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Corporate strategy and organisational redesign
When strategic decisions are made within an organisation, then the people are, almost by definition, affected in some way. Whilst traditional approaches to strategy often put people low down on the scale of importance, the effect that this can have indicates that the impact on people should be considered as an integral part of strategising. Within strategy, there are a number of decisions that are made and a way of understanding the impact on people is to examine these decisions one by one.
Decisions around strengths and weaknesses
Corporate strategy is the means by which an organisation chooses its overall intent in response to the opportunities and threats in the marketplace and in consideration of its internal strengths and weaknesses. This contrastive understanding is often derived from such as SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Corporate strategising often takes a position that makes very limited consideration of the human needs of the people in the organisation, focussing first on the needs of shareholders and (as a means to satisfying these) the needs of customers. The needs of the people in the organisation are considered lower down the thinking order, even though a small change in motivation can result in a step change in organisational performance. Strategy thus can easily end up having a greater negative effect on motivation, with resultant negative impact on human performance. To some practical extent, the importance of worker motivation depends on the cost of replacing them. If a person does not perform up to scratch or fit in with strategic needs, then there are costs associated with their termination and replacement. Beyond the financial cost of pay-offs and recruitment, however, there are also indeterminable intangible costs such as the cost of lost knowledge and the motivational impact on co-workers.
The growth decision
In strategic decision-making, the company may well make decisions to grow in some areas as well as cut back in other areas. The matrix defined by Igor Ansoff is just one tool that is commonly used to help strategic focus in the area of choosing combinations of products and markets. New products and new markets both required additional skills. Growth leads to changing demands on people that can be both positive and negative. On the positive side, it offers opportunity to develop in new areas and to climb the corporate management ladder. It may well result in new people being brought into the organisation, providing opportunity for social growth and new working relationships. On the other hand, change in any form is difficult for laggards and those who prefer the status quo. As work changes it may well also expand, putting further demands on people in terms of knowledge and skills as well as the basic hours that must be worked. Promise of reward tomorrow for hard work today does not suit everyone and does not always benefit everyone, as in all change there are winners and losers.
The make or buy decision
In selecting strategy, a critical decision that a company makes is whether to 'make or buy' for any parts of the design-to-service continuum. When choosing the 'buy' decision, the company elects to pay another company to perform the action or service, whether this is product design, manufacture or after-sales service. This outsourcing choice may also be applied to infrastructure services, from cleaning to management of compensation and benefits. In selecting the 'make' decision, the company decides to do a thing itself. This decision means either that the company can perform the function retained more efficiently than an outsource supplier or that there is strategic rationale for retaining this function in-house. From a company viewpoint, outsourcing is a logical move. However, the emotional scarring that can result gives reason to pause and also consider these potentially damaging effects. Even those who are not outsourced are affected and may go through grief cycles as they mourn the loss of their colleagues and their loyalty may decrease sharply as they wonder whether they will be next for the hatchet.
The process-redesign decision
A common strategic decision for an organisation is to redesign its operations and processes in some way. The underlying principle is that organisations are sets of processes that deliver goods and services, and operational hierarchical structures that are imposed on these tend to result in misalignment and waste within the processes. Processes may also reach out into suppliers, where further mismatch and distortion can lead to problems. For example, a product-delivery process may cut across sales, marketing and shipments departments, in which different priorities and processes may result in problematic interfaces and miscommunication. Even within one department, processes may evolve over time and fragment as they are turned to address varying issues and problems. Outsourcing of shipment can also cause problems where, for example, a cost-cutting contract leads to unreliable deliveries to important customers. When processes change, then people who work in the processes must also change. Any given process includes particular roles in which certain knowledge and skills is required. Changes in these roles requires that the people involved change, which may or may not be good news for them.
The reorganisation decision
When processes are redesigned or other strategic change takes place, there may well be a reorganisation of some kind, with changes in the hierarchical reporting structures and people gaining and losing responsibility and budgets. Done well, a change in organisational structure will take account of human skills and motivations, better fitting people into jobs that they can do well. Consideration of team dynamics can also result in well-balanced teams, for example with good mix of Belbin team types. Done badly, these are not considered and people may end up in difficult jobs
with people with whom they find difficult to work. Whatever happens, when teams changes, they go through the establishing routine of 'Form, Storm, Norm, Perform' as they meet, argue over roles, agree ways of working and eventually settle into a workable routine of activity and relationships.
The relocation decision
The location of many companies is often driven by history and accident than any current strategic reason. This rationale may be explored at any time and the decision to relocate any part or all of the company may be made. Reasons to relocate include: • • • • • Moving closer to customers, to better serve them. Moving closer to suppliers, to reduce cost and improve management. Moving to a more economic location, where rents are cheaper Moving to a development zone, where grants enable expansion Moving to areas where good staff are more plentiful or less expensive
When the company moves, the people who will not move includes experts who can easily find another job, taking their expertise with them. Older people with a deep understanding of the corporate culture and customers may also prefer not to uproot. These are people whose tacit knowledge is often subtly important and whose loss will be keenly felt.
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Author: David Straker
Dave Straker has had a broad career, with quality running as a red thread through it all. Find out more... Print page Add to Favorites Save to...
•
What do these links mean?
