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Organisational Effectiveness by Richard Nelson

October 1, 2013 - In Strategic Change and Organisational Effectiveness - No comments yet

An organisation’s ability to serve its customers successfully and compete with its competitors is critical if it is to prosper over time.’

No matter how obvious this statement may seem, many organisations fall short in taking the necessary actions to build the probability of success in their favour.  We have witnessed the credit crunch, stimulated by overly ambitious financial innovation, and the subsequent financial crisis.

Following this, we have had difficult markets and economic recession.  The requirement of the times suggests the need for leaders who can inspire their people and shape the context in which their people work to facilitate achievement.  Such leaders will be people who have an interest in leadership itself, an interest in people and the human spirit’s desire for fulfilment and an ability to use power for the benefit of the whole organization and its stakeholders.  They are unlikely to be those who can only have a sparkle in their eye when in pursuit of the next deal.

So what must be done?  Clearly, it is essential to establish a robust sense of purpose and direction and a business strategy that will enable the realisation of such purpose.  However, the formulation of strategy is less likely to be the cause of failure than its inadequate implementation.  The focus now needs to be on the generation of profitability through people’s innovation and development of new ideas.  In many sectors, the scope for further performance improvements from cost reduction now risks cutting beyond the fat into the muscle of businesses’ capability to deliver customer satisfaction.

If people are to be the source of new ideas, it will be vital for them to be aligned to the purpose and direction of the business.  But this requires more than a strategy and a willing workforce.  It also requires the organisation structure, the operating processes and systems and the culture to be aligned with the people to realise purpose and direction. Effectiveness, the ability to maximise results in the competitive external environment, arises when all these organisational domains are in alignment.

In leading an organisation to realise its aspirations, it is critical for the leadership to relate current reality to the vision of the future.  This is both an inspirational activity and a task of reason.  People need to believe that the ambitions for the future are possible if not probable.  For managers to be effective as leaders they must engage their people in both the shaping of the vision of the future and an analysis of the organisation’s current reality.

Of course, some of the analysis is classic stuff.  Many organisations have invested in studying the external environment. Environmental scanning, market research and the analysis of the forces and pressures that mould the external context in which the organisation has to operate are among a number of techniques.

In order to foster the development of people’s commitment to the vision, the analysis of current reality needs to examine the organisation itself as well as the external environment.  It is important that the organisation’s capability to deliver satisfaction to its customers and build competitive advantage is comprehensively examined.

Nelson Consulting recommends the use of its Model for Organisational Integration and Effectiveness as a framework for analysis. This Model treats the organisation as an open system, which interacts with external forces and pressures: competitors, legal requirements and social trends among others.  Inside the organisation, the major domains of organisation structure, processes and systems, culture and people need to be assessed in terms of their alignment to business purpose and direction.

Executives, managers and at least a sample of employees can be involved in the analysis of current reality in relation to the business’s desired competitive position.  This position will be articulated by any stated vision of the future, strategic goals and business strategy.  Using Nelson Consulting’s Organisational Effectiveness Questionnaire1, a gap analysis between current reality and the desired competitive position is delivered for each domain.

This gap analysis is the basis of an action plan for change.  However, the action plan cannot be implemented at once. Obviously, management must ensure ongoing operations continue to generate profitable revenues.  Equally important is the need that the development activities identified in the action plan are implemented in a phased and logical sequence, possibly over a significant period of time, months to years depending on the workload.  This timing issue is critical.  To enable organisational effectiveness, managers and employees have to understand and respect the process and timetable for implementation.  In any event huge, so-called change programmes are often indigestible and get abandoned.

Typical actions may involve developing a Strategic and Cultural Framework to integrate vision, strategic goals, performance measures, guiding principles and competencies.  The organisational structure may also need some refinement, simplifying reporting lines and clarifying accountabilities with respect to the new business imperatives.   How to deliver information to enable speedy and quality decisions at the sharp-end for the customer will be an important focus of process/system improvement.

This work will need to be augmented by ensuring that managers have an updated performance management process as a vehicle to implement the new business strategy in a consistent way and within agreed budgeted resources throughout the whole organisation.  Communication, both briefing and seeking feedback about understanding is also crucial to building commitment.  Education and training are likely to be high priorities in embedding an understanding of the current reality and how capability will be developed to realise the vision of the future.  New knowledge, skills, behaviours and attitudes can be acquired to ensure that the direction to meet the strategic aspirations of the business is followed and success is achieved.

1 The Organisational Effectiveness Questionnaire is founded on the Model for Organisational Integration and Effectiveness.



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