Category Archives: Organization Structure

But, We Have an Org Chart

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“But, everyone understands the structure. Everyone knows who they report to. I mean, we have an org chart,” Andre protested.

“And, I said – clear recognition of individual team members, each with individual accountability in clearly defined working relationships. That’s different and rarely exists. Tell me how things work around here,” I asked.

“The managers tell everybody what to do and then correct their mistakes,” Andre looked puzzled at his own response.

“Exactly, in what you just described, which is typical for most organizations, I have no clue who is accountable for the work output. I have no idea of the work of the manager. And, I have no idea how people work together when neither is each other’s manager. In the absence of clarity, people make things up, on their own and that is why you see petty bickering, overt passive-aggressive behavior, borrowed staplers not returned, people eating other people’s lunch (metaphorically). That is why you see bright ideas, ignored or made fun of. Project assignments are hoarded and protected. Promotions are based on favoritism.” I stopped. Andre’s eye were wide open.

“How long have you been watching us?” he asked.

“I think I have been here the better part of ten minutes,” I replied.

Is Your Infrastructure Ready to Grow?

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“You want to grow bigger? What do you need to focus on? Because I don’t think you are ready.” I asked.

The group looked at each other, not sure, maybe some ideas rattling around in their heads, but no one wanted to speak first.

“Before you think about getting bigger,” I continued, “what is your biggest challenge, right now? Look, you called me in here. You all look tired, worn out. You have been working way past 5p every day. And now, you have an opportunity to take a risk, which will grow your company 30 percent over the next 12 months. What is your biggest challenge, right now? What has to get fixed before you even think about taking this next risk?”

“We feel like we are fighting too many fires, right now,” Marcus explained. “And this new project will fail, if we don’t get some of these fires under control.”

“Why are these fires happening?”

“Our team members run into problems they are not capable of solving. We tried to empower them, but that still doesn’t mean they have the capability to make the right decisions. So we are down in the trenches with them, helping to put out the fire.”

“Is it possible, that you don’t have a clear understanding of the level of work in those roles? And that you have placed people in those roles who do NOT have the capability to solve the problems and make the decisions that go with the role?”

“Isn’t that what I just said?” Marcus replied.

“You described the people you placed in the role, but the root cause of the underperformance is that you, as the manager, don’t clearly understand the level of work in those roles. The biggest mistake most organizations make is underestimating the level of work in the role. Without identifying the level of work in the role, most organizations hire someone without the necessary capability. And then wonder why the fires begin to flare.”

Why We Have Supervisors

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“Yes,” Samuel appeared a bit agitated. “But, you are dealing with the rank and file. You are sitting in a pretty nice boardroom, Catherine. You have a nice salary. I know you and I may have bouts of frustration with our work, but at the end of the day, we have it pretty good. But, the rank and file, that is another question. In their jobs, they must all be frustrated. I mean, it is pretty lackluster work. That’s why we have to have supervisors, to keep them in line, to make sure they don’t sit around and play on their smartphones all day.”

Catherine’s blood pressure began to rise. Her face flushed. “Mr. Pierce, it is coming clear to me why Outbound Air, as a small upstart airline, got into so much trouble after your company bought it. It appears, I have as much work to do with the board of directors as I do with the team.”

“Catherine, I am all ears,” Samuel responded. “But I must tell you, we have a large investment in this airline, we have poured in a lot of capital to introduce jet service to the fleet. Your intentions with the company must be grounded in a solid return on that investment.”

“I appreciate your reminder of the value of the shareholders who bear the risk. And that risk is shared by our workforce. Each team member comes to work every day with the full intention of doing their best. They want work that gives them the opportunity to use their full potential. They want to spread their wings and receive fair compensation for that work. They want to use their brain, to exercise judgement in making decisions to reach a goal. They have goals, just like you have goals. They have a need, not only to bring value to their own lives, but to bring value to the lives of the people who work around them. As the chairman of the board, if you do not recognize that, my work as CEO is already doomed. All crumbs lead to the top.”
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This is the beginning of the sequel to Outbound Air. Find out how Catherine got here.

But, We Have a Company to Run

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“But, we have an airline to run,” Samuel continued to object. “As chairman of the board, it is my primary responsibility to make sure we have the right person at the helm. It is not my responsibility to micro-manage you, meddle in the way you run things. But, the way you run things makes me wonder if we have the right person at the helm.”

“Look, Sam,” Catherine replied, “we can squeeze the legroom, rearrange the seating on the planes. We can start charging for checked baggage. We can add a service fee if someone wants a soda. But that is not our problem.”

Catherine looked intently at Sam, sitting at the head of the boardroom. In the periphery, she could see the logos of the other companies in the portfolio. Outbound Air was the company in trouble and she had been selected to turn it profitable. She continued.

“Sam, we have close to a thousand employees now. They work 40 hours per week. Economically, they depend on us. Our compensation system and job opportunities directly impact how they live, now, next week and next year. Their self-esteem, what they achieve in life, in large part, depends on the role they play for us. How we set expectations, how we define their working relationships, how we evaluate their effectiveness, all, have direct impact on their contribution. They come home at night, frustrated or satisfied based on how things went that day. The way we design the environment of their work has way more impact on our bottom line than any fees we may charge for luggage.”
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The saga of Outbound Air continues. Find out how Catherine got here.

Kiss Off

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“Catherine, we hired you to run this company, and we want to give you free rein, but you must admit that some of your initiatives don’t translate into profit for this quarter.” Samuel Pierce was chairman of the board. He was not happy, but he was willing to listen.

“Sam, you didn’t hire me to focus on the next three months,” Catherine replied. “This company has some real problems that will take time to repair. In the short term, we will suffer. We will suffer some profit. I am not here to turn a single quarterly number. I am here to create a sustained profitability stream.”

