for a long time is the impact of marginal gains on performance, inspired of course by the exploits of Dave Brailsford and British cycling.
I have been trying to apply this philosophy to my own ambition of being an effective intrapreneur (an employee of a large organisation who uses entrepreneurial skills and attitudes to disrupt the system and develop initiatives that benefit an organisation).
I have just returned from a residential at a business school, where one of the leading speakers is a leading performance coach (his other clients include British Cycling), my personal learning intention was to be more “in the moment”, less reflective and to get stuff done quicker.This article is part of my ambition to JFDI.
So for the unfamiliar the principal of marginal gains (or more formally the aggregation of marginal gains) is that seeking out improvements to lots of seemingly insignificant aspects of a task will in the aggregate lead to large gains. This is achieved through the increased contribution of the individual tasks to bottom line performance but also the development of a new culture and attitude in a team/ organisation of a focus on improvement and performance achievement.
Some of the more famous (or memorable) ‘improvements’ include searching for the optimal pillow for individual athletes and ensuring they take it with them to hotels and the teaching of the best techniques to wash their hands.
The British cycling team won 7 gold medals at the 2012 Olympics using Marginal Gains, the rest of the world combined got 3.
A lot of the activities are obvious and accessible to all, yet the deliberate commitment to excellence in the “aggregate” is what makes this approach special, unique and medal-worthy.
Inspired by this, I have been looking out for specific marginal gain opportunities in my organisation.
So back to my residential, one of the great things about the business school is the fact that they have free (good) coffee, essential after demanding lectures.
I identified approximately 40 coffee machines on campus, the coffee machines were large machines with a drip tray to capture any spillages. After collecting my coffee one morning, I observed the cleaner take the lid off the drip tray and use paper towels to soak up the liquid (not from me!) and “reset” the drip tray. This process took about 3 minutes.
The following day I noticed that she did the same thing (I timed it this time, it definitely was 3 minutes). This got me thinking about productivity and (back to the topic) marginal gains.
Either inspired by marginal gains or high on caffeine I worked out that the “cost” to the cleaning team everyday was up to 40 machines x 3 minutes, a total of 120 minutes per day (or 600 minutes per week).
This leading international business school was spending 10 hours per week soaking up coffee using paper towels – that is not a productive use of anyone’s time and has a financial cost (let’s say £75 per week, £3750 a year).
In this example its not one individual spending 1/3rd of their time cleaning up the coffee, it may be spread throughout many cleaners resulting in the task being a small component of any job (not worthy of much thought).
There are some obvious solutions here;
Have a more selective admissions policy, if you can’t collect your coffee without spilling you can’t study here
Get new coffee machines with a detachable drip tray (and pour the contents into a sink)
However the replacement cost of 40 industrial coffee machines and the need for a more inclusive admissions policy, probably prohibits those solutions.
£3,750 is a lot of money, but probably not worth any serious consideration by “management” and the individual’s may just accept that the “process is the process” and they honourably repeat this task every day.
I therefore set about thinking about the marginal gains approach and what could improve (however marginally) the productivity of the cleaning team, the business school and the environment.
I spent about brainstorming some options, and came up with the idea of equipping each cleaner with an oversized syringe, which they could use to extract the liquid.
Industrial syringe with a 1 litre capacity — It costs about £10
This would result in the liquid being removed in less than a minute, which using the above numbers would provide a time saving of about 6 hours per week. It also provides a range of other benefits, less downtime for that all-important coffee and arguably and most importantly a feeling from the cleaning team that they are valued, supported and invested in (even if it is just £10 syringe).
Now, the numbers provided in this example are probably not entirely accurate and the savings potential is probably over-stated.
So, so what?
I would argue that the exact costs and savings (from this example) is not what is important here, the key learning for me was that gains, savings, efficiencies can be found anywhere.
Change a lot, a little bit to achieve more
We can all play a part in delivering gold medal worthy benefits to our organisations and to our customers.
