Organisation and productivity

In Technology, UK productivity, Uncategorized on September 9, 2010 by Tim Aikens

I was reminded the other day of the importance of organisation structure and its impact on productivity.  As noted in the last blog, it’s tough enough to change the way people do things to improve productivity. But when you want to change the way people are organised as well!!  For some that’s just too much!  There is the urban myth about a train company. Every day the supervisors had to complete a form stating how much coal their engines had used and what the future demand looked like. Very sensible. However, these returns were still required even after the company moved to diesel and electricity powered locomotives.  One part of the organisation had moved on but another had not and no one bothered to test the need for the coal returns.  Organisations need to change in line with process.

The bottom line is that strategy and process are the key drivers of organisation structure and not the other way round.  In today’s technical age, the pace of technology change is often astounding. Sometimes however, the organisation does not change as fast as strategy and process (and in some cases cannot change as fast) which means that inefficiencies exist where there need be none.  A lot of recent performance improvement has come about through the introduction of faster and better communications.  Many North Sea oil companies have been able to reduce and almost eliminate parts of their onshore organisation because the offshore team can communicate directly with suppliers and contractors.  Other organisations have been able to take out levels of management whose primary role was coordination.  But these things do not happen on their own.  Some one needs to ask the question ‘how well does the current organisation fit the way we do (or want to do) things around here? Does the current organisation structure allow us to operate as effectively as we can?

One example that I have come across in several projects is organisational dislocation.  Because the organisation is split between two or more locations, the structure attempts to compensate for this.  The result is inefficiencies built into processes that can only be resolved by changing the organisation (and therefore the location) of staff.  Physical dislocation in an organisation can be as bad as organisational dislocation!

How do you tell if the organisation is a good or bad fit?  There is not enough space in this blog to do more than hint at a few ideas, but here are some thoughts.  How many different parts of the organisation participate in a particular process?  The more often the process moves across organisational boundaries the more likely there is to be inefficiency and an opportunity for improved productivity.

Who really does the work?  If managers or supervisors are having to take on day-to-day operating tasks, then perhaps the organisation is not big enough, inadequately trained or managers don’t want to manage!

How many similar departments are there?  I worked for one client that had three engineering departments (albeit all with slightly different names).  They all did more or less the same thing.  That meant three management teams when one would have been enough.  There was duplication of process and activity.

Have a look at your organisation.  How well does it support improvements in productivity or does it hinder productivity through poor fit?


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