Organization Restructuring. n Reorganize around business processes rather than discrete functions n...

OrganizationRestructurin

g

Organization Restructuring

Reorganize around business processes rather than discrete functionsRefocus on key customer prioritiesEliminate organizational duplicationReduce layers of management Improve channels of communicationCreate clear responsibility and accountability

Organization Restructuring

EXISTINGEXISTING REVISEDREVISED

From this: To this:

OrganizationDesign

Organization Goals & Strategies

Organization Culture

Leadership

Organization Structure

Reward and Incentive

Plans

Mission, Vision & Values

Policies, Procedures, Processes

Conceptual Framework-Design

Conceptual Framework-Structure

OrganizationStructure

Organization

Technology

Customer, Suppliers &

Other External

Stakeholders

Needs

Redesigned

Processes (Internal)

Structural Dimensio

ns

InternalStakeholder

Input

Organization Structuring Principles

• The development of a set of guiding principles is the first step in the organization structuring process - they define the parameters and desired attributes of the new organization.

• Creating organization structures requires a set of guiding principles that are consistent with the overarching direction of the organization, but are specific and relevant to the individual processes.

– Create an environment that fosters continuous improvement

– Create widespread ownership of results through meaningful employee involvement

– Focus management systems towards outcomes rather than transactions•This will be attained through

informed decision making supported by measurement and analysis

Structuring Principles-Examples

Structuring Principles- Examples

– Provision of service to customers is paramount

– Foster a collaborative environment (teamwork culture)

– Design the process to balance the critical needs of process owners, stakeholders and customers

– Accountability is commensurate with authority

Structuring Principles-Examples

– Move decision-making as close to the point of customer contact as possible and apply supporting state-of-the-art technologies

– Ensure that customer/client feedback opportunities are maximized and easily accommodated•This will be supported through the

design of service and performance measures into each process

Structuring Elements

• Clarity of Mandate• Unity of Purpose• Clarity of Relationships

There are several “principle prerequisites” or elements that must be clearly defined prior to identifying relevant organization structuring principles:


• Clarity of Mandate - the objectives, activities and outputs of an organization component must be clearly defined and must be differentiated from all others within the department/branch/section. The activities and outputs of the organization should be easily linked to the stated organization objectives.


• Unity of Purpose - ensure that all organization components within the larger organization work towards common goals and that all work performed must relate to the larger departmental mission/objectives.


• Clarity of Relationships - how discrete components of the larger organization relate to one another, where interdependencies exist, and how the organization interfaces with internal stakeholders (other departments, across branches, etc.) and external stakeholders (customers, suppliers, general public etc.).

Detailed ApproachThere are six basic steps in organization structuring

Organization Definition

Identification of Organization

Drivers

Selection of Organization

Model

Development of Organization

Options

Evaluation of Organization

Options

Organization StructureSelection

Step 1: Organization Definition

Defines specific elements that will set the context for organization structuring:

• organization mandate/purpose • consistent with the guiding

principles • specific organizational attributes:

– nature of relationships– centralized /decentralized operations– organization culture considerations

Step 2: Key Organization Drivers

• The Major factors which influence the organization structure.

– 1) Services/products delivered: Ensure that they directly reflect the organizational mandate and the organization/process vision.

– 2) Organizational relationships: Organizational interdependencies and external relationships (suppliers, general public, etc.)


- 3) Opportunities for improvement: Address issues that currently exist within the organization that should influence the redesign process.

– 4) Organization constraints / Organization

requirements:

Organization constraints are the boundaries that have been predetermined Organization requirements are the elements that are “must haves” in the proposed restructuring.

Constraints / Requirements:• Transaction volumes• Economies of Scale• Availability of skills• Need for accountability• Leveraging technologies• Customers (nature / location)• Geographic presence• Process or functional orientation


Step 2: Key Organization DriversMore Constraints / Requirements:

• Fixed real estate/facilities• Risk management issues• Pending legislation• Unions and collective agreements• Other initiatives• Administrative support• Resource capability• Resource availability

ACCOUNTING

Sub Ledger Accounting

Domestic Accounting

International Accounting

Treasury Related Accounting

Payroll

Payroll Taxes

Tax Compliance

FINANCE

Budgeting

Financial Analysis

TAXES

Tax Research/Advisory

ADMINISTRATION

Administrative Services

Facilities Management

Human ResourcesAcceptance Testing

Operations Support - Development and Production

System Maintenance - Operations

Data Security

ACTIVITIES:• Accounts Payable• Accounts Receivable• General Ledger• Auditing• Audit Compliance• Consolidation Accounting

•Key activities to be performed by the organization are clustered according to the organization model selected.

