Our research and client experience show that optimizing organization design leads to better financial performance.
There Are Three Parts To The Improved Financial Performance
The first is ongoing financial performance due to the changes that have been made.
The second is more specific cost savings. This primarily results from removing positions that are redundant. Our research shows average potential annual cost savings of about $2,500 per position times the number of positions in the organization review. For example, in a 1,000 employee organization, this would be about $2,500,000.
The third is ensuring that professionals are doing the tasks that require their level of capability, and not less complex tasks that could be done at least as well by someone in a lower level position. Our research shows that professionals spend about 50% of their time doing this lower level work. Our research also shows that resolving this provides potential annual cost savings of about $10,950 per professional position.
How Does One Achieve This Improved Financial Performance?
Optimizing organization design includes the alignment of positions (vertically and functionally); accountabilities and authorities (managerial and cross functional); employees; deliverables and tasks. The improvement process usually involves some assessment of issues and opportunities with the alignment, followed by the implementation of agreed improvements.
Some of the keys are as follows:
Ensure that manager – direct report alignment is appropriate. Every employee should have a manager exactly one level above, both in terms of the complexity of work done and the capability to work at that level. Our research shows that this is the most important sub factor of organization design. Our research also shows that it is incorrect almost 50% of the time. Fixing this makes a major contribution to improved financial performance…and to improved employee satisfaction.
Break down silos and improve work across the organization. Most organizations complain about having significant issues here. However, virtually none have the antidote: appropriate cross functional accountabilities and authorities.
Ensure that deliverables are suitable for an employee’s level in the organization and related compensation. We often find that deliverables are at too low a level, and important, more complex, longer term work is not being done. Resolving this can make a significant financial contribution to an organization, improve organization capability and improve employee satisfaction.
Ensure that professionals are doing appropriate tasks for their level in the organization…and not lower level tasks that someone in a lower level position could do just as well at a lower cost. Fixing this improves financial performance…equally important, it also increases employee satisfaction.
Optimizing organization design leads to improved financial performance. Some of the keys are appropriate manager – direct report alignment; breaking down silos: ensuring higher level deliverables from higher level employees; and ensuring that professionals are not doing lower level tasks that someone in a lower level position could be paid less money to do just as well.