Why Corporate Functions Stumble?
Corporate Functions Change as They Mature
Stage 1: Youth and Enthusiasm
– Restrict the mandate
– Start with a few people
– Focus on selected parts of the company
Stage 2: Adolescence and Ambition
– Explicitly link activities to sources of added value
– Review performance and challenge plans
– Stay lean
Stage 3: Maturity and Best Practice
– Reinforce relationships with business divisions
– Monitor satisfaction levels
– Separate policy from services activities
Stage 4: Change and the Struggle for Survival
– Replace the leaders
– “Zero-base” reviews
– Separate new value-adding activities
– In the past, the managerial focus was on organization as a structure dealing with who does what, who reports to whom, who gets what resources
– As organizations grow in size and complexity, however, the critical questions become coordination and control because of the complex nature of interdependencies
is the integration, harmonization or execution of orderly pattern of activities in an organization in order to move in the agreed direction. It requires:
– Shared knowledge
– Shared objectives
– Accurate communication
– Timely interactions
Types of Coordination
– Vertical Coordination
– Horizontal Coordination
Factors influencing the choice of coordination mechanism
– Cost of designing and implementation: Different mechanisms require trained personnel, creation of new offices, or the establishment of unique teams, all of which are costly for the organization
– Information carrying capacity: Because the objective of any coordination mechanism is to transmit the relevant information effectively from one position to another position in an organization, it is critical to ascertain how much information it could carry successfully
Liaison roles: positions created specifically to link two departments or organizational units to work together. individuals in these positions act as a bridge among different units and ensure effective communication and cooperation.
Full-time integrator: A unit or individual that is outside of the existing departments with the responsibility to coordinate the activities of several departments. they usually have titles such as product manager, brand manager, or project manager.
Permanent Task force: A group of individuals who are responsible for coordinating the activities of separate organizational units dealing with a specific set of tasks.
Departmental team: Group of employees who have similar or complementary skills and are located in the same unit of a functional structure.
Leadership team: Multi-skilled employees who collectively produce a common product/service or make collective decisions
Self-Directed team: Groups that are organized around work progress that complete an entire piece of work requiring several independent tasks with substantial autonomy.
Advisory team: Groups that provide recommendations to decision makers such as committees, advisory councils, work councils, and review panels.
Task force (project) team: Temporary teams who are assigned to solve a problem, realize an opportunity, or design a product or service.
Skunk-works: Multi-skilled employees who are usually located away from the organizations and are relatively free of hierarchy to design a product or service.
Virtual team: Teams whose members operate across space, time, and organizational boundaries and are linked through information technologies to achieve organizational tasks.
Communities of practice: Informal professional groups who bound together by shared expertise and passion for a particular activity or interest.
Management Control System
– A control system is defined as the formal routines, reports, and procedures that use information to maintain or alter organizational activities.
– A control system enables managers to set targets and compare outcome to these targets to observe variance in order to take corrective actions.
– You cannot manage what you do not measure. It is difficult to reward superior achievement or take corrective action when performance fails to meet expectations if a manager does not know how his/her unit is functioning compared to performance goals.
– What gets measured, gets done. When employees know what metrics are used for their evaluation, they will strive to perform well on those measurements.
Basic Principles of linking strategy to outcomes
– Understand the nature of the cause-effect relations: a strategy is a set of hypotheses about creating a desirable effect by manipulating controllable factors
– Develop different outcome and performance drivers: Outcome measures are the lag indicatators; Perfromance drivers are the lead indicators
– Clearly link outcome measures to financial results
Most common outcome measures (Lag Indicators)
- Core Financial Measures
– Return on Investment
– Revenue growth/mix
– Cost reduction/productivity
- Core Customer Measures
– Market share
– Customer acquisition
– Customer retention
– Customer satisfaction
- Core Internal Process Measures
– Order processing time
– Order delivery time
– Quality control
– After sale service time
– Waste and reword needs
- Core Learning and Growth Measures
– Employee satisfaction
– Employee retention
– Employee productivity
How do we know our design is effective?
Symptoms of Structural Deficiency
– Decision making is delayed or lacking in quality
– The organization does not respond innovatively to a changing environment
– There is too much conflict among units in the organization