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Restructuring Kate Kirkland

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1 Restructuring Kate Kirkland

2 Introduction The importance of structure and its relationship to strategy The determinants of structure Common structures used by not-for-profit organisations Problems that may be structural Examples Kate Kirkland Consultants

3 Organisational Structure ‘The means for attaining the objectives and goals of the organisation’ Peter Drucker Kate Kirkland Consultants

4 Organisational structures define The roles of staff and volunteers and their job titles Route through which decisions are made Who is responsible and who is accountable to whom, and for which activities How employees communicate with each other and how information circulates Kate Kirkland Consultants

5 Managing without a Structure No clarity on who was part of the organisation No way of setting and measuring objectives No agreed way of making decisions All decisions would be open for reconsideration No clarity on who should do what External people and organisations would not know who to contact and whether a response committed the organisation Kate Kirkland Consultants

6 Advantages of having a clear & transparent structure Enables participation Provides a framework for the allocation of responsibilities & resources Establishes the organisation’s identity Continuity and change Kate Kirkland Consultants

7 Designing a structure Structure almost always follows strategy ‘unless structure follows strategy, inefficiency results’ Alfred Chandler, Prof of Business History, Harvard BS Managers are limited in choice of structures Structure impacts on staff motivation, managerial control, organisational flexibility No one ‘best’ structure Kate Kirkland Consultants

8 Structures evolve over time View structures as dynamic, not static Well-established structures are difficult to change Major changes requiring structural alteration include –Appointing first paid staff –Setting up teams or departments –Diversifying the activities –Establishing regional offices or local groups Kate Kirkland Consultants

9 Perceptions of Organisational Structure FocusOutsider’s viewInsider’s view Breadth of viewThe organisation as a whole, in its context A particular part of the organisation and its environment How structural problems appear Fairly obvious and clear cut Diffuse and uncertain or as the failings of specific individuals View of existing organisational structure Arbitrary; one of a set of possible arrangements that may be out-dated Could be adjusted here and there, but basically the obvious and correct way to do things Considerations in proposing changes Overall organisational efficiency and/or effectiveness Organisational, departmental and personal interests Kate Kirkland Consultants

10 Contingency School of Organisational Analysis Based on research by David Wilson Avoid ‘tyranny of structurelessness’ & ‘sclerosis of bureaucracy’ Key determinants of structure can be identified Kate Kirkland Consultants

11 Key Determinants of Structure Size Technology Operating environment Age & history Strategy Dependence Kate Kirkland Consultants

12 Four Dominant Structures used by Not-for-Profit Organisations Functional Divisional Federal Matrix or project based Kate Kirkland Consultants

13 Functional structures Tasks differentiated into separate departments according to function Hierarchy: information flows between CEO and departments Bureaucracy in strict meaning of term Work well in contexts that are relatively predictable, little change or competition Kate Kirkland Consultants

14 Divisional structures Divisions can operate relatively independently of geographic area or type of client Divisions co-ordinated by Head Office where service functions are provided Structure often the result of planned growth and adaptation to operating circumstances Kate Kirkland Consultants

15 Federal structures Often formed when local organisations providing similar services ‘federate’ to establish nation stands, brand, represent common interests Local groups may be part of legal structure or autonomous organisations Head Office plays less directive role Head Office Local Organisation Kate Kirkland Consultants

16 Matrix or project based structures Dual lines of authority, e.g. National Director (or Manager of service or project ) reports to the Director of Operations on operational matters, the Director of Finance on financial matters, etc Greater strategic flexibility, but organisation as a whole more difficult to manage, particularly strategic decision-making Chief Executive Director Operations Director Finance Director Fundraising Director Comms Director England Director Scotland Director Wales Kate Kirkland Consultants

17 Recognising Structural Problems Structural issues are not always obvious Problems may appear to be due to lack of commitment, bloody-mindedness, inadequacy John Child suggested that there are certain recurring symptoms of structural problems Kate Kirkland Consultants

18 Problems that may be Structural John Child’s Recurring Symptoms –Low motivation –Late and inappropriate decisions –Conflict and lack of co-ordination –Inadequate response to changing circumstances –Rising costs These are not always an indicator of imminent structural breakdown Kate Kirkland Consultants

19 Structures for Today’s World Views about structures are changing Static concept of formal structures less appropriate Organisations frequently have to reorganise themselves ‘organising’ rather than ‘organisation’ Harnessing knowledge distributed throughout the organisation requires more than top-down hierarchies Informal relationships and processes vital to obtaining competitive advantage Kate Kirkland Consultants

20 New Thinking Formal structures & processes must be aligned with informal processes and relationships into coherent configurations Configuring the organisation so that these elements fit together and with strategic challenges is crucial to organisational success Structure Processes Relationships Configuration Kate Kirkland Consultants

21 Structural Change in Practice Introduction of corporate management team to large charity Members to spend 50% of time leading their department and 50% working as CMT Aims Strengthen leadership Greater co-ordination of departmental goals & activities Recognise the importance of HR Kate Kirkland Consultants

22 What worked well and why New structure improved organisational performance CMT posts advertised internally and externally Wide range of selection tests; Myers Briggs Type Indicator used to recruit balanced team Existing departmental directors assured of future within organisation Process facilitated by external consultants Trustees involved in selection process Kate Kirkland Consultants

23 Lessons learnt Results justified the pain! Time spent on consultation worthwhile Organisational focus on change for a considerable period so timing of change important Using Myers-Briggs Type Indicators helps produce a balanced team but can restrict the pool of applicants when a team member leaves If in doubt, don’t appoint Kate Kirkland Consultants

24 Structural Change in Practice Change of membership status in large membership charity ‘Members’ ceased being members of the charitable company Aims Strengthen governance Cut administrative costs Kate Kirkland Consultants

25 What worked well and why Aims achieved Lead by Trustees & SMT Members & other stakeholders consulted Process facilitated by external consultants Members Forum established Kate Kirkland Consultants

26 Lessons learnt Most members were disinterested Time spent on consultation lessened opposition to change Trustees should have been reminded of their ‘cabinet’ responsibility If something is being taken away, offer something better in return Kate Kirkland Consultants

27 Structural Change in Practice Aim: To improve performance within budget constraints Context: recently formed charity (12 staff, income £1m) in which initial appointments of some Heads of Departments not achieving desired results Structural Change: Trustees and CEO agreed to outsource two HoD roles to see if having greater expertise, albeit for less time, would improve performance Kate Kirkland Consultants

28 What worked well and why Using external communications & fundraising consultants for a day a week produced better performance than employing full-time, less experienced staff Consultants coached junior staff Better balance of ‘chiefs to indians’ for small charity Reasons for change easy to communicate to small staff Change introduced on experimental basis & without long-term commitments Kate Kirkland Consultants

29 Lessons learnt Staff departures can be an opportunity to reassess deployment of human resources Worth trying innovative solutions CEO had to devote more time to staff management Using consultants can be cost-effective Expertise Billed only for time spent on task Higher hourly pay balanced by no holiday/sick pay, no NI, no pension contributions Kate Kirkland Consultants

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