7 Principles to Create a Performance-Focused Organizational Structure

With changing business environments, organizational alignment and behavior must change, too. The purpose of renewing an organizational structure is to enhance performance and efficiency according to changing business opportunities and resources.

Projects to renew organizational structure can be energizing, re-invigorate employee engagement and develop management capabilities.

Sometimes, a change of structure does not realize business impact. Even worse, the pains of change can direct attention away from business objectives, augment internal boundaries and eventually disrupt the collaboration.

Connecting seven principles may help to set and maintain the focus.

Align organizational structure to specific business requirements -#1

What do you want to achieve with the structure and why? Where is the new structure supposed to take the organization in terms of business impact?  What specific competencies are you going to build? How do those contribute to what the customer values?  Which is the focus of bonding with customers - is it superior product, the range of customer specific solutions or is it system embeddedness? The answers to these questions are fundamental for defining the purpose of each single unit and position of the new structure.  Structure must make those capabilities grow, which create an advantage in the business you are in. If it does not create advantage, the new structure will not produce value.

Aim at business improvements – right from the start -#2

What are the changes in performance you want to achieve? Define some criteria for this success. Specific business impact is the objective, not a consequence of organizational structure , materializing in the end, or not.

Set specific targets for tangible improvements of the business that the new structure is to realize.  Do this right from the beginning of an organizational project. This helps to define criteria of success for the design solutions you consider. If it is deeper collaboration with customers, freeze-up of synergies, or time to market - set these as orientation for creating new roles and responsibilities. From the desired improvements you can derive the criteria to evaluate the alternatives for organizational solutions. It also helps, if you estimate the magnitude of the business value which an organizational solution will produce.  It sets the focus on purpose, guiding through the conflicting demands of change.

Align Job Descriptions to Processes - #3

An organization is a decision machine. For that, job descriptions must capture tasks and responsibilities for decisions. A great part of the value which knowledge workers create comes through collaboration. Most of that happens within business processes.  Not what a product engineer knows, but what decisions she produces with that knowledge together with other jobs.  That is where capabilities of an organization lie. Any functional job description therefore must first capture the purpose of a position for the processes of the organization. Secondly, it must capture what the job contributes to decisions. This also means that process description has to come first and job descriptions follow. Job holders like clear boundaries that secure a terrain of tasks where accountability is clear and they to grow their own competencies. In today´s knowledge economy job security comes with interaction.

Engage a team of practitioners and lead - #4

It seems to be common wisdom that organizational structuring must be decided from “above”. Distribution of power and the demarcation of responsibilities seem conflict triggering issues.

This may be true for an environment of hierarchy. But today an organization depends on creative interplay of knowledge workers. Decisions must be assigned to those who have the information. The functioning of any organizational solution will need a fit between the requirements of decisions and the behavioral capacities. This fit evolves with practice. That is one reason why the productive organizational solutions are shaped best by those involved in the process to be served. So form design teams of practitioners of the business process and assign them to suggest structural solutions.  There is one prerequisite. Design teams need orientation through clear criteria for success. Goals for business improvement” (#2) must provide these criteria, operational enough to evaluate alternative structural solutions.  It takes leadership to define the criteria, not the solution. This leadership is indispensable for

Evolve the performance culture -#5

Patterns of action and collaboration are critical for success. How decisions are initiated, made and realized follows tacit rules and established routines, shaped by experience. Whether extensive meetings, crisp expert committees or passionate scrums make the decisions, any organizational renewal reaches into these patterns. Structural solutions can foster culture or can be rejected by it. Real work experience is stronger than organizational regulations. That is why a change of organization structure needs a common vision of the culture, of which the structure will be part of.  How is the organization to operate? Which should be the norms and routines of setting goals, making decisions, coordinating work, appraising results? The first step is to make this vision visible - maybe three or five guiding values that set priorities for the way of working. These points should be clear enough to evaluate the fit of a structure with the performance culture you want to evolve. And they must be compelling enough to practice them.

Realize through Business Initiatives -#6

You may have brought elements together: business requirements, improvement goals, process design, structural solutions and a vision of behaviors you want to evolve. You have teams that created these solutions. How do you turn these into new practices? If the change of organizational structure creates value, the experience of business success is the proof. To go “live”, organization structure can integrated into “live” business initiatives that are suitable to turn new solutions into business success. I their goals are somewhat ambitious, leading out of the usual zone, the new organization is being challenged to perform. Initiative teams go for results, applying the solutions that they were involved in to design. Empower teams to deviate even from the new solutions if it makes them successful with the business task. If such deviations happen, let them turn these into suggestions to optimize the solutions. Then the organization is observing itself, learning and adapting.

Practice Adaptability -#7

In a VUCA world organizational structure is never right. Stretch between organizational regulation and business requirement is building up all the time.  Often, the reaction is to step up commitment, and increase the number of meetings and coordination calls. Then there seems to be no space on the agenda to deal with these issues. Meanwhile, collaboration becomes more complex and less rewarding, and the obstacles to improvement seem to pile up. The way to prevent this vicious circle is to make organizational adaption a practice of incremental steps. Within the framework of a business steering and target setting process you can monitor how the organizational structure works, and develop the measures for small-step improvements. Adaptability is not just an attribute but a practice.

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