Assist an executive to develop a proposal for business structure change

Why this case study is presented

This is a case study for a small project to assist an executive in a medium sized enterprise to develop a change proposal for the structure of business operations. The executive needed to assemble a detailed assessment of the current structure and make detailed change recommendations. This case study describes the analytical approach taken and how the change proposal was developed.

This case study highlights the business strategy expertise of Elkera’s principal consultant, Peter Meyer.

The client

The client is an executive in a medium sized enterprise who was dissatisfied with the current arrangement of operational divisions in the business. She considered that the organisational structure inhibited her capacity to do her job effectively. The executive engaged Elkera to help with development of a change proposal.

The executive and organisation cannot be identified in this case study.

The problem presented

The executive was the leader of an operating division in the business but was overshadowed by more senior managers of other divisions.

Th executive did not have the authority needed to engage equally with other managers. The interests of the executive’s division were frequently overlooked.

The executive considered that the current arrangement of operational divisions was somewhat arbitrary. If a more operationally rational structure was implemented, the authority issue ought to be resolved.

Previous submissions by the executive to senior management for a change to certain parts of the structure had been ignored. There was no indication that senior management was in any way dissatisfied with the executive’s performance, they just did not see the problem.

Elkera’s principal consultant was asked to help the executive analyse the current structure, including leadership arrangements and develop compelling recommendations for change.

Essentially, the executive was banking on an evidence-based submission overcoming management’s resistance to change.

Assessment of the client’s need

The key to this problem was to work out why the operational structure was so opaque that process problems were not obvious to other executives.

The executive had an intuitive understanding, based on operational experience, that the structure was wrong, but could not articulate the precise reasons in a compelling way. That was the problem that had to be overcome.

Elkera’s consultant needed to really understand how the business functioned and why other executives thought about it in the way they did.

Once that problem was overcome, the executive needed a concise submission to explain the problem and recommend solutions.

Problem analysis

Elkera first had to understand the work that the executive performed. That required development of a functional decomposition hierarchy for functions performed by the executive’s division.

The functional decomposition hierarchy begins with an assessment of top-level business functions. Each function undertaken by the executive was then divided into the main sub-processes necessary to perform that function. A two-level structure was considered sufficient. More detail would require considerably more work for little additional benefit for this problem.

The functional decomposition also included functions undertaken in other divisions that intersected with the executives’ functions.

Once the functional decomposition hierarchy was prepared, it was necessary to understand the source of the confusion.

The functional decomposition hierarchy was extended to include a RACI matrix, to identify the stakeholders involved in each sub-process. A RACI matrix assesses stakeholder interests as either Responsible, Accountable, Consulted or Informed. It is a simple model to understand the interests of key stakeholders in projects and was sufficient for this analysis.

Elkera’s consultant and the executive also examined the division’s current organisational chart, as prepared by the HR department. It did not include all persons who were actually managed by the executive. Something was wrong.

What we learned

Looking at the totality of the analysis, some key information emerged:

• The organisation delivered its services under a project-based model. It maintained personnel to undertake those projects. The organisation was actually a matrix organisation. The executive managed a large team that was fielded to deliver project services. Some members of the team received direct inputs from the project director. The executive also had to collaborate closely with the project director on specific issues. As a result, there were two lines of accountability; operational and project based, with lots of collaboration between them.
• Staff who received direct instruction from the project director were excluded from the divisional organisational chart. The business had never identified itself as a matrix organisation. Everyone viewed their accountabilities under a single line of authority, although they had to work with two. This was the source of much confusion for some staff.
• The absence of a clear understanding of the matrix structure had also led to confusion of accountabilities and responsibilities at the executive level. The project director was nominally the executive’s boss, although he did not actually involve himself in operational matters. The effect was to diminish the client executive’s authority within the business.
• Allocation of business functions between units was also affected by the confusion between operational processes and project planning and delivery. Some functions that were really operational were assigned to managers who predominately undertook project-based activities. Operational functions were not satisfactorily managed.

In the end, the picture became clear. The failure within the business to appreciate that the business was actually a matrix organisation, with different management required for operational management and project management, had distorted the organisational structure in multiple ways. It explained why senior management did not appear to relate to the issues raised by the client executive.

The results

Based on the analysis, Elkera’s consultant assisted the executive to prepare a set of submissions to senior management relating to the allocation of functions between divisions and also relating to the leadership structure of her division.

The submissions describe the matrix structure, explaining that it reflects how the business actually works, without it being expressly acknowledged. In relation to leadership of the division, formal acknowledgement of the matrix structure enables management to see that the project director can continue to collaborate with team members in the client executive’s division, and provide instructions when required, without being their operational manager.

The submissions also describe how functions are project-related, operational or hybrid, and how they could be more effectively allocated between divisions to reduce communication overheads.

At the time of writing, it is not known if senior management will agree with the submissions.

Regardless of the outcome, the executive is confident that the issues have been accurately and clearly presented for management’s consideration. Nothing more can be done.

Lessons learned

This was a fascinating project that showed the power of business analysis tools such as a functional decomposition hierarchy and RACI matrix.

In any work involving a review of business processes, the first steps are to identify business functions that are required to generate the business outputs, and then develop a functional decomposition hierarchy. When combined with a RACI matrix analysis, it is a powerful tool to support precise analysis and communications about business process issues.