Organisational Design: ‘getting the right people in the rights seats on the right bus’
Part of the ASPIRE Talent Management series
This series looks at the key elements and philosophies around the Talent Management lifecycle of ASPIRE: Acquisition, Succession Planning, Improvement, Retention and Engagement. We are now drilling down into some of the key aspects which support these elements to explore them in further detail. You’ll find links throughout to our previous articles if you want to explore certain elements in more detail.
Following on from our previous article on Culture Design, in this article we cover some useful concepts and tools to help you to start to look at organisational design. ASPIRE can help you to bring focus to your talent, the HiPo’s (High Potentials) in your organisation and gives you the power to make confident people choices at all stages of organisational design or business growth.
A 2014 Strategy& survey found that 42% of executives felt that their organisation was not aligned with the strategy, and that parts of the organisation resisted it or didn’t understand it. If you’re in a similar position, you will be feeling pain points across many parts of your organisation and in your business’ day to day activities, and you may be starting to think that it might be time to make some changes at an organisational level.
The subject of organisational design is so vast that we won’t go into great depth in this article, but thought we could share a couple of really useful models and principles to help you to start to think about how you can implement any necessary changes in a structured, holistic and considered way. As you can imagine there are lots of great models out there on OD, the CIPD (Chartered Institute of Personnel and Development – a UK professional association for HR management professionals) have collated a good number on their OD factsheet which is a really helpful resource if you’ve registered for their online account (free service). We hope you find these helpful and as always, value your thoughts and comments; whether you’re new to the topics we explore or have experience you’d like to share.
‘FIRST WHO, THEN WHAT’
Part of his Fly Wheel model, this key principle from Jim Collins’ book ‘Good to Great’ is a great principle to help you to start to look at organisational design, and advises that you start by looking at the people in your organisation – your talent or HiPo’s. Collins’ research project which focused on determining what made a good-to-great company found that once you have the right people and the right talent in your organisation, you can more easily adapt to a changing world. The right people will have the right attitudes to be able to adapt to changes in direction, will be self-motivated and easier to manage and will look at how they can play their part in producing results and building success.
ASPIRE, and the different elements that we have been exploring in our previous articles, is all about the ‘who’ – Acquisition of the right talent, Succession Planning with the right talent, Improvement and development of the right talent, and Retention and Engagement of the right talent. We have been defining the ‘who’ and the talent needed for those critical and key roles in your organisation. Getting the critical and key roles right will help to take care of the rest; having the right talent will help you to affect the right types of changes or in other words – getting “the right people, in the right seats, on the right bus” – another pearl of wisdom from Jim Collins.
You may have seen, heard or read us referring to our Talent Wheel in previous articles, videos and podcasts. Our last couple of articles have started to focus around the elements that we set at the centre of our Talent Wheel: your 3V’s and Culture Design.
Your 3V’s (Vision, Values and Visual representation) is your North Star, your guiding light for your organisation, the long-term vision for your business – the destination where your bus is heading. Culture design can be seen as the atmosphere on the bus, making sure that your organisation is a great place to work – we all want to work for a great company where we feel aligned, engaged and motivated, right?
Organisational design is how you get those right people, your HiPo’s, on that right bus, in the right seats… and that can be tough!
CHANGE IS TOUGH
Organisational Design is complex for many reasons, and organisational structures and hierarchies are going to differ for every business, even between those who are in the same industry because each organisation will have their own unique capabilities. It can differ greatly depending on the size of organisation. You need to consider how many seats does your bus need to have, what do those seats look like – what roles and responsibilities do you need to incorporate?
You might have the right people in the wrong seats, so you would need to move those people. You might have the wrong people in your seats. As Jim Collins recommends in ‘Good to Great’, if you’ve got the wrong people it is your duty to get them off the bus – they are not the people who are going to take you in the right direction, they are not going to help you achieve your vision. Once you start considering these elements, it starts to get complex.
Not all changes to your business’ situation will require a full organisational redesign. Before you start making such fundamental changes it is important to understand what is driving the need for the change. This could be any number of reasons.
Various factors could be influencing this need; after all as Bob Dylan says “There is nothing so stable as change.” The business world continues to evolve; changes in legislation, advances in technology or processes, new competitors in the market, the market itself changing as could potentially be the case with Brexit and its impact. Any of these changes could require consolidation and reconfiguration, or – as we would hope for you – a more positive scenario of expansion and growth. It could be that the business leader or CEO has got the feeling that it’s time for a change. It may be that your business model is changing for any of the above reasons and you need to redefine what business you are in. Changes could be subtle, or far-reaching. Either way, it brings you back to your 3V’s and making sure you know what your North Star is.
Once you have really examined your motivations and have determined there is a real need for organisational change (some changes may only need tweaks here and there rather than full-scale reorganisation) we recommend that you use a structured approach to guide you through understanding exactly where those changes are needed. As we all know, all the different elements that make up an organisation are all inter-linked and if you change one, it will impact others for sure so any changes need to be well thought out and considered.
THE MCKINSEY 7S MODEL
One model that has stood the test of time and which we use time and time again with our clients is the McKinsey 7S model. The CIPD also put it at the top of their list we referred to earlier in this article. It is really useful to help you to review your current business against your desired future business.
Developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at McKinsey & Company, it incorporates a set of seven elements which are all interrelated like cogs, as we mention above – turn one, and it will cause motion and movement of others, so all 7 elements need to be kept in balance. There are three hard, or dynamic elements; Strategy, Structure and Systems, and four gentle or soft elements; Skills, Style, Staff and Shared values, which sits right in the middle of the model. Each element is defined as below:
- Strategy: this is your organisation’s plan for building and maintaining a competitive advantage over its competitors.
