Guest Post by Patrick Ow (first posted on CERM ® RISK INSIGHTS – reposted here with permission)
If your organisation is suffering from performance issues despite what you consider well-executed strategies, plans, and initiatives, then you have a range of roadblocks holding you back.
Typically, when organisations are losing market share or not making achieving their revenue targets, the first thing they do is to change their goals, strategy, mission, structure, vision, values etc, and even their plans.
Looking externally seems to be the easiest when organisations are suffering a range of performance challenges that they want to improve.
Focus on the right sequence
The first thing organisations try to do to fix their performance problems is to turn to their strategic planning and try to get it back on track.
While strategic planning is incredibly important to organisations, performance improvement activities must be done in the right sequence.
Unfortunately, many strategic planning approaches and consultants do not properly address the foundational issues or organisational roadblocks that can stop the organisation’s strategies and plans from being effectively implemented and ultimately be deemed a success.
It takes must less effort (and it is quicker) to merely change the strategies and plans than to fundamentally change organisational structures, processes and entrenched mindsets and politics.
Developing another new organisational strategy or plan will NOT make the fundamental problems go away, unfortunately.
The root causes of the performance problem are still there. Until root causes are managed, performance will always be sub-standard.
Therefore, organisational performance can only be improved when internal roadblocks or root causes of poor performance are removed or reduced.
Remove these internal roadblocks first rather than looking externally. Change your strategies and plans only after removing these internal roadblocks.
Address the fundamental roadblocks first before changing strategy
Dysfunctional organisational structure, ineffective reward systems, poor information flow, inability to take corrective action, authority not aligned with responsibility, lack of engagement, and inefficient operational processes are some of the internal issues or performance roadblocks that organisations face that can stop them from achieving our plans, goals, mission, vision, strategy, etc.
Deal with them FIRST. Get the sequencing right
Only when organisations solve these internal problems first, can they proceed to achieve success. When the noose around their necks is released, it is easier to move to where they want to be.
Do you have the right organisational design to execute your strategy?
One key roadblock to achieving better organisational performance is not having the right organisational design and structure to execute your strategy and plan.
Organisational design is a systematic, strategy-centric, and data-driven approach to defining an organisational structure that will achieve role clarity, effective collaboration between roles and teams, and contribute toward a positive organisational culture and better performance and outcome.
The traditional organisational designs are no longer fit for purpose. They are now defunct.
In its place, organisations must be designed and structured to continuously learn, adapt, and grow in a coordinated way to respond to the ever-changing operating environment.
Agile and accountable organisational structures are needed to support the implementation of today’s business model, operating model, work, and jobs.
We need organisational structures that:
- Support the achievement of organisational mission, vision, and purpose.
- Support the cultural constructs and leadership models that the organisation has adopted.
- Has the right skilled people and workforce to support the achievement of strategies, plans, goals, and initiatives.
- Has the appropriate governance and performance indicators and measures to maximise performance.
- Enables customer outcomes and experience.
- Considers the role of technology in automating, augmenting, and transforming the organisation.
- Clarifies and enables personal accountabilities.
- Has in-built flexibility in the design of jobs and work that enables the effective flow of work and positive employee experiences.
- Create team-based structures and performance.
- Is flexible and adaptable and incorporates agile values.
- Prepares the organisation and workforce for the future.
Separate short/long-term and effective/efficient job roles
The Adizes’ PAEI Model, shown below, gives a practical framework for arranging or redesigning job roles in organisations.
Combining Sales (a Producing function) and Marketing (an Entrepreneuring function) with a single manager or person will only interfere with each other. At least one of these functions will suffer or will get less attention.
Likewise, it is best to separate the roles of Accounting and Finance, and Research and Production and allocated them to two different persons.
An effective organisation keeps the following functions (and individuals) separate – Production (P), Sales (P), Marketing (E), Research (E), Human Resource Management (A), People Development (E), Accounting (A), Finance (E), and the CEO (I).
Don’t forget your organisational lifecycle
The practical implementation of the PAEI framework is highly dependent on the stage of the organisation’s life cycle.
Organisational design must be based on the maturity of the organisation.
A young organisation may focus on Production (P), Sales (P), Human Resources (A), Accounting (A) and CEO (EI). Infant companies need more sales, more production, more improvements, more effort, and more focus. Everyone in an infant company must be action-oriented and driven by an unquenchable thirst for results.
And for an older organisation, the focus may be on Production (P); Marketing (E); People Development (E); processes, bureaucracy, and controls; (I) and Technology (I).
After separating short-term and long-term job functions and separating efficiency and effective job functions as guided by the maturity of the organisation, pick the right person with the skills to perform these specific functions.
Accountability for the performance of these roles must be clear. There are no conflicts and compromises. There is a focus on their performance, rather than neglect.
Quick fixes do not address the root causes of poor performance
Putting in place the appropriate organisational design and structure and finding the right person for the function to execute the strategy will take significant time and effort especially when we factor in the organisation’s maturity on the lifecycle.
In the world of quick fixes and unhelpful management compensation schemes that focus only on short-term results, it is quicker to change strategies than to change the organisational design and structure.
But if we think about it, organisational strategies should not be constantly changing. It only creates confusion and chaos.
While a ‘new’ strategy looks good on paper and shows ‘action-taking’ by management, the root causes of poor performance will never be addressed through these quick fixes.
Badly designed organisations will always perform poorly.
Professional bio
As a Chartered Accountant with over 25 years of international risk management and corporate governance experience in the private, not-for-profit, and public sectors, Patrick helps individuals and organizations make better decisions to achieve better results as a corporate and personal trainer and coach at Practicalrisktraining.com.
Given that improving risk culture and maturity has become a top of mind for many executives and risk professionals, he has conducted in-depth research into the topic and written several articles, which can be found at https://practicalrisktraining.com/risk-culture.
Patrick has authored several eBooks including Strategic Risk Management Reimagined: How to Improve Performance and Strategy Execution.
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