It’s not the structure that’s important – it’s ownership
Picture the scene: 1994, a late summer evening in a scruffy office block on the outskirts of Vienna. It is the big one: my client team’s presentation to Herr F, the CEO. He has sponsored a re-engineering of their product management and introduction processes and we are describing the new process-driven organisation structure, the final slide of a small but perfectly formed PowerPoint deck.
“One question,” said Herr F, “where’s the process owner in this structure?”
I should point out that Herr F had read the often-quoted book by Michael Hammer and Jim Champy, “Re-engineering the Corporation”, and was referring to the part – page 103 in my copy – where it says that each of the shiny new business processes should have an owner, responsible for orchestrating performance across the now-irrelevant organisational silos. In his mind, the process owner was an essential part of those that were re-engineered.
Before I could point out that these responsibilities would be carried out by the leaders of the process teams that we’d designed, one of my colleagues leaped to his feet and proceeded to illustrate where the process owner would sit in the structure. This didn’t satisfy the CEO, so another eager team member attempted to re-draw the structure to point to the process owner. This still didn’t work either, so another one jumped up and had a go. Then another colleague got the bit between their teeth, and so it continued until we all agreed with the rather disappointed sponsor that a little more work was needed before he could sign it off. It took a further two weeks before we’d managed to include a role for the process owner in the new organisation, and then rolled it into the implementation phase.
I learned a few lessons from this experience about organisation design and stakeholder buy-in.
The real lesson I learned though has taken a few years working in the management structure of a large company to sink in. Which is this: we are obsessed with organisational structure and therefore changing this is the one thing that you have to get right.
But it’s not a question of designing a new hierarchy or turning the hierarchy on its side and creating a process structure (OK, I know there’s more to it than that), it’s making sure the people involved know where they fit.
This provides the one thing that people crave during times of change: security.
But, hang on, isn’t this the one thing we can’t guarantee anymore? Jobs for life are so last century, surely, with savvy millennials only staying in jobs for 2-3 years before moving on to bigger and better things?
Well, maybe, but not for everyone. Most people want a job and, if not a job for life, a job that gives them security.
And leaders of organisations have a duty to honour that desire, by focusing on ownership.
In the case of my Austrian client, the team had a strong sense of ownership that was a result of having lead roles in reshaping their unit, and I’ve been part of many projects since then that have had the same quality: the members of the team feeling that they are part of something and have a stake in its future.
But leaders, particularly when they are business owners can go even further and change the whole structure so that employees cease to become employees and instead allow the business.
One firm that did this was the branding company Novograf, based in East Kilbride, Scotland. When the two owners, John Clark and Alistair Miller, were looking to sell their business and retire they were approached by an American company looking to buythem out. As recounted in a recent article in The Guardian they were close to a deal when they enquired what would happen to the East Kilbride factory. When they were told that it would be closed down they had a rethink: retiring on a large pile of cash would mean nothing if you had to face the employees and their families existing on benefits the next day.
With the support of Scottish Enterprise, they set about selling the business to their employees and since their employees didn’t have access to a wad of cash to buy the business, they effectively set up a bank themselves, transferring shares to the employees and allowing them to pay back the money – with interest – over a number of years.
Partnership modelslike this are relatively few and far between – much-loved retailer (in spite of the TrustPilot scores) John Lewis Partnership is the largest employee-owned firm in the UK – and their high customer experience rating and employee satisfaction are a data point that suggests that spreading ownership has benefits on both sides of the counter. In spite of research in the US that indicates that younger workers who are worker-owners enjoy higher wages and household wealth only 300 British firms have made this change.
I’m not suggesting that all companies should be partnerships, but I’d certainly advocate considering alternatives to the traditional hierarchy but keeping not just process ownership but enterprise ownership front of mind.