Designing an organisation
Job for an architect
Designing an organisation structure is the job of an architect. In fact there are fewer organisations where HR is seriously involved in organisation structure work. This is normally delegated to business leaders who have objectives to achieve and get to decide resources to throw behind the objectives. The result is called an Organisation Structure.
The way structure work is done deals with the crises which the business is currently facing rather than the long-term business model changes, leadership & style issues, capability building and strategic focus areas, which the business is pursuing.
Ultimately structures follow a “prototype” and that's a good place for the architect to start and then break the mould. The idea is to work with the templates but not get obsessed with them. The “FMCG model” with a large sales & distribution engine, a product supply organisation, and an expertise driven marketing and product development function fuelling new products. The SBU structure with similar clutch of businesses, a classical hub & spoke model poses the heaviest challenges of balancing between growth and implementation. The project based structure for Consulting & EPC. The typical manufacturing structure with strong operational imperatives, bias/ focus for shop floor, supply chain & ecosystem management. Media with content and distribution. The whole services sector where 90% of the structure is consumer facing.
Classical structure issues
1. Implementation driven organisations find it difficult to fuel discontinuous growth. Moving the CAGR from 9% to 15 % cannot be achieved by the same people doing more of the same stuff. So, adding implementation legs (One more factory, more middle management) may not bring home the bacon. The structure does not require incremental changes but some re-thinking. The most common problem is when too much of the structure is deployed in protecting existing revenue. Growth related initiatives such as business development, technology, new business lines are ignored. There is a wish for these but not enough weight of accountability behind these. Who will lose his/ her job if these don't happen?
2. It is not enough to have boxes and designations. Its as much a structural problem to create the eco system for the role to be played effectively. We have business CEOs who do not feel accountable for talent, and sometimes even profitability. They become operational heads and then the Company runs into a genuine challenge of performance, capability and talent required for growth. What could be solved by the structure becomes a capability development initiative which must be supported by structural changes.
3. Creating structures around key people is a maligned and not so clear argument. What is so wrong about putting structures behind key people/ or person who have the loyalty, willingness and capability to take on more.? Why don't you make this person the CEO? But combining Operations and BD (“he can do both”) may not be such a scalable idea.
4. We have seen organisations ignore “functional integrity” leading to an unbalanced structure or weakening of strategic objectives. Sometimes a leadership goes hammer and tongs after accountability. You are running the business and responsible for P&L and client satisfaction. So, all resources hard line report to you and dotted line to some functional chief sitting somewhere. The role of designing for the future (talent, cost management, strategic supply chain objectives,) becomes subservient to meeting this week’s objectives. Classical problem of a high growth economy. We have seen supply chain managers in-warding material directly to production without updating inventory. As a regular practice! In another organisation, we have seen functional resources scattered across multiple businesses and locations with no focused inputs for development and functional or process integrity. Weakening the growth story. Strengthening tactical problem solving!
This is not an argument for reversing the implementation focus in our structures and weakening our capability to respond at a tactical level. That's what made us successful in the last three decades of high growth.
Nor is this piece about producing some checklist of dos and don’ts to make the job easy. The job cannot be made easy.
But its certainly encouraging thinking about our structures almost like an architect would. "What do you want to do here, and how can I design the spaces to facilitate you?"
Deepak Dhawan, CEO & Founder, Talentonic HR Solutions.