Key points to note if you are going to restructure your business

Source: Key points to note if you are going to restructure your business – The Zimbabwe Independent January 25, 2019

Many organisations are failing to succeed because they are not structured correctly. Poor organisational structures are a source of inefficiency that impacts on the ability of the organisation to deliver its mandate.

Memory Nguwi

If the process of how structures are designed is not managed properly, and allows for self-interest to dominate, it may encourage managers to engage in empire building. Executives must note that poorly designed structures are a source of overstaffing in many organisations. Below, I list some of the
factors you need to take note of when designing your organisational structures.

Direct reports to the chief executive 
How many people should report directly to the CE and at what level should these be? I see a lot of organisations struggling with this. Remember, a faulty top structure impacts negatively on the ability of the organisation to perform.

In Zimbabwe, most top structures have an average of 6 direct reports to the CE.

The recommended number of direct report averages between 8 and 12. However, this tends to vary by industry and complexity of the work to be supervised.

You will get less people reporting to the CE in high-risk areas to enable the CE to have a complete picture of where the business is going. The other assumption that affects the number of direct reports is that, at this level, it is assumed that the direct reports are specialists in their areas and would not need close supervision. In practice, we find that CEs sometimes builds structures to serve their own personal needs instead of those of the organisation.

Reporting layers
Try by all means to minimise the number of reporting layers in your structures and make structures as flat as possible.

A structure with too many layers breeds inefficiencies. In better managed organisations you will always find that they go with flat structures. Such structures empower employees resulting in motivated staff and better performance. Communication is the major casualty in in tall structures characterised by many reporting layers.

One-on-one reporting
Eliminate one-on-one reporting in all parts of your business. This can prevent proper oversight, communication and flow of information up and down the chain of command.

Reporting to the CE and your grade

It does not mean all the direct reports must be at the same level. What makes people report to the CE is the functional importance of an area. You can have 8 people reporting to the CE belonging to different grades. Over and above this the same people do not have to carry the same title prefix e.g.
Director, Head or GM.
Duplications

Eliminate all duplications and remember duplications bread inefficiencies and cost your organisation money. During good times most organisations
accumulate unnecessary structures that do not evolve fast enough in line with changes in business models and general market conditions.

Core staff versus support staff 
Some organisations employ support staff above benchmark threshold of 75% core and 25% support staff. In cases where you have a large percentage of your
staff in supports functions rather than your core business, you will always struggle with staff costs. Periodically having your organisational structures reviewed by an independent outsider can add a lot of value to your business through streamlining inefficient structures.

Nguwi is an occupational psychologist, data scientist, speaker, and managing consultant of Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone 481946-48/481950/2900276/2900966 or cell number: 077 2356 361 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com