organization design rick walters 2010

Organization Design: Strategy Driven and a Whole System Perspectiveand a Whole System Perspective

Presented for the Dallas Human Resource Management Association

OD Professional Emphasis GroupBy Rick Walters

September 16, 2010 1Rick Walters © 2010

Topics

• Introduction

• Organization Design Framework

• Examples

• Success Factors

• Overview of Five Design Areas

• References

2Rick Walters © 2010

Organization Design . . .

• Alignmentis g ided b b siness strateg hich changes to some. . . is guided by business strategy which changes to some

degree from year to year. Org design must be reviewed.

H li ti• Holistic

. . . is more than the structure. Don’t stop at the organization chart.

• Engaging. . . releases or inhibits human potential. Your choice.. . . releases or inhibits human potential. Your choice.

• Responsibilityi ibilit f l d t ll l l Eff ti. . . is a responsibility of leaders at all levels. Effective

design and change won’t happen by itself.

Rick Walters © 2010 3

Engaging . . . Release human potential

• The seed wants to grow, move the rock.“Don't Push Growth; Remove the Factors Limiting Growth ”– Don t Push Growth; Remove the Factors Limiting Growth.

Peter Senge, 5th Discipline

• Beliefs about peopleBeliefs about people– People are naturally active; they set goals and enjoy striving– People who understand and care about what they are doing can

devise and improve their own methods of doing workTwo of the beliefs listed by

Douglas McGregor, The Human Side of Enterprise

P i i l f Wh l S t A hit t• Principle of Whole System Architecture– Design work systems to customer’s needs and for business

results.One of twelve principles byOne of twelve principles by

Larry Miller, Whole System Architecture


Organization Effectiveness Frameworks

• People Systems– Performance Management– Training & Development– Recognition and Reward– Individual and Team Dynamics

• Process Focused• Process Focused– Business Process Improvement– Six Sigma– Reengineering

• Whole Systems• Whole Systems– Comprehensive Organization Design Models


Organization Design Concepts Progression and Some Representative Resource BooksSome Representative Resource Books

Strategic

Process Improvement

TavistockInstitute

Research

Socio-Technical Systems

Self-Directed Teams

Dynamic Org.

Design

Strategic Planning

Research Systems Teams Design

Rethinking and Reengineering


Effective TeamsHolistic View

of Performance

Organization Design Framework: Star Model

Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels2002. Jay Galbraith, Diane Downey, Amy Kates


Organization Design Enablers

People• Assessment and selection• Performance feedback

Structure• Function

G h

Strateg

Performance feedback• Learning and development • Culture, norms, habits• Written, unwritten rules

• Geography• Product• Customer• Role definition• Interfaces Strategy

• Vision• Mission

• Boundaries• Governance

• Priorities• Strategy• Values

RewardsProcesses • Values• Goals

• Metrics• Values and Behaviors• Compensation• Rewards and recognition

• Networks• Processes• Teams• Integrative roles• Matrix structures• Matrix structures• Lateral capability

8

Focus Question

• Is the organization designed to achieve the desired (d fi d b k / ) d loutcomes (defined by market/customer) and results

of the business strategy?

– What gaps in results exist now or will exist if no changes to design or capability are made?

– What capabilities and changes are needed to capture opportunities or move in a new direction?


Organizational Development Approaches

• Targeted, narrow focus interventions

• Comprehensive, detailed, large scale, design and

• Complex interventions– Governance by key

– One or small team of sponsors

– One or a few organization design components involved

g , gimplementation programs– Governance by hierarchy

of steering teams– Dedicated design teams– Comprehensive

sponsors or leadership team

– Several organization design components involved

transition planning and implementation

M d

Targeted Process ImprovementsIndividual / Manager

or Work Group Mergers and Acquisitions

ERP System

or Work Group Performance Issues

Problem Solving /Implementations

New Business or Unit Startup

Problem Solving / Decision Making


Unit Startup

OD/HR/Consultant Role in Organization EffectivenessEffectiveness

• Responsibility. . . is a responsibility of leaders at all levels.

• When Quality Circles, Total Quality Management, Business Process Reengineering or other business improvement frameworks were emerging, many organizations had dedicated groups of experts to lead organizations in application of these complex approaches.

T l d th d di t d f ti l i t H f• To a large degree, these dedicated functions no longer exist. However, from the momentum of the initial programs and with additions to management curricula, managers are taking ownership of organization design (whether they know it or not). Although not necessarily in a methodical or comprehensive fashion.p

• The role of the consultant can be to maintain an eye on the principles and methods available for organization design and to bring just the right amount of relevant process to leaders and leadership teams when needed.