Dave Brailsford’s philosophy of ‘marginal gains’ came from the idea that if you break down everything you could think of that goes into riding a bike, and then improved it by 1%, you will get a significant increase when you put them all together.
Therefore, our job is to do the same except apply the concept to your organisation.
How to apply the principles of marginal gains to Organisational Effectiveness?
1. First, decide what you want to improve (the whole organisation, a business unit or a specific product or service?)
2. Review (or create) the value chain map for the service you are delivering
3. Measure — what is the definition of success for this particular activity (e.g. KPI’s)?
4. For each activity in the value chain map, break it down to its constituent pieces (in as much detail as possible), then (via observation and other methods);
a. Identify what capabilities (people, tech, process) are required to deliver this activity (again in as much detail)
b. What does optimal performance look like? (what opportunities are there for standardisation?)
c. What other factors impact on performance?
d. What is the level of performance variation for the individual activities?
5. Apply problem solving techniques (5 Why’s, Root Cause, Appreciative inquiry etc. — https://www.mindtools.com/pages/main/newMN_TMC.htm ) to identify the causes of sub-optimal performance for selected components of an activity
6. Develop and test “micro-interventions” that may yield performance gains (this will also allow you to identify any adverse effects and/or optimisation opportunities)
7. Learn from the tests, Adapt and Optimise (Test, Learn, Adapt, Optimise)
In highly competitive environments, organisations must be able to react quickly and effectively to changes in customer requirements, economic circumstances and competitor activity. Flexibility of people is a key enabler; we call this Organisational Labour Agility (OLA).
Blyton and Morris (1992) have proposed 4 types of flexibility:
Functional flexibility – when employees are able to carry out a wider range of tasks than before, this enables work to be more efficiently allocated across different product or functional areas. Another principle behind this is the reduction of job specialisation; employees are given wider jobs which can provide greater motivation and awareness of the firm.
Potential measure: what is the labour cover for individual tasks (i.e. how many people in the firm could complete each specific task (above the core requirement)
Numerical flexibility – this refers to the ability of the organisation to increase or decrease the labour force quickly as the need arises. To achieve this a range of different employment practices are required (e.g. having core employees, plus temporary/ outsourced staff)
Potential measure: how quickly and what would the cost be to reduce/ impact staff by x%?
Temporal flexibility – this refers the ability to vary the number and type of hours worked (e.g. to cover the ‘twilight’ or weekends) possible approaches include flexi-time, annual hour contracts and short hour contracts
Potential measure: what percentage of staff can be deployed at ‘edge’ times (e.g. 6-9pm, Saturdays and Sundays)?
Wage flexibility – this allows the firm to vary the pay individuals receive in ways which best allow it to meet its objectives. Performance pay can be ‘self-liquidating’ in the sense that performance pay is only paid out when performance (e.g. revenue/ profit) is achieved
Potential measure: labour cost sensitivity to decreases in revenue – for a reduction of x% in revenue/profit what is fall in labour cost?
Delivering OLA requires time, organisational leadership commitment and effective implementation. Therefore, firms should assess their OLA before there is an existential requirement to do so. Prior planning enables firms to develop an appropriate strategy to increase OLA and increase the chances of successful implementation.
For firms that need to radically change their operating model quickly, it is possible to introduce greater OLA but care needs to be taken to protect core employees and maintain commitment and engagement to the firm.
Bloisi (2007) defines equal opportunities as:
“Where everyone is treated equally and given the same opportunities as those that have traditionally held the power”.
It is an established fact that despite cultural and legislative changes, women and other disadvantaged groups are not as well represented at the top (and even middle) of organisations.
Women still suffer from an earnings gap as they typically earn 82p for every £1 a man earns. Over a working life this accumulates to an earnings deficit of £241k. This obviously has wider societal implications, such as pensions provision, purchasing power and other benefits.
However, why does this occur and why would an organisation want to change it?
