Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

Why bother with organisational structure?

For those of you who’ve worked with me in the deals / post merger integration environment, this rant will be very familiar and i apologise for repeating myself in this forum…but I was reminded once again of this in a conversation with an old colleague. Let me take you through the way the discussion normally goes, the participants being an HR person and me in a operational due diligence and post deal planning role:

HR Person: I need an organisational diagram / structure of the target…in fact what I really want is the whole organisation described in terms of levels, functions, down to the entry level. If you haven’t got that, give me the top 5 layers of management. 

Me: Why? 

HR Person: Because it will show me how the organisation works, who has what level of authority, how decisions get made, how communication flows, who the most important people are.

Me: Show me your organisational structure, just draw it for me, top 3-4 levels is fine.

HR Person: Here it is.

Me: Does this accurately describe the nature of your business, in terms of influence, decision,asking, key people. If I were a martian landing in your business, would this work as a road map to navigate my way around your organisation?

HR Person: Of course not…

Me: Why not?

HR Person: Well, it doesn’t describe the true nature of the relationships…for example (starting to draw actively), this person has way more influence than his role would suggest, whilst this person is purely employed to rubber stamp decisions. This person exerts Incredible power over the organisation as he is the primary SME and that is highly valued in our business. This person has strategy in his job title but the reality is that strategy is decided by the owner on an entirely intuitive basis and this person then provides documentary evidence to back up the decision. The most important person from a productivity perspective isn’t even on this chart…she’s the receptionist and she greets everyone by name as they come through the door, smiles, acts as the primary conduit for information, is the knowledge keeper for all that has gone before, manages the politics beautifully!

Me: So, given your incredibly eloquent description of your business which doesn’t seem to resemble the structure you drew at all, why do you think that the target will be any different?

HR Person: mmmh (thinks to him / herself, he’s an awkward so and so, I will get it through some other means!)

Please do not see this as a rant against HR people….it is a critical and massively undervalued discipline and the top performers add real value to their organisations. Rather it is a comment about the inherent messy nature of organisations and the, in my opinion, relatively pointless task of trying to squeeze them into a neat structure which actively misleads rather than informs the reader.

Just wait until I get onto the subject of reward structures….!

 

 

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7 replies

  1. My interest in this lies in how the “more relevant” information could be use to make the organization more effective.

    This is particularly crucial in times of re-org. These exercises are often done by shuffling people around based on the “official” org chart. I think the re-org would have a better chance of achieving it’s intended goals if we incorporate the “more relevant” information in our decision making / design.

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    • Agreed completely that the solution lies in finding out this info and bringing it to bear in the transformation. However, by its nature, some of the most relevant information will be anecdotal at best and certainly qualitative rather than necessarily quantitative. The challenge for the PM is to prepare the stakeholders correctly so that they acknowledge the value of this information and use it to bring about the change. Some of it may not feel very comfortable!

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  2. Hi Ben, interesting comments. My sense from the fund management industry is that HR is largely ignored, and typically physically separated from the rest of the organization on a separate floor or even building. It is therefore unsurprising to find they don’t understand the practical linkages and power lines within the organization. The solution is to integrate them fully from top to bottom, i.e. sitting with the operating people, and sitting on the board. Rotating senior people through the HR function as a rite of passage to the top of the organization would help broaden both sides understanding of the role. Regards, Sam

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    • Agree completely Sam. It’s always struck me as extraordinary that a function which often represents up to 50% of the cost base is not represented on the board whereas a function who’s task it is to retrospectively add up the numbers (and I know that’s provocative!) with no influence over outcome is fully represented! Rotation is a great idea, Ben

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  3. Interesting. Reading this made me think less about HR but more about the underlying desire for information about who is Accountable within a firm and where strengths and weaknesses lie within these models.

    I have seen banks increasingly move towards matrix structures driven by functional verticals as they attempt to pursue a goal of functional best practice across a complex set of geographies – where traditional business accountabilities (e.g. that thing called the P&L and client profitability) are shared between these streams.

    I tend to look at org models and really try to drill into the level of accountability that is held by the management chain and what behaviours really drive from this within the model.

    I feel that many firms have weakened their accountability models in recent times and prefer instead to operate by committee and collective ownership. This is fine conceptually but it often delays decision making and reduces true personal commitment for decisions that are taken.

    We need better tools to gauge strength of organisational model. In part due to the drive for better practices (and I assume that our regulators do want more clarity), but also because clients do need to recognise that firms with strong models should be more nimble in decision-making.

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    • Agreed Giles. It seems bizarre that the one type of behaviour which regulators would seem to favour (personal accountability backed up by robust checks and balances) is precisely the behaviour which is being discouraged by their actions!

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