“But, these employee initiatives are going to erode profitability. You want to change the wage structure. Your personnel plan adds in management overhead. These are long term things that will last beyond the next quarter. Are you sure you know what you are doing?”

Catherine took a moment. “On the surface, my role is to operate the business functions, define the metrics, create revenue and hold expenses. We can do that, and, in the short term, we can make a tidy profit. AND, my role is to create a sound and effective managerial system that will sustain those business functions. As CEO, right now, I have to focus on our people system, because it’s broken. As long as the people system is broken, you can kiss off all the rest.”
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The saga of Outbound Air continues. Find out how Catherine got here.

Structure and Culture

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Thinking out loud here.

During the past two days, I have laid out posts related to –

  • In spite of clear work instructions, does culture trump output?
  • In spite of personality inputs, does culture trump output?

If you learn anything about me, you know that I am a structure guy.

  • For those who think their organizational challenges revolve around personality, I tell you, it’s not a personality problem.
  • For those who think they have a communication problem, it’s not a communication problem, it’s a structure problem.

Structure is the defined accountability and authority in working relationships, both managerial relationships and cross-functional working relationships. Structure is the context, in which we work.

Culture is that set of beliefs that drive our required behaviors in the work that we do together. Culture is the context, in which we work.

So, I am beginning to wonder if organizational structure and culture are inextricably tied together. Does structure equal culture? Does culture equal structure? Do the warm and fuzzy concepts of culture have a science underneath defined by levels of work and structure?

I believe so.

The Enterprise as a Whole

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From the Ask Tom mailbag –

“Different functions in a business do different things, and they each have their own set of cultures, rules and ways to be measured. We need to respect this, and stop imagining that how it works for us is how it should work for everyone else. Each function needs to be managed in the best way to suit its purpose, and the business needs all of its functions to work well and respect each other and their methods and measures if the enterprise as a whole is to be successful.” Comment posted to Responsibility, Accountability and Authority.

Response:
This comment began by railing against management as command and control, ended up with a brilliant description of what management IS. To understand management, as a subject to be studied and understood, we have to step back. We complain that how management works one way, does not work in another way. We get wrapped around the axle.

In the differences, there are universals. Here is what I pulled out of the comment posted above.

  • Business is a collection of different functions. Each function will have its own set of cultures, rules and measurement systems. And those systems will have different characteristics.
  • Each function must have a purpose. All the discussion about goals and objectives ultimately arrive back at purpose.
  • Each function must work together, must be optimized and integrated for total organizational throughput. Out of balance systems create internal feasts and famine, starving and bloating. Some optimized systems remain appropriately idle waiting for constrained functions to catch up.
  • Management is about the whole organization, separate functions coordinated together for the benefit of the whole system. This coordination depends on discretionary judgement, making decisions and solving problems, in roles we call management.

As the organization grows more complex, it needs more management.

Saving Face in a Reassigned Role

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From the Ask Tom mailbag –

Question:
I just read through a couple of your more recent blog posts. Specifically, the one titled “Someone in the Wrong Role, How to Reassign” caught my attention. So what’s the answer to Cheryl’s dilemma? If we need to reassign someone to a new role, because they are better suited in another necessary role how do we allow them to save face. “Somehow, we have to allow Harold to save face in front of the company. I am just not sure how to do that.”

Response:
People change roles all the time. Titles are switched, departments re-organized. First, understand that reality always wins. Don’t try to blow smoke.

Here is the reality. The company needs everyone to be in a role where they can be most effective. The company has a necessary role. (You would never put Harold in an unnecessary role). The company thinks Harold is better suited for the new role than the role he is in now.

First, how do you know Harold is better suited? Hint – you don’t know.

How do you, as a manager, find out if someone is suited for a new role they are not currently doing? The answer is ALWAYS — give them project work. Give them a project that contains time span task assignments similar or identical to the work in the new role.

If they are successful, it is a simple transition from project work to a new role. The announcement is easy, based on the successful project.

Reward or Punishment?

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“So, you clearly understand that you are the problem?” I asked. Events became clear for Reggie. His incentive program backfired. In the short run, his company’s margins were not compromised, but long term, he created a culture cloaked in clandestine competition. His managers gamed the system to beat margin quotas.

“We hired a compensation consultant to help us structure this incentive program,” Reggie defended. “They were very professional and seemed expert in their process.”

“Tell me, Reggie, what impact did this incentive compensation have on your manager’s contract?”

Reggie moved his head an inch, “What do you mean, what contract?”

“You know, the contract. The contract that says You get paid every day to come to work and do your best. To focus your efforts where they are most effective. To give us your best effort.”

Reggie didn’t know how to respond. “Yeah, but that doesn’t seem to work around here. People don’t come to work and do their best unless you, you, you hold some of the money back and give it to them as a bonus.”

“So, what you are saying is that you don’t trust them to do their best, so you don’t give them all their money unless they show their best effort? Then you give them their, well, you call it a bonus.”

Reggie slowly nodded his head.

Contrived System of Reward

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“But the worst part of my little bonus system,” Reggie confided, “was not that my managers manipulated the numbers, but that the system I created changed the mindset. I corrupted their thinking. Digging out of that hole is going to take time. And some of them will not survive. I created a contrived system to reward something I thought was good.

“And the winner of my little contest, the successful candidate who gets the position as the new division VP, is going to think he got the job by gaming the system. It doesn’t matter how I explain it, in his heart, his experience will tell him that he got the job by playing with the numbers.

“It is really true,” Reggie continued, “the behavior you reinforce, is the behavior you get. I created the incentive. I got the behavior.”

“If you are going to create a different environment, what has to change first?” I asked.

“All crumbs lead to the top,” Reggie said. “I have to change first.”