There are a number of reasons that have been proposed as to why women may still suffer disadvantage, they can be split into two sections; person-centred and situation-centred explanations;
Perception that women are less ambitious than men in the workplace – this stems from the belief that women may have other responsibilities such as the “burden of domestic responsibility”
Perception that women do not have the required leadership skills – there is evidence to suggest that women have different leadership skills to men. Women are generally more participative, more empathetic, more willing to develop subordinates. However, as men developed the idea of the ‘organisation’ the traits and attributes that are valued are male, there is evidence this is changing with the emergence of more self-managed/ directed teams.
Self-confidence – women are more likely to attribute success to a team/ joint contribution and failure as a personal contribution failure, this relates to the attribution theory. It has implications during performance appraisals
Training and development – some L&D opportunities have been held outside of working hours, prohibiting women from participating due to domestic responsibilities.
Informal networks – Organisations are social and informal networks play a prominent role in allocating tasks, projects and development opportunities. As these networks are sometimes facilitated outside of work hours it can impact on female participation
Mentoring – due to lower number of female senior managers, the pool of mentors/ role models is lower so women may be at risk of missing out on valuable mentoring opportunities
Presenteeism – there is a culture of “presenteeism” where working long hours and being seen to be working long hours is a virtue. Due to domestic responsibilities this can “lock-out” some women.
Performance appraisal – as discussed the concept of attribution theory can reduce the overall evaluation women may receive during their performance appraisal, this can result in reduced development and promotion opportunities relative to their male peers.
Family-friendly policies – lack of policies to support a return or retention in work, such as flexible hours or crèche’s can impact on female participation
The range of evidence that supports these potential explanations is mixed, and is contingent on the person and the organisation.
There is a compelling “business case” argument for greater participation and diversity. Therefore, it is in the economic self-interest of the organisation to maximise equal opportunities in the workplace.
McKinsey’s research identified a 'diversity dividend’, firms that are in the top quartile of gender diversity are 15% more likely to outperform their competitors.
Contributors to this effect include:
Labour market conditions – Women make up a significant proportion of the labour market and potential “talent pool”, therefore under-utilisation of this resource will lead to sub-optimal outcomes
Retention issues – Women who stay in the firm during and following maternity leave are committed, motivated and provide new perspectives. In addition the firm already has a “sunk cost” of investment through the earlier development so it is important that the resource is retained in the organisation, not wasted or transferred to the competition.
Effective decision-making – More heterogeneous groups, are less likely to succumb to ‘groupthink’ and are more likely to make rational decisions – the “common-sense” dividend
New product development - Heterogeneous groups are more innovative, creative and versatile, these factors contribute to more effective development of new products and sources of competitive advantage.
Company image – Having a diverse workforce, boosts recruitment efforts, boosts customer perceptions of a firm and avoids litigation – “win-win”.
Management styles – Women generally have a different leadership style, there is emerging evidence that this is more suited to modern operating practices. Therefore, women can help facilitate this cultural change.
Organisations should seek to understand the potential reasons they have for a lack of gender diversity and apply interventions that would address the specific causes.
Organisational commitment is the bond employees experience with their firm. Porter, defines organisational commitment as the extent that the employee is devoted to their employer.
Studies by Meyer and Allen identified 3 components (ACN) of organisational commitment:
Affective commitment: this relates to the extent that the employee has strong feelings and an emotional attachment to the firm, there are 3 key components:
Belief and acceptance of the firms goals and values
The extent that the employee is willing to expend considerable effort for the firm (discretionary effort)
The extent that the employee wishes to retain membership of the group (“the firm”)
Continuance commitment: this relates to the extent that the employee believes there are costs attached with leaving the firm (they can be described as “sunk costs”). Examples include loss of social relations (e.g. friends at work), loss of seniority (especially prevalent if an employee has been promoted several times) and perception they wouldn’t be able to secure an equally rewarding position externally.