ORGANIZATION DESIGN INTERVENTION ORGANIZATION DESIGN INTERVENTION Examples from division and department level transformations.

EXAMPLESEXAMPLES


Case for Action & Accomplishments

2000 Accomplishments

Diminished credibility Credibility up – seat at the table

Decreased customer satisfaction High customer satisfaction

Cost overruns Cost goals being met – predictable outcomes

“Fire-fighting” Ability to deliver strategic and tactical solutions

Not taking full advantage of investments in Increasing entitlement and leveraging of ITNot taking full advantage of investments in IT solutions

Increasing entitlement and leveraging of IT investments

Poor project execution Projects meeting expectations

Negative impact on morale Positive impact on morale – higher than Negative impact on morale p gbenchmark on industry surveys

Poor global coordination Global coordination & cooperation

Minimal business integration Increasing integration across business unitsg g g


Example – Drivers: Shift in Products and Services

PeopleStructure

Corporate Priorities

Strategy

• There is and will be a change in the make up of projects to include more, larger system i t ti j t

Improve Customer Relationships

Increase Market Shareintegration projects.

• Common platforms will need to support diverse business unit needs. (e.g. commodity and differentiated, low and high

volume)

Rewards

ProcessesImprove Organization Performance

volume)


Structure

• Initially a Major Program box and manager was added h h i h h i li i hto the org chart with the implication that:

– The other functions continue with the ongoing work.– The Program Manager manages the large program.

Enterprise Applications

V.P.

Order to Cash Plan to Start Purchase to

Booking B2B Application Support

Major Program


Adding the role to the org chart addresses one component (partially).p (p y)

PeopleStructure• Add Major Programs function and

leader.

Strategy

• There is and will be a change in the make up of projects to include more, larger system i t ti j tintegration projects.

• Common platforms will need to support diverse business unit needs. (e.g. commodity and differentiated, low and high

volume)

Rewards

Processes

volume)


Challenge

• The leadership team recognized there were many g yimplications for how the organization would operate going forward. For example, all managers will have h ll ith i it dchallenges with priority and resource limitations with the addition of the new large program. The program was to be 3‐4 years inwas to be 3 4 years in duration.

• A workshop was held with the leadership team with the following objectives:

– What are the common goals across the functions in the group, including the new large program?

– How do we work, communicate and support one another to implement our , pp pcombined priorities (continuing with existing functions and successful execution of the new large program)?


Areas to address identified in the workshop, mapped to the organization design frameworkmapped to the organization design framework.

People• SME’s on business processes

Cross training for fle ibilit

Structure• Internal Customer interfaces and

• Cross-training for flexibility• Need appropriate knowledge per

system

relationship management• Restructure customer teams• Internal and external suppliers

interfaces and relationships management

Strategy• Business Internal Customer

priorities, short and long-term.

Reinforcement

Processes• Scope management (assistance

from internal customers)• People resources allocation

• Alignment within the organization, across functional groups and individuals

• Requirements gathering and priority setting with customers

• Contracting and on-boarding of supplemental labor (short lead time, expertise requirements)

• Simplified work design to make it


• Simplified work design to make it easier to bring in contractors

Four initiatives defined with leadership team members assigned to eachmembers assigned to each.

• Communication Across Functions– Action: Project Coordination Team.C i i h C• Communicate with Customers– Action: Stakeholder communications and planning.– Action: Restructure business unit stakeholder teams.

• Resource Managementesou ce a age e t– Action: Develop plan / approach.

• Internal / External Supplier Management / Relationships– Action: Continue with existing efforts and mechanisms.

• In addition a process was developed and implemented to manage the life cycle of the initiatives so that organization capability was improved year over year.

Definition and Consensus on

Scope

Definition and Consensus on

Scope

Identification of Org Change Implications

Identification of Org Change Implications

Planning to Institutionalize the Changes

Planning to Institutionalize the Changes

Final Report, Celebration and

Next Steps

Final Report, Celebration and

Next Steps

Initiative Life-cycle

ScopeScope ImplicationsImplications the Changesthe Changes Next StepsNext Steps

January December


Structure & Lateral Functions

• Viewing the additional structure and lateral h i l id i h h f i l i imechanisms overlaid with the functional organization

chart.


V.P.

Resource Management & External Supplier Relationships

Restructure business stakeholderdecision making teams. Proactive relationshipmanagement.

Order to Cash Plan to Start Purchase to

Booking B2B Application Support

Major Program

Cross-functional Projects Team: Review projects, staffing, forecasts and interdependencies.


