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2009 NDMA Inc.

Organizational Structure: Frequently Asked Questions (FAQ)

1. How can I find out whether my organization chart is causing problems?

It's not tough to diagnose the problems in an organization chart. Structure is a mature science, and problems are quite predictable.

First, we label each managerial group with the lines of business within it, using the Structural Cybernetics framework -- the basic building blocks of structure.

Then, we analyze the chart using four diagnostic principles: gaps, overlaps, scattered campus, and inappropriate substructure.

Problems will become absolutely clear. It's not that your organization is failing. This process identifies specific points where the structure makes it tougher for people to succeed.

You'll see problems like stovepipes and replication of efforts, poor teamwork, lack of customer focus, weak strategic alignment, slow pace of innovation, a bureaucratic rather than entrepreneurial culture, pressure for decentralization and outsourcing, and poor morale.

All this can be done interactively in a two-day workshop called the "Rainbow Workshop." Working with your leadership team, the interaction develops an understanding of the science of structure while also building your leadership team's commitment to change.

If you're considering a restructuring, this session will position you to decide whether change is needed, and whether that change should be just a "tweak" of the current structure or a "clean sheet of paper" restructuring.

You can also use this same process to analyze a proposed organization chart. It's always better to anticipate the rub-points in advance, and then either adjust the plan or find some other way to address the problems inherent in the design.

Contact us to learn more: 203-431-0029.

2. Is there a simple definition for "organizational structure"? Does it include more than an org chart?

You can't change your org chart without impacting workflows. "Structure" means both.

An organizational chart defines jobs, the reporting hierarchy. In doing so, it defines people's specialties, ideally their lines of business, and their relationships with their peers in an organization.

To make that organization chart work, leaders have to sort out how the different specialists are combined on project teams -- that is, the organizational workflows.

This should not done with an "assembly line" approach like business process engineering. Instead, leaders can define the processes that combine people into teams. With the right processes, teams form dynamically, including just the right people with clear accountabilities.

3. What is "Structural Cybernetics"?

"Structural Cybernetics" is both the brand name of NDMA's consulting work in this area, and the title of Dean Meyer's first book on the subject of organizational structure.

It treats organizations as a set of interlocking dynamic systems, breaking down the old paradigms of process-oriented "stovepipes," or (in IT) applications versus infrastructure.

And the key is, it defines groups around lines of business so that each manager can become an empowered entrepreneur.

The Structural Cybernetics research defines the lines of business within every organization, and scientific principles for combining them into healthy organization charts.

The most effective way to learn about applying Structural Cybernetics in your organization is to scheduling a one-on-one telephone consultation with Dean Meyer by calling 203-431-0029. Consultations are free for c-level executives and their direct reports.

4. Isn't the org chart always going to be a reflection of internal politics or the personalities of key individuals?

Not if you want to get optimal performance!

When you structure around personalities and politics, you'll have to restructure every time anyone changes jobs. That's expensive, disruptive, and induces cynicism -- the "organization du jour."

Furthermore, you'll find it hard to explain to staff the rationale for your structure. So they won't really know what's theirs and why. That makes it tough for them to show initiative and behave as empowered entrepreneurs. They're more likely to learn to be passive and wait for the boss to tell them what to do.

It's true that people have different talents. But you don't have to optimize the structure to fit those at the top. Instead, first define a healthy structure based on principles, and then fit people into it based on their unique competencies.

Organizational structure is a science. There are five fundamental building blocks of structure present in any organization. And there are clear principles for combining them into an organization chart. When you violate these principles for the sake of a few personalities, the consequences will inevitably be reduced performance organizationwide.

5. What do you mean by the "building blocks" of structure?

There are five fundamental building blocks that can be found within any corporation, company, or organization. A good way to think of them is as "lines of business" within the organization, or broad categories of specialization.

The five are:

Service Bureaus: the people who keep things running. They provide ongoing services reliably and efficiently. This category includes infrastructure operations, manufacturing, customer service, and a range of support services.

Technologists: the people who design the organization's products and services. They are the engineers at all layers, the analysts and professional specialists, the designers and "gurus."

Coordinators : the people who help others within the organization, including helping them come to agreement with one another. Standards, strategic plans, business continuity plans, and security policies are examples of their products.

Consultancies: the people who provide the link between clients' business needs and the organization's products; for example, helping to find optimal IT solutions for a business unit. A form of internal sales and marketing.

Audit: the people who inspect and judge others to ensure compliance with rules and policies.

