Extreme Makeover: Business Edition
Positioning the People and Processes of your Organization for Success
Here’s the lead story in the Orlando Sentinel newspaper on September 14, 1999:
“Orlando Theme Parks Closed For Hurricane Floyd
In preparation for Hurricane Floyd, Orlando theme park operators have decided to close down theme parks for a day and half.”
The hurricane came and went, but one theme park decided to open its “doors” early to ensure that the Guests had a magical vacation experience, despite the inconveniences and challenges of the recent weather. To accomplish this daunting task, the Park Vice President initiated an “all hands on deck” request to his General Managers, and within hours a control center was set up and individuals from every facet of the organization were focused on getting the park up and running. By the time the park opened, there were individuals from Accounting managing traffic flow and Information Technology employees serving pizza. Everyone pitched in, with many crossing organizational boundaries, and the results absolutely thrilled the multitude of Guests who visited the park.
This is not an uncommon story. When an overwhelming challenge presents itself, people step up and do the job that needs to be done. This works well in a crisis. However, on a day-to-day basis, we count on organizations to ensure that the right people and resources are in place. A well-designed organization helps a leader move beyond “fighting fires” toward strategic, long-term focus.
What is Organization Redesign?
Oftentimes organization “redesign” is used synonymously with organization “re-structure.” However, organization redesign is much more than moving boxes on an organization chart. Organization redesign is about aligning the key performance levers (structure, processes, roles, people practices and measures) to ensure maximum performance and achievement of the organization’s business strategy. It is leadership’s responsibility to 1) allocate tasks and responsibilities, 2) organize formal reporting relationships, and 3) facilitate communication. It is important for a leader to pay attention to the organization’s design because that is what employees pay attention to; it defines how the work is allocated and divided, how communication flows and, ultimately, who someone’s boss is.
What should a leader keep in mind?
The most important thing to understand about organization redesign is that there is no right or wrong organization design. Organization redesign efforts are all about balancing tradeoffs. That said, there are some designs that would make an organization more effective than other designs. Effectively designing an organization involves both science (gaining clarity on what you need your organization to accomplish) and art (combining all organizational elements into a coherent design).
Next, the greater the clarity provided on the reason for the redesign effort, the greater the potential for success. There are five major reasons that would indicate an organization redesign effort might be necessary:
- Strategic Shifts in the Organization’s Business Strategy (e.g., required change in core product due to competitive influences)
- Redefinition of Work (e.g., introduction of new technology and impact to work flow)
- Cultural/Political Change (e.g., current culture interferes with performance)
- Staffing/Resource Changes (e.g., need to do more with fewer people, or need more people due to growth)
- Current Design Isn’t Working (e.g., poor coordination, excessive conflict, unclear roles, poor work flow, etc.)
Oftentimes a leader will want to use an organization redesign effort as a way of either getting rid of a problem performer or retaining a top performer. While this is a common reason for a reorganization effort, it is not optimal, due to the pressure it puts on the organization and the potential for selecting a sub-optimal design that will be effective only in the short term.
For example, one Executive I worked with had a top performer that he wanted to retain. So he decided to take several disparate organizations and consolidate them into one group, allowing the individual to have a span of control that was attractive to her. However, the effectiveness of those groups decreased as their direct communication to the groups they needed to partner with decreased and their sense of identity and focus became more muddled.
To determine your best design, evaluate each option against the goals you set for the redesign effort. There are a variety of options for organizing the top layer of the organization. You can design around Function (e.g., Operations, Marketing, IT), Customer (e.g., Pre-teens, Older Adults), Geography (e.g., Northwest, Southwest), or a combination. The best approach is to brainstorm options and then rate each option against the goals you set. This way, you will be able to understand the tradeoffs and make a decision about the shortcomings that you can live with. (see tools entitled Decision Matrix and Evaluating your proposed organization design)
For example, one project I worked on was to help similar Operational areas come up with consistent support organizations. To help the group come to a consensus on a new design that would work for all areas, we first brainstormed a list of criteria of what was most important to all. We then generated options and, during the evaluation process, the group was able to gain greater clarity on what was important to them, to select an option or to combine options that would help gain the most benefits while mitigating drawbacks.
You can build the best organization design, but it takes not only people, but also the right people to make it effective. Therefore, special care must be taken in determining the hiring process. There are two things to keep in mind when filling the roles:
1) Fill the most senior open roles first.
2) Even if the role is only a little bit different than it was before, post it anyway. In fact, post it even if there is an incumbent already in the role. The trouble you go to now will ensure that you have the right fit of talent and that incumbents clearly understand they have a new role.
For example, after much effort was put into the design of a new centralized training organization, energy waned when it came to filling the new roles. The selected overall leader had a different vision for the new organization and his direct reports were incumbents who preferred their former responsibilities over the new ones. These hiring decisions caused the implementation effort to be delayed for several months, costing the organization money and credibility among key stakeholders and clients.
Plan for implementation, paying close attention to the “people” issues involved. A big change requires a great deal of detailed planning to make it effective. Consider pacing (going neither too fast or too slow), sequencing of changes, pilot efforts, and communication in your plans. Additionally, ensure that your plans involve alignment of people practices to the new organization, such as union renegotiations, compensation issues, training needs, performance measures. Many redesign efforts neglect this last point and then find themselves with a wonderful design that isn’t realized in day-to-day practices.
Bottom Line: Is Organization Redesign a One-Time Thing?
A great leader is one who, when necessary, is willing not only to recreate his or her organization and entire approach to business, but also to anticipate those changes. And remember: The final concept that a leader needs to keep in mind is that by the time changes are implemented, it may be time to change again.
Does your organization need an Extreme Makeover? Check out the other resources (including a free assessment: How effective is your organization design) available online at www.acceleraconsultinggroup.com or give us a call at 407.376.8522 for a free consultation. We accelerate results by igniting leadership and organizational potential!