When strategic decisions are made within an organisation, then the people are, almost by definition, affected in some way. Whilst traditional approaches to strategy often put people low down on the scale of importance, the effect that this can have indicates that the impact on people should be considered as an integral part of strategising. Within strategy, there are a number of decisions that are made and a way of understanding the impact on people is to examine these decisions one by one.
Decisions around strengths and weaknesses
Corporate strategy is the means by which an organisation chooses its overall intent in response to the opportunities and threats in the marketplace and in consideration of its internal strengths and weaknesses. This contrastive understanding is often derived from such as SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Corporate strategising often takes a position that makes very limited consideration of the human needs of the people in the organisation, focussing first on the needs of shareholders and (as a means to satisfying these) the needs of customers. The needs of the people in the organisation are considered lower down the thinking order, even though a small change in motivation can result in a step change in organisational performance. Strategy thus can easily end up having a greater negative effect on motivation, with resultant negative impact on human performance. To some practical extent, the importance of worker motivation depends on the cost of replacing them. If a person does not perform up to scratch or fit in with strategic needs, then there are costs associated with their termination and replacement. Beyond the financial cost of pay-offs and recruitment, however, there are also indeterminable intangible costs such as the cost of lost knowledge and the motivational impact on co-workers.
The growth decision
In strategic decision-making, the company may well make decisions to grow in some areas as well as cut back in other areas. The matrix defined by Igor Ansoff is just one tool that is commonly used to help strategic focus in the area of choosing combinations of products and markets. New products and new markets both required additional skills. Growth leads to changing demands on people that can be both positive and negative. On the positive side, it offers opportunity to develop in new areas and to climb the corporate management ladder. It may well result in new people being brought into the organisation, providing opportunity for social growth and new working relationships. On the other hand, change in any form is difficult for laggards and those who prefer the status quo. As work changes it may well also expand, putting further demands on people in terms of knowledge and skills as well as the basic hours that must be worked. Promise of reward tomorrow for hard work today does not suit everyone and does not always benefit everyone, as in all change there are winners and losers.
The make or buy decision
In selecting strategy, a critical decision that a company makes is whether to 'make or buy' for any parts of the design-to-service continuum. When choosing the 'buy' decision, the company elects to pay another company to perform the action or service, whether this is product design, manufacture or after-sales service. This outsourcing choice may also be applied to infrastructure services, from cleaning to management of compensation and benefits. In selecting the 'make' decision, the company decides to do a thing itself. This decision means either that the company can perform the function retained more efficiently than an outsource supplier or that there is strategic rationale for retaining this function in-house. From a company viewpoint, outsourcing is a logical move. However, the emotional scarring that can result gives reason to pause and also consider these potentially damaging effects. Even those who are not outsourced are affected and may go through grief cycles as they mourn the loss of their colleagues and their loyalty may decrease sharply as they wonder whether they will be next for the hatchet.
The process-redesign decision
A common strategic decision for an organisation is to redesign its operations and processes in some way. The underlying principle is that organisations are sets of processes that deliver goods and services, and operational hierarchical structures that are imposed on these tend to result in misalignment and waste within the processes. Processes may also reach out into suppliers, where further mismatch and distortion can lead to problems. For example, a product-delivery process may cut across sales, marketing and shipments departments, in which different priorities and processes may result in problematic interfaces and miscommunication. Even within one department, processes may evolve over time and fragment as they are turned to address varying issues and problems. Outsourcing of shipment can also cause problems where, for example, a cost-cutting contract leads to unreliable deliveries to important customers. When processes change, then people who work in the processes must also change. Any given process includes particular roles in which certain knowledge and skills is required. Changes in these roles requires that the people involved change, which may or may not be good news for them.
The reorganisation decision
When processes are redesigned or other strategic change takes place, there may well be a reorganisation of some kind, with changes in the hierarchical reporting structures and people gaining and losing responsibility and budgets. Done well, a change in organisational structure will take account of human skills and motivations, better fitting people into jobs that they can do well. Consideration of team dynamics can also result in well-balanced teams, for example with good mix of Belbin team types. Done badly, these are not considered and people may end up in difficult jobs
with people with whom they find difficult to work. Whatever happens, when teams changes, they go through the establishing routine of 'Form, Storm, Norm, Perform' as they meet, argue over roles, agree ways of working and eventually settle into a workable routine of activity and relationships.
The relocation decision
The location of many companies is often driven by history and accident than any current strategic reason. This rationale may be explored at any time and the decision to relocate any part or all of the company may be made. Reasons to relocate include: • • • • • Moving closer to customers, to better serve them. Moving closer to suppliers, to reduce cost and improve management. Moving to a more economic location, where rents are cheaper Moving to a development zone, where grants enable expansion Moving to areas where good staff are more plentiful or less expensive
When the company moves, the people who will not move includes experts who can easily find another job, taking their expertise with them. Older people with a deep understanding of the corporate culture and customers may also prefer not to uproot. These are people whose tacit knowledge is often subtly important and whose loss will be keenly felt.
Comment on this article
Log in or register to comment on this article.
Chartered Quality Institute
Please log in to see your personalised content, or register if you have not done so already Log in Join Register
See Also
Author: David Straker
Dave Straker has had a broad career, with quality running as a red thread through it all. Find out more... Print page Add to Favorites Save to...
•
What do these links mean?