•These groupings will begin to define the individual mandates of the organization units

Activity Clustering

Step 3: Select the Organization Model

Process Process CenteredCentered

Front Front End / End / Back Back EndEnd

ProductProduct

CustomeCustomerr

FocusedFocusedMatrixMatrix

Geo-Geo-graphicgraphicFunctionFunction


Based on the organization definition, organization drivers, and key activities, select the appropriate organization model that best matches the requirements

Step 3: Select the Organization Model1) Functional• Activities and employees grouped

according to their business function• Functional expertise supports core

competencies• Applicable when technology is

routine, small number of products, and/or if interdependence across functional units is minimally required


2) Product/Service• Each unit is responsible for the

design, production, and administration of a service line

• All resources are directly available to the unit

• Each service unit is responsible for planning, within the context of the organization’s business strategies


3) Geographic• Geographic regions report directly

to the corporate head office• Each region has full control of all

activities within its geographic boundaries

• Corporate head office retains responsibility for strategic planning


4) Front End/Back End• Some functions focused on customer

interaction, while others focused on service developmentFront end: sales, service, software applications Back end: special projects, engineering, purchasing, accounts processing

• Relatively recent model; both ends may have their own separate accounting


5) Customer Focused• Business organized around customer

groups such as by department, branch, SOA, types of vendors etc.

• Teams with shared expertise in customer area and functional areas are assigned to customer groups

• Decisions are driven by customer demands• Support levels refined based upon customer

needs -- both unique and recurring


6) Process-Centered• Business organized horizontally around

linked, end-to-end processes• Multifunctional teams, not functions or

individual jobs, define the structure• Decisions are made at point of contact

by empowered employees• Decentralized, with few supervisors• Functional expertise maintained

through centers of excellence


7) Matrix• Multiple reporting relationships

represented by grids and webs• Formal systems of multiple decision

making, communications, and balance of power

• Common in engineering and project intensive organizations

• Multiple contacts are intended to facilitate collaboration and coordination

Organization models compared against organization attributes

Organizational Attribute FunctionalProduct/Service Geographic

Front End/Back End

Process Centred

CustomerFocused

Matrix

Responsiveness to department needs (speed)

Clear delegation of authority

Flexible to new technologies

Ease of transition

Quality conscious

Transparent to customers

Promotes teamwork & collaboration

Revenue generation/cost recovery

Vendor-customer focus

Clear definition of roles & responsibilities


Step 4: Develop Organization Options

• There are four elements that are included in this step:

1) Position Creation/Task Analysis: Create logical grouping of activities and their component tasks to create actual positions for the proposed organization


2) Position Integration: Further integrate the proposed activities and positions within the existing structure, and minimize duplication through position integration


3) Establish Reporting Relationships: Once positions have been established, the appropriate level of management/supervision is determined. In keeping with the guiding principles, each level of management needs to be justified.


4) Develop Organization Structure Options: Building on the previous three steps, develop several (at least 2-3) organization structure options for analysis.

Step 5: Size the Organization OptionsFinalize the proposed activities and tasksFor each activity develop 2-3 effort key drivers (# of transactions)Estimate the effort required to perform each driverMultiply estimated effort by the driver volume to determine total required effort to perform activity

Finalize the To-Be organization

structure

For each position identify activities to be performed

Sum the estimated effort for each activity

Sum the estimated effort by activity for each positionRound up the

amount of effort to the number of

employees required for the

position

Proposed Organizati

on Size

Proposed Organization sizing requires inputs from both process design and organization design

Process Organization

Step 6: Select the Appropriate Structure

• The strengths and weakness of each option should be clearly defined.

• Each option must be evaluated against several criteria:– adherence to guiding principles– agreement with organization mandates– supportive of the desired culture– fit with process/organization visions– opportunities for further organizational

integration


• evaluate the efficiency of each option. There are four measures most often used to identify organization efficiency:– total organization cost– cost to manage– span of control– layers of management


Cost Salary Costs of Managers to Manage =

Structural Efficiency Is Based on Four Primary Measures

Total Organization Cost

Spans of Control

Cost to Manage

Layers of Management

Span

Layers

Salary Costs of Workers Managed

Organization Restructuring. n Reorganize around business processes rather than discrete functions n...

Documents

Transcript of Organization Restructuring. n Reorganize around business processes rather than discrete functions n...