Restructuring Kate Kirkland [email protected].

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Restructuring Kate Kirkland [email protected]

Transcript of Restructuring Kate Kirkland [email protected].

Restructuring

Kate Kirkland

[email protected]

Introduction

• The importance of structure and its relationship to strategy

• The determinants of structure

• Common structures used by not-for-profit organisations

• Problems that may be structural

• Examples

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Organisational Structure

‘The means for attaining the objectives and goals of the organisation’

Peter Drucker

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Organisational structures define

• The roles of staff and volunteers and their job titles

• Route through which decisions are made

• Who is responsible and who is accountable to whom, and for which activities

• How employees communicate with each other and how information circulates

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Managing without a Structure • No clarity on who was part of the

organisation• No way of setting and measuring objectives • No agreed way of making decisions• All decisions would be open for

reconsideration• No clarity on who should do what• External people and organisations would

not know who to contact and whether a response committed the organisation

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Advantages of having a clear & transparent structure

• Enables participation

• Provides a framework for the allocation of responsibilities & resources

• Establishes the organisation’s identity

• Continuity and change

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Designing a structure

• Structure almost always follows strategy

‘unless structure follows strategy, inefficiency results’

Alfred Chandler, Prof of Business History, Harvard BS

• Managers are limited in choice of structures

• Structure impacts on staff motivation, managerial control, organisational flexibility

• No one ‘best’ structure

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Structures evolve over time

• View structures as dynamic, not static

• Well-established structures are difficult to change

• Major changes requiring structural alteration include– Appointing first paid staff

– Setting up teams or departments

– Diversifying the activities

– Establishing regional offices or local groups

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Perceptions of Organisational Structure

Focus Outsider’s view Insider’s viewBreadth of view The organisation as a

whole, in its contextA particular part of the organisation and its environment

How structural problems appear

Fairly obvious and clear cut

Diffuse and uncertain or as the failings of specific individuals

View of existing organisational structure

Arbitrary; one of a set of possible arrangements that may be out-dated

Could be adjusted here and there, but basically the obvious and correct way to do things

Considerations in proposing changes

Overall organisational efficiency and/or effectiveness

Organisational, departmental and personal interests

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Contingency School of Organisational Analysis

• Based on research by David Wilson

• Avoid ‘tyranny of structurelessness’ & ‘sclerosis of bureaucracy’

• Key determinants of structure can be identified

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Key Determinants of Structure

•Size

•Technology

•Operating environment

•Age & history

•Strategy

•Dependence

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Four Dominant Structures used by Not-for-Profit Organisations

•Functional

•Divisional

•Federal

•Matrix or project based

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Functional structures

Operations Finance Fundraising Communications

Chief Executive

• Tasks differentiated into separate departments according to function

• Hierarchy: information flows between CEO and departments

• Bureaucracy in strict meaning of term

• Work well in contexts that are relatively predictable, little change or competition

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Divisional structures

• Divisions can operate relatively independently of geographic area or type of client

• Divisions co-ordinated by Head Office where service functions are provided

• Structure often the result of planned growth and adaptation to operating circumstances

Africa

Asia

Latin America90 branches

6 Regions

UK Division Overseas Division Finance Fundraising Communications

Chief Executive

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Federal structures

• Often formed when local organisations providing similar services ‘federate’ to establish nation stands, brand, represent common interests

• Local groups may be part of legal structure or autonomous organisations• Head Office plays less directive role

Head Office

Local Organisation

Local Organisation

Local Organisation Local

Organisation

Local Organisation

Local Organisation

Local Organisation

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Matrix or project based structures

• Dual lines of authority, e.g. National Director (or Manager of service or project ) reports to the Director of Operations on operational matters, the Director of Finance on financial matters, etc

• Greater strategic flexibility, but organisation as a whole more difficult to manage, particularly strategic decision-making

Chief Executive

Director Operations

Director Finance

Director Fundraising

Director Comms

Director England

Director Scotland

Director Wales

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Recognising Structural Problems

• Structural issues are not always obvious

• Problems may appear to be due to lack of commitment, bloody-mindedness, inadequacy

• John Child suggested that there are certain recurring symptoms of structural problems

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Problems that may be Structural

• John Child’s Recurring Symptoms– Low motivation

– Late and inappropriate decisions

– Conflict and lack of co-ordination

– Inadequate response to changing circumstances

– Rising costs

• These are not always an indicator of imminent structural breakdown

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Structures for Today’s World• Views about structures are changing

• Static concept of formal structures less appropriate

• Organisations frequently have to reorganise themselves • ‘organising’ rather than ‘organisation’

• Harnessing knowledge distributed throughout the organisation requires more than top-down hierarchies

• Informal relationships and processes vital to obtaining competitive advantage

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New Thinking

• Formal structures & processes must be aligned with informal processes and relationships into coherent configurations

• Configuring the organisation so that these elements fit together and with strategic challenges is crucial to organisational success

Structure

ProcessesRelationships

Configuration

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Structural Change in Practice

• Introduction of corporate management team to large charity

•Members to spend 50% of time leading their department and 50% working as CMT

•Aims

•Strengthen leadership

•Greater co-ordination of departmental goals & activities

•Recognise the importance of HR

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What worked well and why

• New structure improved organisational performance

• CMT posts advertised internally and externally

• Wide range of selection tests; Myers Briggs Type Indicator used to recruit balanced team

• Existing departmental directors assured of future within organisation

• Process facilitated by external consultants• Trustees involved in selection process

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Lessons learnt

• Results justified the pain! • Time spent on consultation worthwhile•Organisational focus on change for a

considerable period so timing of change important

• Using Myers-Briggs Type Indicators helps produce a balanced team but can restrict the pool of applicants when a team member leaves

• If in doubt, don’t appoint

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Structural Change in Practice

•Change of membership status in large membership charity

• ‘Members’ ceased being members of the charitable company

•Aims

•Strengthen governance

•Cut administrative costs

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What worked well and why

• Aims achieved

• Lead by Trustees & SMT

• Members & other stakeholders consulted

• Process facilitated by external consultants

• Members Forum established

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Lessons learnt

•Most members were disinterested• Time spent on consultation lessened opposition

to change• Trustees should have been reminded of their

‘cabinet’ responsibility• If something is being taken away, offer

something better in return

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Structural Change in Practice

•Aim: To improve performance within budget constraints

•Context: recently formed charity (12 staff, income £1m) in which initial appointments of some Heads of Departments not achieving desired results

• Structural Change: Trustees and CEO agreed to outsource two HoD roles to see if having greater expertise, albeit for less time, would improve performance

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What worked well and why

• Using external communications & fundraising consultants for a day a week produced better performance than employing full-time, less experienced staff

• Consultants coached junior staff

• Better balance of ‘chiefs to indians’ for small charity

• Reasons for change easy to communicate to small staff

• Change introduced on experimental basis & without long-term commitments

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Lessons learnt

• Staff departures can be an opportunity to reassess deployment of human resources

•Worth trying innovative solutions • CEO had to devote more time to staff

management• Using consultants can be cost-effective

• Expertise•Billed only for time spent on task•Higher hourly pay balanced by no holiday/sick pay, no

NI, no pension contributions

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