Redesign­ing Your Busi­ness, The Right Way

When it comes to organ­i­sa­tion­al per­for­mance, clas­sic busi­ness books focused more on lead­er­ships and mind­sets as opposed to the bor­ing nit­ty grit­ty details of how to con­fig­ure an organ­i­sa­tion for excel­lence. Unfor­tu­nate­ly, the fas­ci­nat­ing top­ic behind build­ing great organ­i­sa­tions has a dull name: Organ­i­sa­tion­al development.

Organ­i­sa­tion­al devel­op­ment is some­thing that Renoir Con­sult­ing has decades of expe­ri­ence in dri­ving, and this arti­cle will share some of the key con­cept and meth­ods that have enabled it to be a trust­ed part­ner for hun­dreds of com­pa­nies around the world.

Organ­i­sa­tion Devel­op­ment vs. Organ­i­sa­tion Design

First things first: organ­i­sa­tion­al devel­op­ment is not organ­i­sa­tion design. A good way of dif­fer­en­ti­at­ing these two con­cepts is to remem­ber that:

1. Organ­i­sa­tion design is con­cerned with pro­ce­dur­al changes, i.e., how to design a great organisation.
2. Organ­i­sa­tion­al devel­op­ment is con­cerned with behav­iour­al changes, i.e., how to devel­op a great organisation.

That being said, a pre-requisite for organ­i­sa­tion­al devel­op­ment is good organ­i­sa­tion design.

Organ­i­sa­tion­al Development

Organ­i­sa­tion­al devel­op­ment refers to every­thing that is done to upgrade the skills and improve the over­all job per­for­mance of the employ­ees. It seeks out cul­tur­al changes — such as increased empow­er­ment, improved team dynam­ics, knowl­edge man­age­ment and con­tin­u­ous learn­ing — so that the com­pa­ny is bet­ter able to adapt to new challenges.

The Basics of Organ­i­sa­tion­al Development

Some of the key focus areas regard­ing organ­i­sa­tion­al devel­op­ment are:

1. Pol­i­cy deployment
   This refers to the care­ful align­ment of long-range goals of the busi­ness to all organ­i­sa­tion levels.
2. Per­mis­sion ver­sus control
   Com­pa­nies need to find a bal­ance on the aspects of direc­tion (visions, goals, objec­tives), bound­aries (exter­nal and inter­nal reg­u­la­tions), space (free­dom from close over­sight, effec­tive del­e­ga­tion of author­i­ty) and sup­port (resources, from train­ing and devel­op­ment on explic­it ways to doing things, to finan­cial ones).
3. Respon­si­bil­i­ties and accountabilities
   The respon­si­ble par­ty (the per­son who per­forms the task) and the account­able par­ty (the per­son who checks on the task com­ple­tion) are often not clear, let alone for­mal­ly recorded.
4. Del­e­ga­tion of Author­i­ty (DOA)
   A com­mon com­plaint in organ­i­sa­tion­al devel­op­ment involves senior man­agers being over­loaded with requests com­ing up from the ranks. DOAs must be in place, with man­agers and super­vi­sors trained on what kinds of deci­sions they are expect­ed to take — and rep­ri­mand­ed when they do not take them.
5. Com­pe­ten­cy development
   Gaps in skills and com­pe­ten­cy lev­els need to be addressed through appro­pri­ate train­ing and on-the-job coaching.
6. Active man­age­ment behaviour
   When we con­duct obser­va­tions with clients, we typ­i­cal­ly see less than 5% of a supervisor/manager’s day ded­i­cat­ed to active supervision/management. On-the-job coach­ing in active super­vi­sion and man­age­ment is a major com­po­nent of all our programmes.
7. Organ­i­sa­tion­al behaviour
   When it comes to rolling out new ways or work­ing or sus­tain­ing high lev­els of per­for­mance, most com­pa­nies man­age this in a sub­jec­tive man­ner. In Renoir, we have devel­oped tech­niques that mea­sure the expect­ed behav­iours of an organ­i­sa­tion. This results in objec­tiv­i­ty regard­ing behav­iours, and the abil­i­ty to cor­re­late this to performance.
8. Trans­for­ma­tion Man­age­ment Office (TMO)
   This func­tion is con­cerned with the future per­for­mance of the com­pa­ny. It’s imper­a­tive that a TMOP has ded­i­cat­ed resources and is autonomous from the rest of the organ­i­sa­tion; short-term changes and cost-cutting mea­sures can cur­tail the function’s effectiveness.

