“A particular structure will not itself ensure the success of a company’s corporate strategy, however an inappropriate structure can impede its achievement.”
- Johnson and Scholes.
The Company Background
The CEO of Safe Company (name changed to protect client confidentiality) was also the promoter and had passionately nurtured his company to be a quality service provider in the safety and security solutions space. He had a few minutes before his next meeting. His eyes wandered to the article in the business edition of the newspaper regarding the boom in the economy and in the safety and security industry. Hmm…. that will be certainly good for the company, he thought. It got him reminiscing. He had founded this company alone and over a period of 10 years it had grown to 250 employees with reasonable revenues and profits. In the recent years the company had started growing at a scorching pace. They were starting operations in new locations. Bigger and more projects were coming along. The future for the company did seem to be full of promises.
Yes, he had done well he thought. And yet he was feeling a little uneasy. Was it because the last management report had shown that the Resource utilization was not up to the mark? This meant inefficient management of projects. As projects were the primary driver for the business, this could have an impact on client satisfaction, project profitability, signing up for annuity contracts etc. There was another thing that was bothering him ….A long term employee he met in his last trip to one of his locations had expressed dissatisfaction with the growth of his individual skills and how it was the dominant feeling among most long timers. Instinctively, he knew to sustain the momentum of the growth it was essential to have a solid people strategy.
Thus when he met our team a few weeks later, he was looking for answers to a few questions. What people strategy will enable the company to achieve business results while providing a nurturing and learning environment for its employees? How could they ensure optimum resource utilization and effective project management?
Drivers of Change
Is it possible to get grip on the solution without understanding the problem thoroughly? So we began by holding a series of interactions with the leadership team to gather additional data on the concerns shared by the CEO. A certain amount of desk research was also conducted to understand the organization and nature of business better.
And this is what we learnt… Projects were an important way in which the company delivered value to their internal and external customers. For effective utilization of resources, teams needed to be brought together quickly and resized along the project life cycle with fluid transitions of people joining and leaving. Project delivery being their core activity, it needed to be managed more smoothly and professionally. Though client satisfaction was considered paramount by them, the company culture did not seem to be actively supporting provision of professional services and a focus on metrics which were essential for ensuring client satisfaction. Targets for the coming years were ambitious. Very ambitious in fact!
What was required was an integrated solution for evolving an efficient and professional organization. Our diagnosis was that the way in which the client had organized themselves was an impediment to their goals of increasing the number of projects and revenues. Was creating an organization structure in which it would be able to deliver projects within the best possible time frames the need of the day? Our information gathering indicated the following symptoms prevalent in the organization:
- New skills and capabilities are needed to meet current or expected operational requirements.
- Accountability for results is not clearly communicated and measurable.
- Parts of the organization are significantly over or under staffed.
- Organizational communications are inefficient.
- Technology / innovation are creating changes in workflow processes.
- Substantial staffing increases or decreases are being planned.
- Employee morale is deteriorating.
- Workforce productivity is stagnant or deteriorating.
- Personnel retention and turnover is a significant problem.
Voila! The prevalence of the symptoms in the company helped us conclude that restructuring the organization was the way to go.
An organization structure cannot exist in isolation. Various factors need to be considered. So, to determine a suitable organization structure we examined factors like company goals and strategy, customers’ expectations for the services delivered by the organization, department dependencies, nature of business, size of organization, openness to change among top management, the support one can expect from middle management, skills of employees to be able to shoulder responsibilities in the new structure and the need for a change in company culture.
We also wanted to ensure that all stakeholders in the restructuring process should feel involved, the process should have a definite end date, there should be a clear implementation plan and that the restructured organization should be able to tackle the challenges envisaged with confidence and optimism.
On examining the pros and cons of different types of organizations structures possible given the organization context, our team zeroed in on Project Based Organization (PBO) as being ideal for the client. Our team’s research on the organizations that had implemented this model provided some insights. The PBO is suited for organizations whose main activity is running projects and which are motivated by a desire to achieve maximum project effectiveness. The PBO being customer focused would help in responding flexibly to changing client needs. It is also effective at integrating different types of knowledge and skill and coping with the project risks and uncertainties common in projects.
Some of the aspects about the structure that got debated were:-
- Should it be centralized or decentralized?
- What would be beneficial - a flat or a hierarchical structure?
- How much of authority can be delegated down the levels?
- Should it be vertical or horizontal?
- How to divide the organisation into management groups: by function, by service, by skill group, by location?
- Should centres of expertise be created?
- Who should have Profit and Loss responsibility?
- Should organisational layers be removed?
- Should some activities be outsourced?
Our team’s key deliverables included the following:
- Designing the solution
- Creating the Organization Structure
- For Corporate functions
- For Regions
- Developing Organization Banding (grade structure) and Titles
- Creating Role Maps and detailed Job Descriptions for all key positions
- Others - Creating a Policy Manual, providing recommendations on Compensation Structure
- and Training, determining the HR philosophy
- Facilitating the implementation of the solution
- Designing an implementation plan for transitioning to the new structure of PBO
- Facilitating the Change Management Process and Institutionalization of New Processes
- Conducting an Audit to ensure systems and processes that were to be implemented as part of the change management process were completed and employees were working within this framework.
A Part of the Organization Structure Indicative of the Project Based Organization
Value to Client
We are proud to say that today our client, Safe Company is India’s leading player in this space. It is 800 employees strong organization and continues to grow exponentially.
Published in 2007.