Other Implications

• A shift in the organization characteristics from highly h i l h i b i l l d killtechnical emphasis to a business analyst role and skill

set.• Reconfiguring the organization to a functional model:Reconfiguring the organization to a functional model:

PMO structure, Level 2 Support Function and Technical Applications support.

l d l f ll d• Developing and using tools for resource allocation and management.

• Development of career maps for business analysts andDevelopment of career maps for business analysts and project managers.


Success Factors for Sustainable Change

• Clear understanding of business drivers and strategy.

• Engagement of leadership team in process to identify– Common goals / vision– Challenges and gapsChallenges and gaps– Implications for organization culture / mindset– Initiatives to develop organization capability

• Structured process to implement organization design changes: Awareness Adoption, Institutionalization– Typically, the organization design changes that are needed to

execute strategy are new and often do not fit in to the currentexecute strategy are new and often do not fit in to the current charter of any existing functional area.

– To create new capability, the leadership team must define a charter for the initiatives, take the lead and make time to develop and implement them in parallel with existingdevelop and implement them in parallel with existing operations.


OVERVIEW OF FIVE ORGANIZATION OVERVIEW OF FIVE ORGANIZATION DESIGN AREASDESIGN AREAS

23

Organization Design Enablers

People• Assessment and selection• Performance feedback

Structure• Function

G h

Strateg

Performance feedback• Learning and development • Culture, norms, habits• Written, unwritten rules

• Geography• Product• Customer• Role definition• Interfaces Strategy

• Vision• Mission

• Boundaries• Governance

• Priorities• Strategy• Values

RewardsProcesses • Values• Goals

• Metrics• Values and Behaviors• Compensation• Rewards and recognition

• Networks• Processes• Teams• Integrative roles• Matrix structures• Matrix structures• Lateral capability

24Created from concepts in : Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002).

Strategy

• Strategy guides decisions in the face of infinite possibilities for organization design choicespossibilities for organization design choices.

• Clarity on drivers for change, vision and direction is k f ti f d ti f b ildikey for creating a foundation for consensus building across leadership teams and key stakeholders.

• Key steps:– “Identifying Success Indicators: What business results must

the design achieve? – Understanding the Value Proposition: What are the

organizational implications of our strategic focus? – Determining the Design Criteria: What are the organizational

biliti th t th d i t h l i ticapabilities that the design must help our organization build?“*


*Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002).

Structure

• “Step 1. Selecting a h i lik l

• “Step 2. Defining the new i i l l i h

Two of five steps from Designing Dynamic Organizations.

structure that is most likely to support development of required organizational capabilities*”

organizational roles in the structure and clarifying the points of interface among them *”capabilities*

– A new organization structure was implemented: From Product to Function focus.

them.*– A cross‐functional resource

management team was established.

– Roles were defined for relationship managers for key business functions.


V.P.

PMO User Support

Technical Support

Major Programs

Resource planning and management team.


* Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002).

Processes

Key Concepts

• Organization Structure provides a starting point for organization design. There is not a perfect or ‘right’ structure that accommodates all needs.

• Lateral organization components can fill the gaps or• Lateral organization components can fill the gaps or ‘white spaces’ in the organization structure.

• Designing Dynamic Organizations emphasizes and provides more information about lateral capability. There are many other references for basic process design, improvement or reengineering.


Five Types of Lateral Capability

• Matrix Structures: Dual reporting relationships in order to manage the conflicting needs of functional, customer, product or geographic forces.

• Integrative Roles: Managerial coordinator orElective • Integrative Roles: Managerial, coordinator or boundary‐spanning positions charged with orchestrating work across units.

• Teams: Cross‐business structures that bring CM

anagem

people together to work independently and share collective responsibility for outcomes.

• Lateral Processes: Move decisions and information through the organization in a

omplexity

ment Tim

e andCan O information through the organization in a

formalized flow.• Networks: The interpersonal relationships and

communities of practice that underlie all other

yd Energy

Occur

Naturally

types of lateral capability and serve to coordinate work informally.


Examples of Lateral Capabilities Augmenting Organization Structure DesignOrganization Structure Design

Cross-functional Cross-functional Cross-functional Networks Processes Teams

• Project M t

• Cross-business F di M d l

• IT Leadership TeamR i l P tManagement

• Business Analyst• Architects • Diversity

Funding Model • Business Readiness• Standards Board• Job Rotations

• Regional Partners• Global Initiatives • Cross-functional

Projectse s y• Others…

Job o a o s• Others…

ojec s• Others…


Example of Integrative Role for the CTO to facilitate communications and sharing across technical roles in the organization.