6. How does differentiating these "lines of business" within an organization help?

First, if any of these building blocks are missing, critical activities will not occur with reliability and quality.

Second, defining a job with responsibilities in multiple building blocks makes that job needlessly difficult because of conflicting objectives (eg innovation vs. keeping things running). The result is lower performance -- and a position that's harder to fill.

Third, scattering a single building block throughout the organization (the "scattered campus") undermines sharing of lessons learned within a profession, and generally leads to territorial gaps and overlaps.

Fourth, each line of business lends itself to a different basis for structure. The way you divide groups up within that part of the organization should be driven by the nature of the line of business.

Essentially, the building blocks allow you to analyze the pros and cons of existing or proposed organization charts, and provide a framework for designing a new, more productive structure.

7. What characterizes a well-designed organization chart?

A well-designed organization chart defines jobs based on lines of business, i.e., it defines accountability for products and services.

Clear individual accountability for lines of business is key. It empowers people to run internal businesses creatively, with a focus on satisfying their customers and adding value. It gives people well-focused jobs without the risk of demotivational job narrowing. And it defines jobs based on results, not skills or processes (products, not what people do).

8. Can you fix structural problems by simply redesigning the org chart? Why are workflows such an important part of improving structure?

Changes in the organization chart inevitably induce changes in workflows.

The more people focus on excellence in their respective lines of business (their professional specialties), the more they become dependent on teamwork (workflows). This is why structure has to address both the organization chart and workflows.

If people don't team across structural boundaries, the organization will revert into "stovepipes" of self-sufficient generalists. At that point, it doesn't matter what the organization chart says. People will ignore boundaries and do whatever it takes to get their jobs done.

Thus, any structure change process must both define a new organization chart and establish cross-boundary workflows as an integral part of the design.

9. We're not a simple assembly line.... How can we build flexible cross-boundary workflows?

We've been very successful at building high-performance teamwork by conceptualizing each part of a department or organization as a business within a business.

To address workflows, each project or service is assigned to a "prime contractor." And the first job of the prime is to arrange for help from peers, that is, to line up any needed "subcontractors."

The result is that teams are dynamically created with just the right people at just the right time.

Furthermore, by subcontracting for specific deliverables, everybody on the team clearly understands their individual accountabilities. This is a much more effective approach to project management than if a single project manager tried to manage each step from above.

10. How is this different from "business process reengineering"?

The key difference is that these flexible workflows are automatically tailored to the unique needs of each project. Dynamic teams include just the right people at just the right time, all with clear individual accountabilities and a clear chain of command.

In Structural Cybernetics, you design the structure and workflow process together. Then, the organization can naturally adapt to new product offerings without any loss in performance.

By contrast, reengineering defines fixed processes in advance. While it may be appropriate for highly structured work (like assembly lines), in most white-collar settings, it's far too rigid.

Furthermore, in practice, with reengineering it's too easy forget the basics of empowered, entrepreneurial jobs in the zeal for process optimization. A better approach is to define jobs based on principles, and then overlay flexible, dynamic processes that draw from those various lines of business just what's needed for the job at hand.

11. Is it worth the effort to try to build a high-performance structure in a single department, even if the rest of the company suffers from haphazard design?

Absolutely. In fact, that's a duty of leadership. None of us can change the world; but each of us can and must do everything possible to improve what's within our purview.

The payoff for the redesigned department will be huge. Moreover, it can be the success story that helps drive change through the rest of the company.

In fact, starting with single department is often the best approach to follow. It's easier to build a showcase in a well-defined organization than to change an entire company all at once.

12. How can NDMA help me improve organizational structure at my company?

NDMA has a detailed, tested, adaptable process for helping you lead a successful organizational structure change in your department or your company.

The Structural Cybernetics implementation process is radically different from the all-too-familiar process of juggling boxes at the top, announcing the new organization chart, and then hoping for the best as people struggle in public for month after month to figure out how it should work.

The Structural Cybernetics implementation process emphasizes leadership education and participative planning before announcement day, so that the new organization can then "hit the ground running."

Structural Cybernetics principles are the key to a productive participative process. Instead of territorialism and battles of opinions, leaders debate the trade-offs of various design alternatives in a rational, fact-based design process.

We'd be happy to talk to you in detail about it. Call us at 203-431-0029 to schedule a complimentary telephone consultation.

13. Is your organizational structure work equally relevant for a non-for-profit or government entity like mine?

Absolutely. And we have plenty of implementation experience in both the not-for-profit and government sectors. Call us to find out more.