An organizational structure that works for change

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Many, if not most people, would argue that the ability for an organization to change over time is critical to that organization’s long-term survival. To this end, the literature is full of theories, methodologies, recommendations and analysis on how an organization should be structured in order to maximize the likelihood of obtaining successful change.

It is explained that organizations need to be structured to provide employee empowerment, lean operating techniques, and continuous improvement philosophies as just a small sampling of examples. Yet, we still hear about organizations failing to obtain desired change even though they possessed exemplary efforts to support such structural recommendations.

The reality is that if we want to see advancement in this arena, a major paradigm shift needs to occur regarding the dynamics of change and organizational structure and the best place to begin this shift is by leveraging off of concepts found in Change Science.

Step One – Develop and Communicate a Proper Perspective of Change in the Organization

One of the first things Change Science tells us is that change is constantly and continuously occurring around us on a universal basis. Therefore, it is important for everyone in the organization from the board of directors down to individuals in frontline administrative and production positions to recognize this fact.

Every time a new customer order is received, an engineering drawing is created, a product is produced, an invoice is generated, and the list goes on, a change has occurred within the organization. Therefore, an organization is continuously inundated with change and assuming that the organization has managed to survive, this change (both expected and unexpected) on a whole has been successful change.

So, step one is for everyone to stop thinking of change as strictly specific efforts and/or events and recognize that the organization is already successfully dealing with a continuous stream of change at every level in the organization.

Step Two – Develop an Organization Wide Understanding of Responsibility

So how does an organization manage all this continuously occurring change? The answer is simple – delegation of responsibility. From the person who pushes the button to start the production machine, to the person who enters the customer order and to the manager that resolves a conflict, responsibility for the control of these various changes has been delegated.

It is important to recognize that the concept of employee empowerment automatically exists as soon as that individual is given responsibility for managing and controlling the change that has been assigned to them. What is most often lacking is a top to bottom organizational recognition of the fact that not only is there a significant amount of change continuously occurring in the organization, but through the assignment of responsibility, all the employees in the organization are already masters at managing and executing all of that change.

Step 3 – Recognize and Communicate Two Broad Categories of Change within the Organization

Given that organizations are already managing and executing a continuous flow of change, why all the discussion about how organizations struggle with change? The answer lies in the fact that organizations have allowed the lines of responsibility between day to day operational change and strategic change to get blurred. More importantly, the lines of responsibility have not only become blurred but it is common that the interrelationship between operational change and strategic change has become disconnected.

Strategic change is in response to both internal opportunities for improvement and reaction to external influences that can threaten the organization.

Operational change focuses on the short term expected and unexpected change that needs to be executed in support of the customer and is based upon strategic change that has occurred within the organization on a historical basis.

It is critical that everyone in an organization understands that both operational change and strategic change is equally important in order for the organization to survive. There needs to be an understanding and an acceptance on the part of all individuals within the organization that operational change needs to be continuously executed in order to support the customer in the here and now, while strategic change needs to be continuously executed in order for the organization to survive into the future.

Step 4 – Adjust Organizational Responsibility to Clearly Support Operational and Strategic Change

Assuming an organization is successful in Steps 1 through 3, it can still face challenges when addressing change within the organization if there is not a clear delineation of responsibility for operational and strategic change amongst the workforce. The following guidelines will help:

  • Drive responsibility for day to day operational change as far down the organizational pyramid as possible. Ideally, the more operational change that can be executed and controlled at the administrative and production levels of the organization, the better. These are the people closest to the operational change and generally have the greatest ability to address opportunities and issues that may arise.
  • Clearly indicate (i.e. including through appraisal and compensation arrangements) that the primary responsibility over strategic change is from the lowest management levels on up to the executive and board level. There will always be operational change that requires involvement at the higher levels of management. Even a major customer contract could easily require signoff by the CEO. However, it should be clear that the main responsibility for management should be related to the accomplishment of strategic change. For example, the allocation of focus related to strategic versus operational change by management level might look something like the following:

Allocation Of Focus Between Strategic And Operation Change





Strategic Change

Operational Change

Board of Directors

100%

0%

Chief Executives

90%

10%

VPs

85%

15%

Directors

75%

25%

Managers

60%

40%

Admin & Production

5%

95%

  • There should be a clear understanding at the ground operational level that it is management’s responsibility to make sure there is continuous strategic change occurring in the organization with an objective of long-term improvement and survival of the organization.  However, it is also important to make sure a communication loop exists that supports the delineation of responsibility. This includes communication of the whys and what behind strategic change to those with a primary responsibility over operational change along with feedback communication to those responsible for strategic change regarding the performance of strategic change initiatives and other opportunities for improvements that might exist.

By following these four steps, the formula associated with an organizational structure that will greatly enhance the ability to support the change required for growth and long-term survival is really quite simple. The real challenge lies in executing the paradigm shift that requires a clear understanding by everyone in the organization that change is already constantly successfully executing within the organization and a new delineation of responsibility between strategic and operational change is required.

Tom Somodi is a speaker and expert on change, applying his extensive domestic and international business experience, including reorganizations, acquisitions, strategic change initiatives, and taking a company public during the difficult 2011 financial markets.  Somodi has held CEO, COO, CFO and board level positions. His book, "The Science of Change: Basics Behind Why Change Succeeds and Fails" is now available. For more information, visit www.changescienceinstitute.com or e-mail info@changescienceinstitute.com.


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