- Structure: this how your company is organised (that is, how departments and teams are structured, including who reports to whom).
- Systems: the daily activities and procedures that staff use to get the job done.
- Shared values: these sit right in the middle and are the core values of the organisation, as shown in its corporate culture and general work ethic. They were called “superordinate goals” when the model was first developed. We’ve discussed this in previous videos and we’ve looked at 3V’s and other elements of organisational culture including values and behaviours
- Style: the style of leadership adopted.
- Staff: the employees and their general capabilities.
- Skills: the actual skills and competencies of the organisation’s employees.
With the last two, staff and skills, it’s important to make this really clear. As stated above, the staff element is about the employees and the general capabilities and the skills are the actual skills and competencies of the organisation’s employees. Imagine if you’ve got your current staff with a particular core capability and if that doesn’t match the future business, then the skills element is going to be much more relevant in determining the changes you need to make to increase the capability of the current employees. These two can often be confused, but it’s another example how each one of these cogs or elements can affect the others.
Of course, just reviewing the model is not going to change anything. It is important to ask series of questions around each of the seven elements to be able to paint a true picture and help you to carry out a diagnostic. This checklist can help you to be able to do that diagnostic yourself. Here are a few examples of the questions which sit under the individual elements that you can find on the checklist which will help you to determine which direction you need to take;
What is your strategy? How do you intend to achieve your objectives? How are you going to deal with competitive pressure? How is the company or the team divided? How have you split up each elements or each function? How do you monitor and evaluate the various systems and processes? What are the core values? Have you aligned the expected behaviours with each of the core values? How effective is the current leadership style? Have you got a collaborative leadership style? Are there gaps in required behavioural competencies?
And the last one element – skills – is aligned with the gaps and whether your current employees have the ability to do the job? Have they got that core competency to actually develop and change? As we mentioned earlier, you might have the wrong people on the bus and you may have to accept that they’re not the right people and make some difficult decisions about whether you want them on your bus.
WHEN IS A GROUP OF LAWYERS NOT A GROUP OF LAWYERS?
Going through a diagnostic and assessment can help you understand and appreciate all of these moving parts as it’s important to know why we want to make a change and look at the impacts of that change on all of the elements in order to keep your business in balance. As we’ve said before, a good question to ask is what business are we really in? It is one of the fundamental questions Tony Robbins asks in his workshops on Business Mastery. It can be very difficult for a business owner or a leader to vocalise or put that in to words. We can share a couple of examples of our experiences which may help to illustrate the importance of this question.
Firstly, who would you expect to see in a law firm? A bunch of lawyers? This law firm, who want to broaden their market have decided they don’t want to be just a law firm, but a professional services business. So what does that mean? It’s not going to be the same business as it was. The strategy, skills and staff need to see changes to incorporate those new accountancy, talent management and HR services. This may need to just be a little tweak to the organisation and might not necessitate a wholesale change.
Another example has seen a business double in size in a very short time so the need that they had in terms of the structure etc. is very different to what they need now. As they went through a period of organically changing without actually considering the structure, they’re now going through a lot of pain across the board and change to varying degrees is needed probably in all seven elements because of the sheer scope of their scale-up.
CHANGE IS AFOOT – NOW WHAT?
So if you’re thinking that your business model or your organisation needs to change, you can run it through this model and it will help you to define the areas where you will need to implement changes. If you are certain that organisational redesign is where you are headed, how you go about doing that is beyond remit of this particular article, and while we may focus a future article around this, in the meantime we will direct you to another great resource from Price Waterhouse Coopers who, from their wealth of knowledge and research, in their article ‘10 Principles of Organization Design’ have created some fundamental guidelines to help you reshape your organisation to fit your business strategy. There’s some other great links in there, and it will give you some great guidance and advice on how to get it right.
But for today, we’ve focused on how you can get to the point where you know you need to make some changes at that organisational level and we’ll leave you with the key things to consider as you start your journey with organisational design.
1. Keep checking what business you are in. It’s a great question to ask, and one we regularly ask ourselves. 3P have previously been seen as a training company, because yes, we do some training – it’s a small element as part of the improvement package and the whole talent management suite that we offer. It’s also about how you communicate that to the outside world. If we were in the training business we wouldn’t be writing articles on organisational development linked to talent management – it goes back again to your 3V’s. We’ve shared our roadmap in a previous article. Our vision is unleashing people’s potential; training may be part of that overarching vision but for us it is unleashing people’s potential. So keep asking the question and the clearer you can get on that, and the clearer you can be on your strategy, the clearer you can be on the people you need on your bus, the type of bus you need and where you are heading.
2. Look at the different elements of ASPIRE; acquisition, succession planning, improvement, retention and engagement – the full talent management life cycle. It’s about people – it’s about the ‘who’. Look at your 3V’s in a sense of that as your long term vision, your guiding light and North Star. Where are you going in three to five years’ time? Look at your culture, which is really starting to shape the bus and the atmosphere on the bus.
3. Pass your changes through the McKinsey 7S model, use the questions and the checklist. OD might not be what you need at this stage. Do the due diligence. What will making those changes mean to your business?
There are lots of good models out there which can help you which we will perhaps share in future articles. Models are great for bringing complex subjects into one diagram and can help you bring different a narrative to your business challenges.
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Thanks for reading!
Peak Performance Partnership Ltd (3P) is a Business Performance Consultancy specialising in Talent Management. ASPIRE by 3P is our talent management solution which supports the talent life cycle of Acquisition, Succession Planning, Improvement and Retention & Engagement.
Co-authored by Lindsay McGhie, Trevor Norman and Michelle Manning