A New Organizing Structure: How to Raise Effectiveness During the Crisis

An organizing structure —compared with business models, macrotendencies, strategies and so on — is more comprehensible and comfortable for owners and managers as an instrument for leadership. It is the only strategy needed, as any problems with the organizational structure are highly visible and easily fixable. But what are the guidelines and how should they be applied during the crisis?

The principles of an effective organizational structure are:

•Responsibility for key business drivers and processes (only the key ones, not less important ones) should be personalized to one of the managers.

•The responsibility of the manager should be balanced with assets, resources and competencies of the processes and functions

There are a limited number of known factors that determine the survival and success of a company in general, in at the time of crisis in particular. All business drivers are connected to defined business processes, assets, resources and competences i.e. every business driver manifests itself in the structure and in the controlling system in a certain manner.

In this period of uncertainty, business drivers may even be changed quickly. The financial results during the crisis may be based on balance sheets or positive cash flow, depending on the type of company. This may also be added to criteria for liquidation.

What does it mean to personalize responsibility? It means to clearly show managers and employees who the responsible party for the results of a specific factor is. This does not always succeed for the top-level factors. In this case, it is necessary to conduct a rating of business processes and functions to single out the most important factors. As a bare minimum, the responsibility for these processes and functions should be personalized.

When considering this particular crisis, it seems that key business drivers and key processes may chance radically for the company in a very short space of time. This puts special requirements on the organizational structure. It is absolutely necessary to be prepared to quickly reassign responsibility with the authority, resources and competencies that follow. Companies that were already working along these lines when the crisis started, find themselves in a better situation than their competitors now.

Actions:

•To help the financial model conduct a sensitivity analysis and single out business drivers to reduce the effect of the crisis on the economy of the company.

•Conduct ratings of business processes and functions to see what impacts on key business drivers. If possible, personalize the responsibility for key processes and functions

•Conduct an express analysis of the organizational structure with the aim of balancing out the responsibility of the manager for key business drivers/ processes/ functions with authority, resources, scope of competencies (in % of the ideal)

•Localise the key imbalances of sub-delegated/ re-delegated/ shortage of authority and competences. Make changes in the organisational structure to achieve balance.

•Check and change selected key business drivers and processes as often as the situation requires during the crisis.

•Warn all managers that structural changes such as redistribution of responsibility and authority may take place more often than ordinarily. Make sure the company is ready for quick change

•Create a motivational system to encourage results in key processes and drivers.

•Among the less important processes and drivers create a list of candidates for outsourcing

Results

•You will know for sure who is responsible for key business drivers, and have a bargaining chip which means really controlling the situation

•For key results, the responsibility is not only on the employees and the General Director, but also on the managers

•The pressure is off the chief executive

•Increases responsibility and motivation of the managers