Organ­i­sa­tion Design

The prac­tice of most com­pa­nies when redesign­ing their organ­i­sa­tion is to draw new ‘box and wire dia­grams’, exper­i­ment with dif­fer­ent clas­si­cal struc­tures, and then spend a great deal of man­age­ment time in sub­jec­tive debate about what will and won’t work. There is much more to effec­tive organ­i­sa­tion design than this; you wouldn’t put a chef in a pilot’s seat, but often that is a good anal­o­gy for what com­pa­nies try to do.

Organ­i­sa­tion design, in its sim­plest def­i­n­i­tion, is the opti­mi­sa­tion of a company’s ‘oper­at­ing mod­el’ to bet­ter achieve busi­ness objec­tives. Break­ing the notion that organ­i­sa­tion design is just a struc­tur­al exer­cise is one of the first fun­da­men­tal steps towards effec­tive organ­i­sa­tion design.

Putting togeth­er the organ­i­sa­tion chart (the ‘micro-structure’) is one of the last activ­i­ties to be under­tak­en when con­duct­ing organ­i­sa­tion design. An organ­i­sa­tion design approach starts with exam­in­ing the com­pa­ny strat­e­gy and ensur­ing align­ment with:

1. The macro-structure (the over­all organ­i­sa­tion architecture)
2. The deploy­ment of processes
3. The con­trol of process­es (also known as Man­age­ment Con­trol Systems)
4. The micro-structures (the organ­i­sa­tion struc­tures and respon­si­bil­i­ties and account­abil­i­ties etc) and peo­ple (num­bers and capa­bil­i­ties etc)

The Basics of Organ­i­sa­tion Design

There are many con­fig­u­ra­tion areas when it comes to organ­i­sa­tion design. Here are a few of them:

1. Organ­i­sa­tion design principles
   There is no such thing as a per­fect organ­i­sa­tion design. There­fore, design prin­ci­ples must be agreed to eval­u­ate the organ­i­sa­tion design options.
2. Macro-structure
   There are many high-level organ­i­sa­tion archi­tec­tures pos­si­ble (func­tion­al, geo­graph­i­cal, hybrid, etc.). It is impor­tant to under­stand what these are to be able to iden­ti­fy the suit­able type.
3. Cen­tral­i­sa­tion vs. decentralisation
   This is a very com­mon fea­ture of organ­i­sa­tion design, and it is impor­tant to under­stand where it is appro­pri­ate and why.
4. Out­sourc­ing and offshoring
   Sav­ing mon­ey is the prime moti­va­tor here. How­ev­er, because of the inher­ent risks involved only non-core depart­ments should ever be farmed out.
5. Process com­plex­i­ty
   For some depart­ments, there are very clear bound­aries regard­ing the process­es involved (such as finance and IT). How­ev­er, many process­es run across units, and this adds to the organ­i­sa­tion­al com­plex­i­ty. It is impos­si­ble to elim­i­nate all these inter­faces, but it is pos­si­ble to reduce them.
6. Check and bal­ance (con­flict of interest)
   This sce­nario is often present when it comes to busi­ness process­es. One com­mon man­i­fes­ta­tion of con­flict of inter­est is when plan­ning is not sep­a­rat­ed from execution.
7. Micro-structure
   No work should start on the micro-structure until mul­ti­ple macro-structures have been con­ceived, eval­u­at­ed against the selec­tion cri­te­ria, and the final choice signed off.
8. Activ­i­ty analy­sis and job design
   Out­side of the man­u­fac­tur­ing shop floor, prop­er job design is usu­al­ly weak or entire­ly absent in almost all oth­er indus­tries and func­tions. Yet it is a cru­cial con­fig­u­ra­tion area when it comes to being able to prop­er­ly crew a company.
9. Span of con­trol (supervisory/management)
   Up to 40% of pay­roll goes into man­age­ment. That’s why the span of con­trol is a bru­tal­ly straight­for­ward way of deal­ing with top heavy organisations.

Con­clu­sion

Chang­ing an organ­i­sa­tion design can be a daunt­ing task due past prece­dents of inter­per­son­al rela­tion­ships, expec­ta­tions, roles, and career tra­jec­to­ries. In gen­er­al, peo­ple will fight any change that results in a real or per­ceived loss of pow­er. These things can make it very dif­fi­cult for com­pa­nies to make a clean break from the past and take a fresh look at what the busi­ness should be now.

In short, a redesign done wrong exac­er­bate inter­nal pol­i­tics and increase resis­tance to change. A redesign done right will address and release resis­tance to change, help­ing those affect­ed to see the full pic­ture, as well as to under­stand and appre­ci­ate their new roles in it.

Get­ting a fresh eye’s per­spec­tive — and a thor­ough organ­i­sa­tion­al design and devel­op­ment pro­gram done — is some­thing Renoir has the capac­i­ty to deliv­er. If you would like to learn more about how we do this, please feel free to get in touch with us.