Want Organizational Efficiency? Don't Be Afraid to Reorganize

Colin Boyd, CIO, Joy Global
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Although it is probably true that there is no perfect IT organizational structure, there are one or two basic organizational structures that offer the best chance of achieving efficiency and effectiveness. Yet, more often than not, we find IT organizations with illogical reporting lines and departmental structures that cannot be justified, “organizational anomalies.”

The reasons why these anomalies occur usually involve something along the lines of “it has always been set up like this” or “that’s just the way it is.” Which is probably true, because organizational structures tend to have inertia. A lot of inertia. A CIO needs to constantly assess and review their organizational structure to see if it can be improved. Avoid change for change’s sake (employees tend to appreciate some organizational stability), but don’t be afraid of confronting anomalies head on, and lobbying for a re-org when needed.

Many CIOs (rightly) spend a considerable part of their time on recruitment, building the team, but they fail to spend time creating the best possible IT structure to support their business. They hire highly talented and capable people, and then put them into an organizational structure that perhaps does not guarantee they will fail, but makes consistent success unlikely. You need both elements to succeed: talented people working in an optimized organizational structure.

  ​Avoid change for change’s sake, but don’t be afraid of confronting anomalies head on, and lobbying for a re-org when needed 

In the world of sport you can sometimes build an entire team around a single superstar individual, but in an IT organization that is not a viable option. Optimal IT organizational structures are not tailored to fit individuals. The objective is to define the clearest, best possible organizational structure, and then assign individuals to the structure.

There should be no ambiguity in this structure. Lines of responsibility, accountability and authority should be clear to both staff and management. If the answer to “Who is responsible?” is a number of individuals, then a reorg is needed.  

A well-functioning organization also must follow and mirror the corporate culture. If the corporate culture allows regional freedom with few corporate standards imposed, then a centralized IT organizational structure that attempts to function with global standards will cause conflicts. But fully centralizing IT teams into a headquarters location will nearly always lead to failure. Instead, companies should work toward achieving the correct balance between regional flexibility and global standards. The IT organization needs to implement virtual global teams, and for that, managers that can think and operate both locally and globally.

Most people like working with clarity. Not rigidity, but clarity. Knowing what they are responsible for and having the corresponding authority is empowering for employees. If you can explain your IT organizational structure on a single piece of paper to your parents and your 10-year-old, then you have clarity.

While division of an IT organization into departments typically cannot be avoided, a team-like atmosphere for the group should be encouraged. As soon as you have departments, you have boundaries, and every boundary is a hand off between two or more departments. Every hand off is a potential source of mistakes, and a potential source of interdepartmental friction. So keep the structures as simple as possible and make it clear to staff that they are all on the same team.

A complex organizational question that has recently arisen as an issue is the “external boundary” of the IT function. Where do IT end and business functions begin? For example, should super users, project managers and business process specialists be in IT or not? There are pros and cons for both options. As a starting position, everybody with access to the test and development systems, and everybody with a systems administrator level of access, should be in the IT function. However, the Internet of Things is now redefining the boundary issue as IT functions become increasingly a part of the actual product offering. So in the future the IT organization will need to reflect a role that is a combination of the “traditional back office” role and a new “fast moving, innovative, external customer facing, product offering” role. As the IT organization becomes an integral part of the product offering for many companies, the boundary between IT and product development, and between IT and customer service will change, and the IT function will need to reorganize itself. Perhaps the typical IT organizational structure in the future will change from the “infrastructure and applications” division into a “back office systems and front office systems” division. Either way, the Internet of Things is going to forever change the role of the IT function and the CIO.

Despite the benefits to be gained, many managers have a tendency to try to avoid making organizational changes such as these, however. They worry that change “might have a destabilizing effect” (it might, in the short term) and will “upset some staff.” They say they’re “waiting for the right time.” There’s rarely a good time. Sooner is better than later, just make sure to emphasize the benefits of the new organization.

Most re-organizations do create winners and losers. So careful planning and a lot of communication is needed to successfully implement the changes. About double the amount of communication that seems reasonable is needed.  

Success should be defined as: all people involved in the change understand the reasons for the change, support the need for the change, and are clear about their roles in the new organization. Then, operational efficiency is no longer a “nice to have,” it’s the standard set.

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