We have worked with numerous companies where a function, group, project or strategy-based organizational development project has faded or died over time.
Simultaneously, improving the financial performance of firms and strengthening their market position remained a pressing need for managers and owners.
Based on the practices of the 17 companies we have worked with, we can tell the reason: management's intention was to improve the actual value of business KPIs in short term, not to improve the company's long-term ability to generate financial results.
The best if the company is designed before hiring the first associate or buying the first piece of the technology used to produce goods or provide services, but at least before starting any organizational development project.
Company design is to define the way the company makes money, i.e., the internal routes of turning market demand into financial results or the investments into profits.
In our experience setting up a company design requires the following sequence and elements.
Tools for planning and tracking internal projects, a living system of regular personal communication and not least of all, position definitions that bring the company's financial model to life.
Stable people systems
A management communication system, combined with an incentive and job system.
A daily management routine that links the people systems with the management tools.
When these are aligned, we are able to create a solid foundation for achieving business goals, for organizational collaboration and future changes.
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The ultimate, true product of the company is the financial result.
The production of this result is financed either by the market for goods and services (mass, serial, individual) or by investments of the financial markets (corporations, crowdfunding, governments, etc.). All forms of financing require specific company design.
The shift in company design from the business model, based on the division of labor to the financial model established on the division of business data, guarantees the optimal firm size.
In addition, this approach facilitates a wider knowledge base, contributing to achieving business objectives at any stage of the corporate life cycle.
Instead of a top-down, departmental breakdown of KPIs, we design what data each position produces in the chain in which the realization of business performance is tracked.
Company design based on the financial model replaces performance data-driven planning, control and execution roles/functions with position-driven business data.
Distribution of data by financial complexity among the positions defines the true hierarchical structure of the company unleashing personal potential and strengthening positive employee experience.
The cascaded A3 planning method is based on a common understanding of the actual business case on a weekly, monthly, quarterly basis. This shared understanding connects staff to solutions, as they no longer just execute instructions from "above" and are involved in developing solution alternatives.
The cascading structure of „Face to Face”-s ensures that each manager at each management level provides the support needed in maintaining the effectiveness of the level 'below', or is able to ask for help if they cannot provide solution within their remit.
The use of these tools evens out individual differences between managers in terms of delegation, involvement, and communication skills.
Managerial communication is traditionally understood as the channels through which management intent is communicated and held to account.
The most important feature of the system we use is that, regardless of the individual skills of managers, each associate can realize the contribution that we have assigned to their position throughout the company design.
This means that there will no longer be a chartered accountant doing bank data entry, a process engineer doing maintenance work, or a salesperson doing distribution.
When designing the incentive scheme, we directly link the financial model of the company to the daily activities of the associates.
The incentive systems we developed are flexible and adapt to changes in the company's market and financing model.
The comparison of positions is based on the data complexity of the data being handled, rather than on their position in the command-and-control chain or on the labor market value.
The grade and the job system is a tool for employer branding - it makes internal career paths and promotion criteria transparent.
Since job descriptions are used to cover as many tasks as possible that the employee does, they can never be completed, or even keep up with the actual daily tasks performed.
We have the opposite experience: if the employee is required to perform tasks other than those described, it is up to the manager to intervene. Either to revise the content of the job description or to ensure that staff or managers of other departments do not "divert" associates from the business contribution expected of them.
Every Face-to-Face meeting starts with a review of the job description - until the manager knows that the associates can and will do the tasks they are assigned to, it is useless to talk about obstacles, overloads, delays or even excellent results.
In our experience, the difference between the actual and target values of an indicator, especially if it is a high-level indicator, is not sufficient to make appropriate management decisions.
Reducing costs in one process can lead to errors in another that cause customer complaints.
We design the data flow in such a way that the value of a given piece of data triggers the "before and after" indicators in the business process. This ensures that management decisions consider both the cause of the problem and the potential consequences.
The biggest mistake that owners and managers make is that when KPIs are in the green zone, they do not look at the cost-effectiveness of processes, assuming that everything is running as it should.
But this is the state where processes, systems and products can really be examined, and their potential identified.
At yellow or red KPI values, process, system or human improvement cannot be effectively carried out, because in reality the intervention is merely damage control.
Practical guidelines – extracting business data from general information:
Plan and monitor the type and the number of employment contracts instead of headcount.
Track and monitor the impact of the incentives/job families to reward the business contribution.
Plan and monitor the number of associates, turnover rate and vacancies per grade by the department instead of using time to hire or general turnover data.
Use the grade and job system to attract and grow talent.
Rely on our 15 years of company design experience to ensure that your business can deliver the financial results expected in the long term.
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