Are you wondering how an organization can survive the current economic crisis and how to be prepared if this happens again? Will your organization be prepared when the bounce back comes? It will come, we just don’t know when. Now is the time to think about becoming a resilient organization.
In this blog we will look at this from the perspective of what needs to happen inside your organization so it can become resilient. We will focus on the concepts of organization systems, organization design, human capability, accountability, and authority.
In the first phase of the pandemic, leaders were wondering how to protect their people, whether they can maintain operations, and how to ensure enough working capital. Now they are more concerned with how long and deep will the recession be, and whether they can survive it. How can they return to work without endangering their people. How will the customers react? What will the new normal look like, and what will be the impact on their business?
In the first phase, organizations reacted to survive. It is time to change the thinking from survival to building resilience and making sure the organization is as effective as possible now. This helps with efficiency during the crisis. More importantly, it helps to position the organizational for maximum success as the crisis resolves and the economy rebounds.
What is resilience?
Resilience is the capacity to recover quickly from difficulties or toughness.
The ongoing issues in organizations that get in the way of effectiveness existed before the crisis. Many organizations tried to resolve those issues but without success. This is because they reacted to the symptoms, but what owners have to understand are not the symptoms of ineffectiveness but the root cause issues so that they can resolve them. In times of disruption, owners cannot afford to try to solve their issues at the symptom level – they have to improve their whole systems.
Our research with the University of Ottawa enable us to measure the organizational churn that leads to ineffectiveness. What do we mean by that?
Organizational churn means wasted energy and resources. It’s the activities that absorb time and waste energy, but don’t produce the right results. When people hear “organizational churn,” they mostly think about employee turnover. However, the bigger issue here is the lack of focus on the right work. Employees are doing their jobs and working, just not in the right direction.
Here are the most common issues:
- Meetings, meetings, meetings – Why can’t someone just decide?
- Conflict – People in different departments can’t agree on how they need to work together.
- Poor communication – The right information is not getting to the right people at the right time.
- Silos – Departments decide to “do it themselves” because it’s easier, and they can’t trust their coworkers to deliver what they promised.
- Drift – Executive decisions are not implemented consistently throughout the organization.
- Indecision – People that should be making decisions are not, which results in delays, duplicated work, and missed opportunities
Some other common issues are:
- Poor quality work
- Poor decisions
- Missed work
- Wrong work
- Late or no decisions
- Missed deadlines
- Over budget
- Poor collaboration
All this symptoms are a result of ineffectiveness of the organization. These inefficiencies are tolerated in normal times. But these times aren’t normal, and more disruption is coming, which makes the current situation very different.
The bottom line is that this also affects profit margins because people are being paid to do things that are not increasing the value-add of the organization.
Think of an organization as a system. It exists in an environment where it draws its resources to provide input. The input then goes through the system and creates the output. The key to an organization’s success is the ability to add value using the resources available. Those that add the most value are the ones that have the most success with customers.
The individuals and the environment typically don’t care what goes on inside an organization. The consumer mostly only cares for the output or products and services.
However, what makes the organization tick is the organization’s strategy and systems. Employees use these systems to provide output, so the key is to get the right people in the right place to do the right things.
The single individual accountable for what goes on inside the system is the CEO or the owner since that is the person that has insight into all the processes going on in an organization. The main goal is to get the team to put in the right efforts in the right direction at the right time.
As a complex system, an organization has many similarities with a tree. They share traits such as resilience and the ability to thrive under challenging conditions. A tree is also a system that lives in an environment and uses the inputs to create an output.
The structural components of an organization are the strategy, business model, and the organization design. The trunk of the tree is accountability, managerial leadership, and managerial capability, and they connect nutrients with the output (culture, performance, and profit).
Strategy development is one thing, but strategy implementation is another.
Most organizations don’t have a problem setting up a strategy. They scan the environment and perform competitive analysis to come up with a vision for the future. However, in 3 to 5 years, they don’t get the result they expected. Why? Because people get distracted doing everyday work and don’t see how it leads to strategic goals.
John Kotter said that only 5% of strategies are implemented effectively, and 70% of them fail. The remaining 25% are somewhere in the middle.
The correcting of these inefficiencies has to be done in a way that will strengthen the organization and build resilience. But how is that done?
The problem is not that managers don’t feel accountable – they do! The problem is that managers are not clear on what they are accountable for.
The Effective Point of Accountability® (EPA) is a single point of accountability in the organization that has the capability and resources for success.
This is why, starting at the top of the organization, the owner has to decide the value-added work they will do to achieve the strategy. After that, they can delegate work to subordinates, so that the totality of the work is delegated in line with the business’s strategy over a period of time.
When the next level receives their delegated portion of work, they must also determine the value-added work they must do individually, along with what they can delegate further down the organization. Note that here managers must not use the command and control approach but give their employees context about the strategy and their work.
Break down silos.
Research from Harvard Business Review showed that only 9% of managers could rely on their colleagues to do what they said they would do.
People can be successful in their roles in the finance or sales department, but collaboration between departments becomes an issue. For example, there can be a conflict between individuals in two different teams, so there needs to be a higher-level manager who can resolve it. Process managers can also be in charge of some tasks so that the owner doesn’t have to supervise and resolve everything.
Most work requires cross-functional relationships for success.
In this situation, the Effective Point of Accountability® is vital. However, the Effective Point of Accountability® is often much higher in the organization than one would think.
For example, it is the owner is the one who must set the context and boundaries for all processes across the organization. Instead of delegating to one subordinate, they must set the context of the delegation to all involved areas.
Cross-functional relationships can be in the form of:
- Informing – Giving advice and recommending
- Persuading – Coordination and monitoring
- Instructing – Not used as often, it includes Stopping and Directing
In the end, we thought it would be appropriate to quote Peter Drucker, who said: Culture eats strategy for breakfast! If you want to improve your culture, you need to improve accountability and authority. We can help you with that using our Resilient Organization Program.
Free Recorded Webinar: The Resilient Organization. Click Here to watch.
The Resilient Organization Program
Disruption is here, and it will come back! The resilient organization program is:
- Virtual and non-intrusive
- Provides you with an objective, third-party snapshot of your strengths and opportunities
- Identifies the root cause of things that are getting in the way of your being as effective as you can
If you are not as effective as you can be, your organization will not be as successful as it can be.
You can learn even more about The Resilient Organization Program and how to be a better and more effective manager through the eLearning resources we offer to organizations like yours. Take a look and contact Dwight if you need some specific advice!