Last week I talked to the problems businesses can experience when their org chart isn’t based on solid organisational design. This week I promised to explain a little bit more about my four step process to build a sensible and solid organisational structure.
Step 1 – Strategy
Sounds easy right? Maybe not! It’s often tempting to jump a few steps, to build a structure around pivotal people, but organisations that have transitioned from good to great (Netflix is a great recent example) have a consistent approach of building the strategy first, and being willing to exit great people (and they do it well with a great thank-you redundancy payment) if the business is moving in a different direction.
Ask yourself the following – where is the business going in the next 12 months? Three years? Where are you competing? Where are you reducing or changing your focus? What does this mean for your customers? Products? Culture? People?
Other considerations should include your operating model/business model. One way I like to think of an operating model is if you had a set of plans for a building a house you have different blueprints for different functions (e.g. the electrician has a specific one, the builders have another, the landscape gardener has another again etc.) but you always have an overall summary plan that brings all these together – in a business you have a blueprint for an organisational structure (step 2) but you will also have technology page, a location/site page, a customer segmentation page, etc.
Step 2 – Structure
Now that you have greater clarity around your strategic focus, it is time to start thinking about the tasks, skillsets and deliverables that you are going to need. Organisation design 101 focuses on taking a holistic view of the tasks and skillsets required to deliver on an organisational strategy and translate these into structures and roles. On one side you have a sound operating model (see step 1) that helps guide the functions or divisions your business needs after which you combine these with the tasks and skillsets your business requires to build out a blueprint of the future structure, with position descriptions for the roles within the structure.
Step 3 – People
As hard as it can be, this is the first time you should start considering your people and individuals. Now that you have clarity around the functions you need and roles required this is when you go through two key steps – looking inward, which of your current people currently meet the requirements you have identified in step 2, and secondly, what roles do you not have suitable individuals currently within the business and thus you will need to recruit for.
I’ve seen this step go really badly when you don’t consider legislative implications of restructuring, redundancies, changing individual’s roles and communicating why you are doing this in the first place! Implementing a change or restructure affecting people’s roles, careers and livelihoods has implications not only for them but also for your people that stay – if you are ever going to get help from an expert, this is the step I recommend you don’t do without getting quality advice.
Step 4 – Process
Now that you have an org chart with clear roles, responsibilities and expectations, it’s time to start documenting the processes required to undertake the roles, and how all the roles connect together to deliver the outcomes you are looking for. Think of it like the instructions for building the furniture – the more senior the role, obviously the less specific the processes are, however this will enable you to de-risk the business from individuals and empower consistency amongst roles and allow you to lose an employee and be able to replace them with clear instructions for a new individual so that they can pick up the role quickly and continue without the business losing momentum.
Do you have questions or want to have a discussion around organisational structure? Don’t hesitate to give me a quick call or email! I’m passionate about helping your business get on a clear path to success.