Normative commitment: relates to the extent that the employee has a sense of obligation to the firm and believes staying is the “right thing to do”. This could be because the firm has invested in the development of the employee (e.g. sponsoring an MBA)
Organisational commitment differs from job satisfaction in that it is;
These factors partly explain why employees leave roles where they have experienced high job satisfaction.
Organisational commitment benefits the firm
If an employee has a strong affective commitment to the firms goals and values they are less likely to suffer from job dissatisfaction (“I am doing this for the firm”). Employees who are highly committed perform better than their peers and expend more effort to find creative ways to solve organisational problems and achieve performance excellence. Therefore there is a link between the extent that employees have organisational commitment and the organisational effectiveness of the firm.
Firms can achieve competitive advantage in two ways; increasing the capital intensity of the firm (e.g. through investing in greater and new technology) or by increasing the motivation and skills of the workforce.
A highly motivated, satisfied and capable workforce is the most sustainable source of competitive advantage (as it is easy to buy new technology, but more difficult to create a motivated workforce).
A component of achieving competitive advantage and increasing the effectiveness of individual employees is by increasing organisational commitment.
This can be done by developing interventions targeted at the individual components of organisational commitment (affective, continuance, normative).
Screen employees for congruent goals and values during recruitment and selection (e.g. using realistic job previews) – this enables prospective employees to self-select in or out and also for employees to be ‘inoculated’ against incongruent goals and values.
Highlighting the firms goals and values at all opportunities (e.g. through a newsletter) so employees can visibly see the impact of the firm.
Increase the “switching costs” by promoting social opportunities and harmonious group relations, ensure that the employee understands the ‘capital’ they have built up in the firm and explaining the pathway (clear line of sight) to desired second-level outcomes (such as promotions).
Socialisation is the process in which new employees are brought into the firm’s culture. The socialisation process is the transmission of values, beliefs and assumptions from one generation to another. It is a process of assimilation to make the employees become functioning members of the organisation.
For an organisation an effective socialisation process can contribute to reduced hiring costs, better culture fit and ultimately greater productivity and operational effectiveness.
The required socialisation or orientation process varies between firms and individual job roles as the demands of the new employee will be different. Therefore the socialisation programme should be tailored as much as possible to the needs of the individual.
Anticipatory Socialisation – this occurs prior to the employee joining the organisation and relates to the research the employee does to answer:
• What it really is like to work for the organisation?
• Whether they would be suitable for the job?
Accommodation Socialisation – this occurs after the employee has joined the organisation and involves 4 milestones:
• Forming interpersonal relations with peers and supervisors
• Learning the task requirements of the role
• Clarifying their role in their organisation and the role of other group
• Evaluating progress made against the requirements of the job role
Role management socialisation – this occurs throughout the members career and involves work life balance and the management of role conflict with exposure to multiple stakeholders with multiple demands.
There are a wide number of interventions that a manager can apply to increase the effectiveness of a socialisation programme:
Anticipatory socialisation – use Realistic Job Previews as part of the recruitment process, this will enable the employee to answer “what its really like to work here” and “whether they are a good fit” – this can provide “self-selection” so potential employees decide not to work here if there wouldn’t be a good cultural fit. Alternatively, it allows the employee to be “inoculated” against unrealistic expectations and the requirements to conform to the prevailing norms of the firm.
Managers can also provide detailed information about the role, firm, culture, history, values and expectations as a lighter-touch intervention to achieve the same aims (or to consolidate the RJP).
Accommodation socialisation – This is a crucial component of the ‘onboarding’ process. This process should be tailored to the role and individual as much as possible but should include:
1. Clear instructions of work expectations and instructions on how to complete work to a high standard
2. Introductions to peers
3. Buddying with a high performing peer
4. Supportive and accurate feedback
5. Increasingly challenging work assignments
6. Access to a coach and/or a mentor with high levels of referent and expert power
Role management socialisation – to best manage this process employer’s should provide Employee Assistance Programme’s including access to professional counselling and the opportunity for flexible working. Additionally the employer can also provide training on coping and stress management techniques