Defining Functions: 3 reasons why this should be the first step in organizational design
When we examine public sector organizations, we are often reviewing the product of an evolution in structure. This product has been incrementally added-to or reduced depending on changes in priorities. For the most part, it is difficult to incorporate long-term strategic design principles as part of these changes. This places an importance on periodic reviews, which can ensure alignment to visions and objectives, and drive continuous improvement through better working relationships and structures.
What do we mean by functions?
My colleague; Kathy Roy, covers this in her post on Functions vs. Processes. Kathy defines a function as “a discrete set of actions that produces a result, which can contribute to processes, projects and programs (in conjunction with other functions)”. Typically, organizations will categorize their functions differently, depending on the industry, culture, and products or services. For example, the function of research will involve similar but collectively different actions at Tesla vs. Pizza Hut.
So how can you define the best configuration of teams and resources to ensure support for both current and future priorities? How can we make sure we aren’t just “shuffling the deck-chairs on the Titanic”? Whether it’s existing pressures, new initiatives and mandates, or an aging workforce in demographic transition, organizations are placing attention on reviewing their organizational structure, and designing the requisite changes. We explore three important reasons for incorporating functional definitions into organizational design work, specifically:
- The ability to identify critical linkages between work units
- Understanding how the distribution of functions aligns (or not) to strategic priorities
- Creating foundational information, enabling the use of organizational design approaches
Why are functional definitions important for organizational review and design?
1. Identifying critical linkages
Organizational design requires more than identifying who’s doing what, but rather the full itemization of each unit’s functions. By defining the full collection of functions, we start to see which teams and groups are actively involved in similar types of work.
At a minimum, in the areas where there are similar functions, their approaches and practices should be shared. These situations may also present opportunities to reduce redundancies between duplicating functions and activities.
2. Understand the alignment to strategic priorities
Priorities change. Sometimes this happens slowly over time, and sometimes it occurs in rapid succession. Some organizations are more nimble in aligning to new priorities, while others need longer to adjust. We’ve found that analyzing the distribution of work through functional definitions provides a basis for understanding how well aligned the current work is to existing strategic priorities. It can also be used to predict the impacts of new priorities, identify where new resources or learning may be required, and where there may be capacity to address future needs.
3. Foundational information for organizational design
“Good organization structure does not guarantee performance. But poor or inappropriate structure impedes performance – and performance is the test of organization structure.” – Peter F. Drucker
While there are many different organizational structure models, most (if not all) require a detailed understanding of what functions are required to complete key work, how they contribute to processes, programs, products, etc. This is especially true in three of the more popular structures:
- Team Design: each unit is a combination of functions that work together on different projects/assignments
- Functional Design: each unit reflects a specific function, leveraging their combined knowledge
- Matrix Design: a combination of team and functional designs, where the resources reside within functional groupings, and work with resources from other functional groupings to form (usually temporary) teams.
We work in an era where a traditional vertical hierarchy structure is becoming less and less relevant. Horizontal working relationships and information exchange between work units is now dominating day-to-day work. The flexibility to use functional definitions to discuss and analyze strategy alignment, team building, capabilities assessment, structural considerations, resource allocation, and others, can help tailor designs that meet specific organizational needs. As such, we have found that defining the functions of a group or organization, as a starting point, provides one of the best lenses for organizational review efforts.