Since the beginning of time, organizations have traditionally been structured in a top-down manner. Using this structure, leaders formulate and implement business plans by allocating resources and directing managers along departmental lines, and through business functions and job responsibilities. These jobs are typically bound by vertical reporting relationships with increasingly smaller increments of responsibility.
Often missing in this traditional hierarchical approach is the connectivity between functions and departments; work flows across organization boundaries from department-to-department and function-to-function. What connects workflows are business processes – tasks combine to create a process; processes link to form business systems; and business systems connect to form the enterprise.
On average, 72% of all improvement opportunities are directly related to deficient business processes and organizational silos. Without developed business processes in place, most problems lay hidden in between organization boundaries. These disconnects make it easy to hide the source of problems, who is responsible and who has authority to solve it. Stuck in traditional organization silos, many leaders miss the valuable insight that, without a strong business process structure, it is nearly impossible to improve performance.
The solution to the organization silos opportunity is to match up the organization chart with the business system and business process structure that more naturally flows with the work itself. Excellent execution requires clear accountability established at the business system and process level so that work can be actively managed and improved to create the desired outcome.
- A Business System consists of a collection of business processes that align to deliver the goals of the system. There are typically 12 Business Systems in any organization. These include the Enterprise Management, Finance, Human Resources, Equipment Management, Facilities Management, Information Technology, Product Development, Sales and Marketing, Operations, Supplier Management, Customer Service, and the Improvement Management System.
- A Business Process consists of a series of tasks that receives a product or service (the input) from a supplier, adds value to that product or service through some transformation (the process), and then delivers a product or service of more value (output) to a customer. All business transactions take place through business processes that connect in a series to form Business Systems. We typically find somewhere between 8-16 business processes per Business System.
By matching up management’s responsibility with the work that must be accomplished – instead of the hierarchical reporting relationships typically found on organization charts – the enterprise is in a far stronger position to improve performance and better meet customer expectations. This approach yields a much flatter and lean organization chart. While improving any task is generally good for the enterprise, improving a business process will yield more benefit, and improving an overall business system will give even far greater value and benefit to the enterprise. This new improvement paradigm can only be achieved by first redefining the organization according to workflow and knowledge requirements, and then addressing the improvement opportunities offered.
Restructure to Eliminate Organization Silos
A key to performance improvement is to tackle the silos created by traditional organizational structures. Rethink responsibilities in terms of business process and flow of work. Then rethink reporting relationships according to logical handoffs created by connected business process boundaries. In doing this, leadership can align the organization structure with the flow of work. Because customer value is delivered through the execution of work, leadership should mirror workflow when designing the organization chart.
Challenge the way you think about work.
Download the free eBook today to learn:
- How to map business processes
- How to create aligned business systems
- How to transform your business