Prior to 2000 2006 2007 +2001

Centralized Function

Customer Facing

Enterprise View Function g

Focus Perspective

IT Architecture

Centralized decision Separate customer Separate customerCentralized decision making and governance

for architecture.

Separate customer focused technical

functions.

Separate customer focused functions with CTO in integrative role.


Excerpt from Chapter Five: Defining and Rewarding Success*Defining and Rewarding Success

Reward systems define expected behaviors and influence the likelihood that people will demonstrate those behaviors. They p p yensure that everyone is pulling in the same direction. An aligned reward system reduces internal competition and the frustration and diffusion of energy that comes when people are given competing goals. p g g

• Reward systems have four components: 1. Metrics: The systems that identify measures and targets for enterprise,

business unit team and individual performancebusiness unit, team, and individual performance 2. Desired Values and Behaviors: The actions that are most likely both to

produce desired business results and to reflect the organizational values

3. Compensation: The monetary means intended to recognize a person’s3. Compensation: The monetary means intended to recognize a person s past contribution as well as motivate continued or improved performance

4. Reward and Recognition: The nonmonetary components that complement compensation systems to let people know that they are l dvalued

31

* Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002).

Leadership Team Process –Defining a Recognition Program to Drive Desired

B h i d V lBehaviors and Values• Definition ‐ Defining the program helps

build consensus among the leadership team members and clarify what values

Alignment• Consider how the department level

recognition program fits with otheryand behaviors are needed to meet business and organizational culture goals

recognition program fits with other programs.

• To get the most from each, in what ways do the recognition programs align

f b h• Process – The winner selection process has value in asking the questions on a recurring basis, serving as a reminder of what is important, d i i di i b t h t it l k

to reinforce behaviors. – Consistency of message (what is

valued, desired)– Emphasis – what is needed to succeed

in the current business environment ordriving discussion about what it looks like in action and providing feedback and reinforcement.

Results T ibl d i t ibl

in the current business environment or achieve this year’s priorities

– Different levels or perspectives –ensure programs are aligned but not redundant

E d f Y R fl i• Results – Tangible and intangible results should be positively impacted by the change in behaviors driven by the program. This includes business goals as well as the quality of the

End of Year Reflection• Are we getting maximum benefits from

the program?– Effectively communicating expected

values and behaviorsg q yworking environment and relationships.

values and behaviors– Demonstrating and observing people

exhibiting, behaving – Reinforcing other programs


People Practices*

• Staffing the New Organization presents principles and tools to guide the process of placing people into new roles and positionsguide the process of placing people into new roles and positions.

• Assessing for Learning Aptitude presents a way to select for l i il did tlearning‐agile candidates.

• Performance Feedback reviews the ways in which multidirectional feed‐back can support building lateral capability.

• From Training to Learning provides a checklist of the best practices that many organizations are utilizing to create a learning organization.

33

Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002).

Next Steps / Topics


What level of capability would you like to achieve?

Capability Levels

Mentor

T hTeach

L dPracticing Lead

Do

Learning

act c g

Do

Speak

Reading

35

Speak

Rick Walters © 2010

References

• The Social Engagement of Social Science: A Tavistock Anthology : The Socio‐Ecological Perspective. Eric L. Trist, Fred E. Emery, Hugh Murray, Beulah Trist (1997)

• Designing Effective Organizations: The Sociotechnical Systems PerspectiveWilliam A. Pasmore (Apr 1988)

• Whole System Architecture: Beyond Reengineering : Designing the High Performance OrganizationLawrence M. Miller (1994)Lawrence M. Miller (1994)

• Designing Dynamic Organizations: A Hands‐On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (2002).

• Applied Strategic Planning, An IntroductionTimothy N. Nolan, Leonard D. Goodstein, and Pfeiffer (2008)Timothy N. Nolan, eonard . Goodstein, and Pfeiffer ( 008)

• Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity, and CompetitivenessH. J. Harrington (1991)

• Reengineering the Corporation: A Manifesto for Business Revolution g g pMichael Hammer, James Champy. (1993)

• Work Teams That Work: Skills for Managing Across the Organization Anthony R. Montebello (1994)

• Analyzing Performance Problems: Or, You Really Oughta Wanna‐‐How to Figure out Why People Aren't Doing What They Should Be, and What to do About ItRobert Frank Mager (1997)


Organization Design Worksheet

38

Organization Design Framework

Created from concepts in : Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002). 39

organization design rick walters 2010

Business

amy kates rick walters

ld th d

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development customer

g largescale

s tprinciple f wh

th discipline beliefs

dont push growth