Step Six - Modifying the Organizational Structure
Most changes begin with a modification of the organizational structure. Unfortunately, most changes end there as well – which is precisely why most large scale change is unsuccessful. Step six represents the point where examining and possibly modifying the organizational structure is both appropriate and necessary.
Structure should exist to support what an organization is trying to accomplish (vision and strategy); how it is trying to do it (core work processes) and the requirements people have for their work (key roles). Now that these have been identified, the structure should be reviewed and, if necessary, re-designed.
The fundamental question is: Does the existing structure enhance or at least not interfere with how the work needs to get done? If the structure is helpful or neutral, the general guideline is to leave it alone. Structural changes are very disruptive. They should only be made if they are truly necessary.
If the structure is a barrier to the work that needs to be done, then it should quickly be re-aligned to meet its new requirements. This analysis and re-design should be a collaborative effort by the senior team. If individual team members cannot "check their positions and their egos at the door" then it may be necessary for the President to impose the new organization. This step should be reviewed and implemented quickly, in its entirety, based on what best serves the needs of the whole organization. This is not the time to allow the "right of infinite refusal" to stall the change process.
Step Seven - Establishing the Key Performance Measures
Every organization measures its performance. Unfortunately, most organizational measures have two fundamental flaws. First, there is a disproportional emphasis on financial measures. Financial measures are not direct performance measures. They are the consequences of company performance achieved or not achieved. By themselves, they indicate very little. Second, most performance measures cause the company to look through its rear view mirror. These measures indicate past performance and do little to help guide future performance or have a positive impact on organizational results.
This next step calls for the creation of a balanced scoreboard – or dashboard – of the key internal and external measures that provide a comprehensive view of the organization’s performance, with as much insight as possible regarding their implications for the future.
At the completion of this process by the senior management team you should have a limited set of defined measures that provide a balanced understanding of current performance, guidelines for improving short-term results, and the ability to assess and improve long-term organizational performance.
Step Eight - Reviewing System-Wide Tools
Tools are powerful forces in defining how an organization behaves. An enterprise-wide tool can be one of the most dramatic vehicles to create (or force) organizational change.
Enterprise software systems have become very powerful forces for driving organizational behavior, and potentially creating highly value increased productivity. Such tools require an organization to define how it conducts its business, and impose a discipline on all individuals and functional areas to conform to the standards and processes defined by the tools. However, if the tool is not sufficiently flexible or does not match how business is actually conducted, the effect will be disastrous. Tools that impose their way of working in conflict with established business norms or practices will be strongly resisted.
Step Nine - Develop Training that Enables Performance
Training is an integral part of organizational design and behavior. It is essential to ensure that individuals have the knowledge and skills to perform in their current jobs and prepare for new ones.
Training is also perceived by employees as a measure of the organization’s commitment to them. In the current marketplace employees are encouraged to think of themselves as independent contractors selling their services for the best opportunity. Training (as a part of continuous learning) is an essential ingredient for retaining a nimble workforce.
Training is one of the most powerful vehicles for a company to create breakthrough change. It can achieve three simultaneous results. First, it builds alignment to the desired change. Second, it provides individuals with the knowledge and skills to implement the change. Third, it creates the opportunity for cross-functional communication in the implementation of company-wide initiatives.
Step Ten – Aligning the Reward Systems
Traditionally reward systems have been approached conservatively in the form of salaries for professional employees, and hourly wages for non-exempt employees. In some companies annual bonuses or profit-sharing programs have been added, tied to organizational performance for that year.
Companies have now started to use more sensitive vehicles to align reward systems to individual, team and organizational performance. Commissions for a sales force have long been in place. More recently, defined bonuses for the achievement of individual quarterly goals has become fairly widespread. Team rewards tied to specific project completion has also become common. Annual bonuses based on the achievement of specific performance goals is becoming the new norm.
Though the techniques may differ, two dominant themes emerge. The first is the trend toward broad band job classification, providing much more flexibility in establishing individual compensation. The second is a much higher degree of at risk compensation tied to individual, team and organizational performance.
If possible, reward systems should to be tied to the desired breakthrough change. Employees will pay great attention to adjustments in the reward system, especially if it is modified to focus on the desired behaviors and effects of the breakthrough changes.
Dr. Resnick works with senior leadership teams and change leadership teams to help guide them through this process. He may be contacted for further information regarding this process.