1000 words (9 minutes reading time)                                      by Colin Weatherby

I am intrigued by the thinking behind council organisational restructures. It seems that every new CEO feels the need to redesign the organisation to make it work better. Are they successful? The question on my mind is, how can a restructure make the organisation perform better?

I recently came across a useful publication on the topic that has been provided by the Victorian Public Sector Commission. It is entitled ‘Organisational Design’  and is part of the ‘Leading Public Organisations’ series. The intention is to provide ‘prompts, thought starters, practical ideas, and reminders for leaders and managers working in Victorian public sector organisations’.

There were certainly some useful reminders. In the first section on ‘the basic concepts’, the reminder is that organisational design is a consequence of the organisation’s goals, the work it needs to undertake, how that work is divided up (and how the bits are then connected, especially information flows), and how the work will be authorised and governed. The design is communicated through formal documents (e.g. the organisation chart, position descriptions, instruments of delegation) and informally through workplace practices (i.e. ‘the way things are done around here’). The design is also dynamic and changes in response to formal decisions (e.g. work allocation) and evolutions in practice (i.e. the workarounds that develop over time).

For public organisations, the authors have picked out some special considerations related to predetermined decisions outside the control of the organisation’s leaders. For example, the boundaries of a public organisation is often determined by legislation. For example, councils have a defined municipal district and set of roles specified in legislation. Councils in Australia must deliver the policies of the State and Federal government and comply with their decisions. Legislation also requires councils to be the local provider of State services, such as town planning and building controls, domestic animal management, public health and road management. These can be real constraints on a council trying to design their organisation to best meet local needs and priorities.

The impact of external factors is significant. I know of one rural council that has determined their total annual budget is required just to provide the services legislated by the State government, without any of the other services local people have decided they would like (e.g. libraries, sports facilities and better parks). This highlights the problem being created by rate capping in Victoria. Councils are being reduced to the local branch of the State government.

There is also some useful advice. In the section dealing with ‘when to redesign’, the compelling reasons for redesign are listed as changes in the external environment, an externally imposed restructure (e.g. municipal amalgamation), change in organisational strategy, failure to deliver results, or a compelling opportunity to improve. The less compelling reasons the authors have identified (a diplomatic way to describe them) are interesting.

They start with a new leader redesigning to make their mark or create an organisation that they are more comfortable leading (i.e. recreate an organisation that they are confident to lead).  Then they describe leaders wanting to make the organisation design appear more logical on paper or balance workloads. Both are less important than responding to strategy and the best way to do the work. The last two reasons relate to key staff member performance, either good and bad, and restructuring to accommodate them. We have all seen restructures for these reasons.

I will close with a summary of their last eleven sections (it is worth looking up and reading). This is where the authors provide advice on how to redesign an organisation. A couple of key pieces of advice that stand out include:

• Start with strategy – what will/won’t the organisation do in order to meet the needs and expectations of stakeholders and make the best use of available resources.
• Treat redesign as a project – have a clear scope, distinct tasks, defined accountabilities, a timeline, achievable milestones, and adequate resources.
• Document the design – the organisation chart shows the formal reporting relationships and accountabilities, and it needs to be accompanied by documents describing the relationships with external stakeholders, how information will flow, and the ‘operating and care instructions’ for the new design (e.g. accountabilities, delegations, governance and decision making, activity process maps, and position descriptions/role relationships).
• Test the new design – are the legislative requirements of the organisation being met? (e.g. use the RACI model – Responsible, Accountable, Consulted, Informed). Are community and customer needs being met (i.e. How many touchpoints are there? Are the channels adequate? How easy is it for the customer?). Is the organisation being effective and efficient (i.e. review end to end processes – How many people are involved in delivering a service? How many hand-offs are required? How many IT systems are being used? Is there a continuous improvement process in place?). Does the design work with culture? (i.e. Does it support and promote a constructive culture? Does it damage existing aspects of culture? What values and behaviours are likely to emerge as a result of the design?). Finally, how does it manage risk? (i.e. Are gatekeepers in the right roles? Who will be the first person to know when there is failure?).
• Ensure the authority structure works – Are decisions being made at the correct level? (i.e. Does the decision maker have the requisite knowledge and information required? Is the impact of their decisions on the organisation at the level expected?). Where decisions are made in an organisation is one of the clearest insights into the informal organisational design.
• Make sure the parts are connected – dividing an organisation into component parts can be relatively easy but ensuring they work together can be difficult. Are the formal and informal connections effective?

For those contemplating a new organisation design, or even trying to understand how the one they are currently in works, this is a very useful guide. Keep it handy.