THREE KEYS TO RUNNING AN EFFECTIVE ORGANIZATION

by Paul Cormier, President, Cormier Strategy Advisors Inc.

November 2008

In my 15-plus years as a consultant I have seen plenty of great organizations. When I think back on the organizations that I have been associated with that have really worked, and those that have not, there seems to be three common elements in the effectiveness of an organization. And by effectiveness, I mean an organization that delivers on its goals with people who are productive, efficient and effective.

The three key elements to running an effective organization are:

Strong Leadership

Good Organizational Structure

Supportive Culture

Former Chrysler CEO Lee Iacocca has said “Here’s what management is about: Pick good people and set the right priorities.” Leadership can’t be summarized much more clearly than that. So let’s think about each element.

What about picking the right people? Donald Rumsfeld, former US Defense Secretary, has said that A’s hire A’s and B’s hire C’s. I can tell you that I have seen this over and over again in organizations. The best people hire the best people. Weaker managers hire people who won’t threaten them. Lawrence Summers, former US Treasury Secretary and advisor to incoming President Obama, addressed the class of incoming members of Congress in 2004. He had some very wise words that we can all learn from: “The most important decision that you have already made, or will make in the next three months, is who are going to be the two most important people on your staff, and whether the two most important people on your staff: (a) are going to be effective, (b) are going to be people whom you will trust and listen to and who will tell you when your instinct is wrong, and (c) will remain loyal to you, which in turn will depend upon how you treat and regard them. Enough said.

Ever worked for a group with 20 priorities? How much gets done? Prioritization is absolutely vital for any manager. What is important? I have seen so many organizations where everybody is busy but objectives are not met. It usually involves poor prioritization. The urgent tends to crowd out the important. People begin to focus on the wrong things. Three to five priorities is your maximum. Everything needs to relate back to these three to five priorities.

Leadership means picking the right people, setting the right priorities and making sure that people understand and are working on the priorities. Leaders do that by motivating, inspiring, communicating and fostering trust.

Does the organizational structure support delivery of the priorities by the right people? This can be a very important component of the equation. Is the organizational structure logical and aligned to support the strategic priorities? Are there clearly defined roles and responsibilities for each function? Is it clear to stakeholders which positions do what activities? Are there areas that overlap? These are some of the key questions to ask when assessing or designing an organizational chart. Roles and responsibilities must be clearly defined with minimal overlap so that people understand their roles and are doing the right things. This leads to maximum efficiency, productivity and aligned behaviour and prevents confusion, wasted effort and duplication.

Does your culture support an effective organization? Are people trusted and empowered to make decisions? Does the culture foster collaboration, teamwork, trust, information sharing and dedication to a single vision and purpose? These are really important questions to ask. For example, a culture where information is shared leads to better decision making whereas one where information is guarded leads to decisions based on incomplete information. A culture where trust exists reduces fear. It causes people to speak their minds and be creative and original. It also reduces the need to duplicate work because leaders can have confidence in what is being provided to them.

All of these factors are interdependent and all must be present in order to have an organization firing on all cylinders. For example, you can have great people in place but if they don’t have a clear definition of what they are supposed to be doing, it is a recipe for disaster. Trust is a key component of a supportive culture; but if leadership has not picked the right people, is there likely to be trust? How likely is there to be dedication to a single vision and purpose if leadership has the priorities screwed up?

Leadership needs to be constantly reviewing organizational effectiveness. One of the sure indicators that something is wrong is high turnover within a group. When strong leadership, a good organizational structure or a supportive culture is not present people leave. Management should be constantly assessing turnover statistics to determine if something is amiss in their organization.

Critically assessing and working to improve these three key elements are the ways to keep your organization running effectively.

Paul Cormier is President of Cormier Strategy Advisors Inc., a firm which provides clients with strategic consulting, project management and short-term management services.