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The Right Time to Re-Org
Changing a company's organizational structure is a tool executives commonly employ to improve their company's performance. More than half of CEOs reorganize their company during their first two years on the job. But Bain's research suggests that most of these reorganizations accomplish little. Some even make matters worse.
I co-wrote a piece for the Spotlight section of the June issue of Harvard Business Review called "The Decision-Driven Organization" that looks at this issue. What we didn't discuss in the article are the other tools executives can employ to improve results at their company — tools that have been short-changed by the many executives who seek a quick fix or stroke-of-the-pen solution. So if structure is the wrong tool in so many cases, then what are the right ones? And how should executives think about the relative priority of these tools?
Picking the right tool naturally depends on your diagnosis of the problem. There are many reasons why decision-making and execution break down, and most have little to do with how a company is structured. In my experience, the four most common breakdowns are:
1. Decision ambiguity — nobody is quite sure who should play what role in major decisions. So no one makes a decision. Or else multiple people assume the role of "decider" and work at cross purposes.
2. Data dysfunction — the information needed to support major decisions isn't available at the right time or in the right form. So people are left trying to make decisions in the dark, or else they're swamped with more data than they can possibly decipher and use.
3. Process paralysis — no one is clear on how important decisions will be made. Too much time is devoted to unnecessary analysis or, worse yet, too little time is spent on analysis and the wrong decision is made.
4. Talent deficiency — positions with major impacts on decisions aren't held by people with the necessary experience and competencies. Some of the right people aren't even on the bus, and others are in the wrong seats.
Each of these breakdowns can have a dramatic effect on company performance. And none can be solved through reorganization. But the four breakdowns do lend themselves to a simple hierarchy, a way to prioritize potential actions. Here's the idea:
First, define decision roles — make it clear to everyone who "has the D" on critical decisions and who plays other key roles. In many cases, merely defining decision roles helps eliminate critical bottlenecks;
... next ...
Improve information or information flows — specify upfront the information required to make critical decisions. Assess when critical information will be needed to support decision-making and execution, and evaluate what form of data will be most easily processed and digested;
... then, if clear roles and better information don't do the trick ...
Strengthen decision processes — let everyone know in advance how critical decisions will be made. Define the criteria used to weigh competing alternatives. Put mechanisms in place to ensure that the chosen alternative gets baked into resource plans with specific performance milestones;
... if the same people, supported by good information and strong processes are still making poor decisions or are making them too slowly, then ...
Change the people — talent is a critical resource for every company. Aligning the company's best talent with its mission-critical roles is essential for superior performance. No amount of organizational change can compensate for having the wrong people on the bus or in the wrong seats.
... finally, if clear roles, good information, strong processes, and the right people in the right jobs does nothing to improve performance — and, in my experience, this applies to less than 20% of cases — then think about structure. Is the organization itself getting in the way of making good decisions quickly and executing them effectively? If so, tackle the elements of structure that pose the biggest obstacles.
The hierarchy I'm suggesting puts structural change last, not first. If more executives followed this simple hierarchy, the cost associated with so many needless reorganizations would be greatly reduced.
Michael C. Mankins (michael.mankins@bain.com) is a partner at Bain & Company. He is based in San Francisco and heads Bain's Organization Practice in the Americas. Together with Marcia W. Blenko and Paul Rogers he is the author of Decide and Deliver: Five Steps to Breakthrough Performance in Your Organization (Harvard Business Press, forthcoming 2010)
Access Content Source: http://blogs.hbr.org/cs/2010/06/think_structure-last_not_struc.html?cm_mmc=npv-_-DAILY_ALERT-_-AWEBER-_-DATE
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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.
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