April 2014: Business Management

Words: Dan KamysApril 2014

Business Management

Structure That Works for Change

Many would argue that the ability for an organization to change over time is critical to that organization’s long-term survival. 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. The best place to begin this shift is by leveraging concepts found in Change Science. Step 1. Develop and communicate a proper perspective of change in the organization One of the first things Change Science tells us is that change is universally constant and continuous. 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, and an invoice is generated; a change has occurred within the organization historically. Therefore, an organization is inundated with change and, assuming that the organization has managed to survive, this change (both expected and unexpected) on a whole has been successful. So, Step 1 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 2. Develop an organization-wide understanding of responsibility So how does an organization manage all this continually 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 the manager who resolves a conflict, responsibility for 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. 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 continually occurring in the organization, but also, 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? Organizations have allowed the lines of responsibility between day-to-day operational change and strategic change to become blurred. More important, it is common that the interrelationship between operational change and strategic change has 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 historically. It is critical that everyone in an organization understands that both operational change and strategic change are equally important 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 continually executed, in order to support the customer in the here and now. Strategic change needs to be continually executed in order for the organization to survive into the future.
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%
Step 4. Adjust organizational responsibility to clearly support operational and strategic change Assuming an organization is successful in Step 1 through Step 3, it still can face challenges when addressing change within the organization, if there is not a clear delineation of responsibility for operational and strategic change among 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 who generally have the greatest ability to address opportunities and issues that may arise.
  • Clearly indicate (including through appraisal and compensation arrangements) that the primary responsibility over strategic change is from the lowest management levels, up to the executive and board levels. 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 table above.
  • There should be a clear understanding at the ground operational level that it is management’s responsibility to assure 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 assure a communication loop exists that supports the delineation of responsibility. This includes communication of the whys and whats behind strategic change to those with a primary responsibility over operational change. It also includes 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. A new delineation of responsibility between strategic and operational change is required as well.

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 email info@changescienceinstitute.com.

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