RE­MU­NER­A­TION

Could or­gan­i­sa­tional mod­el­ling work for your busi­ness? By John Ellen.

NZ Business - - CONTENTS - John Ellen is the man­ager – Cen­tral Con­sult­ing and Per­for­mance Im­prove­ment at Strate­gic Pay.

What goes into or­gan­i­sa­tional mod­el­ling? By John Ellen.

THE WAY a busi­ness is struc­tured and op­er­ates will go a long way to­wards its suc­cess. Of course, when an or­gan­i­sa­tion grows, it can be tricky to work out who should be do­ing what. Should this fac­tor be based on skills or in line with what cus­tomers are de­mand­ing? This is when or­gan­i­sa­tional mod­el­ling can be im­ple­mented.

Or­gan­i­sa­tional mod­el­ling is the art of tak­ing the ac­count­abil­i­ties that must be met by an or­gan­i­sa­tion and de­vel­op­ing logic for the dis­tri­bu­tion of th­ese among the con­stituent parts.

There is one el­e­ment ev­ery or­gan­i­sa­tion needs – struc­ture. It doesn't mat­ter whether you're a small busi­ness with a hand­ful of em­ploy­ees or a multi-faceted coun­cil with count­less de­part­ments, the more struc­ture and process in place, the greater the chance of suc­cess.

With this in mind, or­gan­i­sa­tional mod­el­ling might be the best way to ap­proach growth and change.

Or­gan­i­sa­tional mod­el­ling rep­re­sents mul­ti­ple par­ties with dif­fer­ent pur­poses where each team has its own goals and ob­jec­tives.

Most or­gan­i­sa­tions have an or­gan­i­sa­tional chart, where there are clear re­port­ing lines and hi­er­ar­chy. How­ever, in mod­ern busi­nesses where growth is in­evitable, this isn't al­ways the most ideal way to holis­ti­cally look at struc­ture and process.

In­stead, or­gan­i­sa­tional mod­el­ling rep­re­sents mul­ti­ple par­ties with dif­fer­ent pur­poses where each team has its own goals and ob­jec­tives.

This sys­tem helps to show how th­ese teams in­ter­act with each other and the ex­ter­nal en­vi­ron­ment. As a re­sult, or­gan­i­sa­tional mod­el­ling splits re­spon­si­bil­ity and al­lo­ca­tions across a team. As such, they can take greater own­er­ship of their pur­pose and re­late tasks more closely to what is hap­pen­ing out­side the or­gan­i­sa­tion. This could be based on what skills and ex­per­tise a team has, ge­o­graph­i­cal ar­eas or even the needs of the cus­tomer group.

A good ex­am­ple of or­gan­i­sa­tional mod­el­ling is in the form of a coun­cil. With this en­tity wide-reach­ing and multi-faceted, there are count­less peo­ple do­ing dif­fer­ent tasks. The chal­lenge for a board or a CEO is to en­sure the right peo­ple are do­ing the right tasks for the right re­sult.

For sim­plic­ity, a coun­cil can be bro­ken into three core out­puts – reg­u­la­tion/democ­racy, in­fra­struc­ture and com­mu­nity ser­vices. The rules let us live to­gether, the in­fra­struc­ture makes it pos­si­ble to live there and the com­mu­nity ser­vices make it nice to live there.

When an en­tity starts to un­der­stand its core de­liv­er­ables, it forms the ba­sis of an or­gan­i­sa­tional model. In the coun­cil ex­am­ple, if an is­sue around dog con­trol or pub­lic toi­lets cropped up, it's eas­ier to work out what out­put is most re­spon­si­ble for the is­sue. Top­ics could come up across mul­ti­ple out­puts, but the struc­ture in place will help de­ter­mine the right so­lu­tion.

Of course, be­hind each out­put are dif­fer­ent mea­sures of suc­cess. For ex­am­ple, fol­low­ing pro­ce­dure will be im­por­tant around reg­u­la­tions, good engi­neer­ing around in­fra­struc­ture and pos­i­tive en­gage­ment around com­mu­nity ser­vices.

Ba­si­cally, we have dif­fer­ent ways to build our model. In­stead of hav­ing an or­gan­i­sa­tional di­a­gram that says this task needs to go to com­mu­nity ser­vices be­cause that team has fewer peo­ple, this model is log­i­cal and de­cides where tasks go based on other met­rics.

While th­ese three out­puts are siloed, there can be de­part­ments that are spread across all. For ex­am­ple, cor­po­rate ser­vices such as IT and ad­min­is­tra­tion will be re­quired across the board. Be­low this, sits peo­ple, cus­tomers and com­mu­ni­ca­tions who aren't em­bed­ded in th­ese de­part­ments, but can still pro­vide im­por­tant HR and cus­tomer ser­vice pro­cesses. This is an or­gan­i­sa­tional model. It de­scribes what the teams are and how they both work with the com­mu­nity and in­ter­nally.

Over sev­eral years, we have de­vel­oped a unique process for or­gan­i­sa­tional mod­els. For ex­am­ple, there's a colour cod­ing sys­tem (Or­gan­i­sa­tion Model Draw­ing Con­ven­tions) that al­lows busi­ness lead­ers to have a more holis­tic view of their or­gan­i­sa­tion and who's re­spon­si­ble for what. With the model and con­ven­tions to­gether, the story can tell it­self and be a blue­print for the fu­ture.

Over­all or­gan­i­sa­tional mod­el­ling can en­sure that a busi­ness is struc­tured and op­er­ates in a way that ensures long term suc­cess.

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