Defining and Refining Organizational Structure to Improve Performance
At Management Concepts, we are often asked to help clients rationalize and reorganize their organizational and functional structures when they reach a level of inefficiency that threatens to impact performance. In a recent example, the CEO of a healthcare services company had begun to notice that a recent period of rapid growth had led to a muddled organization structure.
The organization had gone through a period of rapid expansion with significant growth in staffing through organic growth, as well as through acquisition. The organization had historically made hiring decisions based on immediate business needs, with choices made in isolation by individual managers and departments. The organization had enjoyed some success with this approach and was able to find people with the necessary skills and experience it needed. However, without a systematic approach to job titling and responsibilities, structural inconsistencies were being created that would increasingly result in under-performance of individuals and the organization as a whole.
The unstructured approach to job creation and hiring had resulted in major variations in people’s job titles, scopes of work, job responsibilities, and compensation. Across the organization, we encountered seven different supervisory job levels, a wide range of compensation and responsibilities across departments for corresponding job titles, and many people with unique job titles that could not be mapped to another position within the firm or benchmarked to outside comparisons. As a result, the organization was facing several issues that threatened future growth and reduced their ability to respond to organizational change, these included:
- A lack of clearly defined job accountabilities and expectations, that made it very difficult to adequately understand and define what is necessary to perform roles successfully.
- No technical and behavioral competencies that could also be used for performance management, career path development, and to recruit the right individuals to roles.
- Difficulty in determining if individuals were being fairly compensated for the work they performed.
- Reduced opportunities for personal advancement within the organization as career paths were not defined, as the organizational structure was based on the actual individuals in place rather than the work that those people were supposed to perform.
- An inability of upper management to efficiently make necessary changes, since the organization structure was overly complicated and based around individuals already in positions.
- Inability to efficiently integrate acquired firms into the organization as there was no single standard by which to assess employees of the acquired organizations.
Management Concepts was brought in to work with the organization to assess the situation, work through a process of job leveling and use this to develop a set of accountabilities and technical competencies by which all jobs could be evaluated. The end result was a framework used to place all positions consistently across all functions of the firm and that could be used as the basis for all company workforce planning, recruiting, learning and development, performance management, succession planning, and ultimately compensation.
Without a framework to provide structure as the underpinning for roles with an organization, it is inevitable that managers will make hiring decisions in a vacuum that may or may not meet the long-term needs of an organization. With a comprehensive competency framework that all jobs can be aligned to, organizations have a rational basis for all hiring decisions, greatly increasing their ability to respond to all forms of change.
Jim Sowers also contributed to this post.