Improving Company Infrastructure Through Optimizing Organization Design®
Optimizing Organization Design® has a strong focus on the improved alignment of five factors. These are alignment of positions; accountabilities and authorities; people; deliverables and tasks. We will first discuss these five functions and then discuss some other areas that can be improved through optimizing organization design.
The combination of vertical and functional alignment of positions is the organization structure. This is the spine of your organization and any misalignment will reduce the effectiveness of other factors. This also becomes the foundation for manager – direct report alignment, which is critical to organization performance.
Improve The Vertical Alignment Of Positions
Determine the appropriate number of layers or strata and place every position in the correct layer or stratum. We use a research based approach called time span analysis. With this approach, we can eliminate unnecessary positions and add missing positions to increase effectiveness and cost efficiency.
Improve The Functional Alignment Of Positions
Start with the strategy and determine the relative importance of dimensions such as customer / market, product / service, function and geography. The most important becomes the primary way of organizing, and one or more other dimensions become important for cross functional relationships.
Improve Manager – Direct Report Alignment
Every employee should have a manager exactly one level or stratum above in terms of complexity of work done and capability to work at that level. Our research shows that this is the single most important organization design factor. Ironically, our benchmarking database of over 59,000 manager – direct report relationships shows that it is sub optimal nearly 50% of the time. While this is a colossal waste of human resources, it is a significant opportunity for improvement.
Improve Employee Relationships With Managers
This is usually one of the most significant factors on employee satisfaction surveys. Research has shown it to be directly related to customer satisfaction and financial performance. Optimizing Organization Design, and particularly the manager – direct report alignment, provide the fundamental underpinnings for improving these relationships.
Improve Span Of Control
(Number Of Direct Reports Of A Manager)
Our approach begins with understanding the nature of work and then determining the optimal span of control for each situation. This is fundamental to developing spans of control that are appropriate for each manager.
Clarify Employee, Supervisor, Manager And Manager Once Removed Accountabilities And Authorities
These are key position types in an organization. There is often a lack of clarity of accountabilities and authorities as well as a lack of consistency. Greater consistency of managerial practices and a better foundation for managerial leadership training will help reduce the confusion, conflict and rework that results from lack of clarity and consistency.
Clarify Cross Functional Accountabilities And Authorities
Most organizations complain about having “silos” and not working effectively across the organization. However, virtually none have appropriate cross functional accountabilities and authorities, which are a key solution to silos. The starting points for success are the appropriate vertical and functional alignment of positions, as well as employee and managerial accountabilities and authorities. One can then overlay the cross functional accountabilities and authorities to significantly improve work across the organization.
Develop A Better Alternative To “Matrix Organization”
People in most organizations complain that their matrix “doesn’t work”. It is often seen as some “solid lines and dotted lines” that don’t provide the necessary clarity. Our approach provides a better alternative. It starts with a strong foundation of position alignment as well as clarity of employee and managerial accountabilities and authorities. It creates the important role of a cross over point manager. It specifies that each employee can have only one manager, but can have multiple cross functional relationships. As well, it provides a clear set of cross functional accountabilities with real authorities to go with them.
Better Match People To Positions
Just as time span analysis can be used to determine how many layers or strata an organization should have, we have a research based method (information processing capability) that can be used to determine at which level or stratum an individual can work. This reduces situations in which individuals are working below their capability or promoted beyond their capability (Peter Principle). Combined with our measures of skilled knowledge and application, this can provide better outcomes for both employees and their organizations.
Develop Stronger Talent Management
While matching people to positions is an initial requirement, our approach can lead to much broader talent management improvements. These would include recruiting, performance management, retention, satisfaction, job evaluation, career progression, succession planning, compensation and managerial leadership training. It can provide the foundation for a comprehensive and integrated human resources management system.
Develop A Stronger Organization Planning And Review System
Most organizations have several systems that are not properly integrated. These include strategic planning, business planning and performance management systems. We have developed a method for integrating these into one powerful organizational development and review system. It helps to ensure that all employees are assigned the right work and are doing it in an integrated way. The goal is to align all efforts and move the organization towards successfully delivering its strategies and business plans.
Better Align Deliverables To Positions
Higher level positions should be doing more complex work. We often find that employees are doing work below their stratum and pay level. This is a waste of money and can be the reason why important work is not getting done. Determine the complexity of the deliverables and ensure that they are appropriate. As well, ensure that they are delivering the outcomes that are expected.
5. Optimizing Organization Design Can Improve Alignment Of Tasks
Better Align Tasks To Positions
We have developed a method to measure the complexity of tasks and determine which tasks should be done at which levels in an organization. Our research shows that professionals spend about 50% of their time doing work that someone at a lower level could be paid less money to do just as well. Our research also shows that the potential average annual cost savings are $10,951 per professional position. Not only do organizations lose out on these cost savings, but they also suffer from reduced levels of employee satisfaction.
Optimizing Organization Design Can Also Improve Other Areas
Optimizing Organization Design can also be used to improve other important areas:
Improve Functioning Of Board Of Directors
While our approach is primarily intended for organizations, it can also be used for improving the performance of Boards of Directors. This includes a framework for governance, a model for requirements for Directors and selection criteria that should be used. Our approach provides important insights for the levels of capability that are required for appropriate Board work.
Improve Project Management
While project management methodology can add significant value, it is often weak in areas related to organization design. Many projects fail to deliver expected results because of issues in determining the complexity of projects, the requirements for a project manager and the required relationships with the rest of the organization. Our approach can help to avoid these failures.
Improve Process Management (e.g. Lean, Six Sigma)
Our approach is complementary to management processes such as Six Sigma and Lean, helping to make them more effective. We can provide a framework for the ongoing accountability for processes. We can determine significant macro processes that are often ignored. Our task alignment method provides valuable information that can be used to improve micro processes.
Research and client experience show that time span analysis is a valid job evaluation method that can be used for compensation. Further, we have research showing that only 63% of employees are compensated within the optimal range. Since appropriate compensation is related to employee satisfaction this provides significant opportunities for improvement.
Please call 416-236-3044 or fill out our online form to request a discussion. Find out more about our Optimizing Organization Design® approach and how it can help your organization achieve significant performance improvements.