Consulting Frameworks Series: Management and Organization Frameworks (Part 3)
When it comes to results, having a strategy is only the first part of the equation. Having good management and organization frameworks model, and the right processes are paramount. Chandler used to say that structure follows strategy. Well, our article on management and organization frameworks came after the one strategy. So we respected the logic!
In this article, we will cover what management and organization frameworks are all about. And also we’ll delve into some of the most important frameworks associated with it.
Management and Organization Consulting Frameworks
Management and organization are two of the most important pieces in any company, firm, or organization, and without them, no company can function properly. While management is relatable to the general administration of the company, the organization takes care of the flow of products and services throughout businesses, as well as who will be in charge of making choices on processes, projects, and product development, among other things. Hence, in order to manage these key functions effectively, the management and organization frameworks come into the fray.
The Main Management and Organization Frameworks In Consulting
Since management and organization are key for any company, it is obvious that there are plenty of management and organization frameworks to pick and choose from. Hence, we will gauge through some of the most important management and organization frameworks that are available.
#1. McKinsey’s 7S Model
The McKinsey 7S model is a framework for evaluating the success of an organization’s organizational architecture. It is model was derived from the book “In Search of Excellence” by Thomas J. Peters and Robert H. Waterman Jr.
This model by McKinsey came into existence in order to compete with existing models such as the Nadler-Tushman Congruence Model and The Star Model by Jay Galbraith.
McKinsey’s 7S Model technique is beneficial for identifying and resolving internal issues. The 7S model by McKinsey comprises of the following components:
- Structures: The structure of a business refers to how its employees and units are organized, including the chain of command and accountability connections.
- Strategy: The strategy is the business plan that a firm adopts to get a competitive edge and accomplish its objectives.
- Skills: The term “skills” refers to the capabilities that an organization and its personnel have in order to assist them in achieving its strategic objectives and overall goals.
- Systems: The methods and procedures that an organization follows when working and making decisions are referred to as systems.
- Shared Values: A company’s mission and goals are referred to as its shared values. These values help employees and the company act in a certain and efficient way.
- Style: Style refers to how management leads a business, interacts with others, and makes organizational decisions.
- Staff: The term “staff” refers to a company’s human resources and talent management efforts, which include recruiting and implementing reward programs.
#2. The Congruence Model
The Congruence model, which is also known as the Nadler-Tushman congruence model was developed by professors David A. Nadler and Michael L. Tushman. Both these professors have jointly written a book called “Competing by Design“, which talks about the power of organizational structure.
Moving on, the congruence model framework is one of the top management and organization frameworks and is used for identifying performance issues and determining how to begin addressing them in order to improve performance. So basically, its concept is on the assumption that a corporation can only succeed if all of its parts are in sync and working together. Moreover, the congruence model consists of four main components, and they have been jotted down below.
- Work: It refers to the duties that employees perform and if they are in line with the company’s goals.
- People: This refers to the abilities and expertise, as well as the experience and education, in terms of remuneration and potential growth.
- Structure: Here, it refers to what the organization seeks and what it does are consistent with one another or not.
- Culture: It comprises of beliefs and standards, behavioral patterns, and both written and unwritten rules, among other things.
Furthermore, a congruence model is simple and fairly easy to follow. A specimen of the Nadler-Tushman congruence model can be seen below.
#3. The SMART Method
In the early 90s, the father of modern management, Peter Drucker came up with an important concept called the smart method. The method is basically a goal-setting concept and constitutes 5 key elements that make up the word “SMART”. Let’s have a look at those elemens.
- S for Specific: First and foremost, this management model is about being precise. You must be very clear and concise about what you want to achieve for the company.
- M for Measurable: How will you know when you’ve reached your goal if it isn’t quantifiable? The answer is simple; you’re not going to. You will merely go in circles and come to the realization that your efforts have been in vain. Thus, irrespective of tangible or intangible goals, it is necessary to create a structure that will help in measuring the outcome.
- A for Achievable: You should be able to achieve whatever goal you set for yourself. It shouldn’t be just wishful thinking and something that cannot be achievable. The goal should be made which is both achievable and doable.
- R for Realistic: Goals that are defined should also be realistic. This is pretty similar to the previous one. Making realistic goals will help you achieve them. Unrealistic goals are always going to make you end up with nothing.
- T for Time Based: Lastly, your goals should be time-based. Setting deadlines are a great way to get things done quickly. Otherwise, without a time set, things can get lackluster and goals can take longer than usual to accomplish.
#4. The OKR Framework
OKRs are an acronym that stands for “Objectives and Key Results.” It is a goal-setting and one of the better known management and organization frameworks that is used collaboratively by teams and individuals to set challenging, ambitious goals with measurable outcomes. OKRs are used to track progress, promote alignment, and inspire participation in the pursuit of measurable goals.
Furthermore, Andrew Grove is widely credited with the creation of OKR, which he introduced to Intel during his time there. Typically, OKRs begin with an Objective and end with three to five supporting Key Results.
Objectives: Objectives are simply what needs to be accomplished, by hook or by crook. They are defined as a specific goal that is measurable, concrete, action-oriented, and inspiring. Moreover, they’re a preventative measure against sloppy thinking and shoddy execution when done correctly.
Key Results: The Key Results are a quantifiable outcome that is required in order to attain and fulfill the objectives. It contains metrics that have a starting value and an end value. Key Results are used to track progress toward the objectives, so that you are well aware of how far or near you actually are towards accomplishing your goals.
#5. Risk Management Framework
The risk management framework (RMF) is a process that is designed to construct the most effective risk management plan possible. It also aids in the development of best practices and processes for risk management within the organization. Furthermore, the risk management framework comprises of five components and they have been jotted down below.
Risk Identification: Defining the risk universe is the first step in recognizing the risks that a company encounters. Simply put, the risk universe is a catalog of all possible dangers. A few examples would include – IT risk, operational risk, regulatory risk, legal risk, political risk, strategic risk, credit risk, etc.
The company can then identify the risks to which it is exposed and categorize them into core and non-core risks after listing all possible dangers. The core risks are those that must be taken in order to achieve performance and long-term growth. On the other hand, non-core hazards are generally unnecessary and can be reduced or eliminated entirely.
Risk Measurement & Assessment: In order to calculate the quantum of a given risk exposure or the aggregate risk exposure and the probability of a loss occurring as a result of such exposures, risk measurement must first be performed on the exposures themselves. When assessing a single risk exposure, it is critical to analyze the impact of that risk on the organization’s overall risk exposure profile.
Risk Mitigation: Once a company has categorized and quantified its risks, it may select which risks to eliminate or minimize, as well as how much of its core hazards to maintain. Risk mitigation can be accomplished by the selling of assets or liabilities outright, the purchase of insurance, the use of derivatives, or the diversification of assets and liabilities.
Risk Reporting & Monitoring: To ensure that risk levels remain at an optimal level, it is essential to report on specific and aggregate risk measurements on a regular basis. Daily risk reports will be produced by financial institutions that trade on a daily basis while other institutions may have fewer reporting requirements. Risk reports must be issued to risk personnel with the authority to alter risk exposures (or tell others to do so).
Risk Governance: Risk governance is the process of ensuring that all firm personnel carries out their responsibilities in accordance with the risk management framework. Risk governance entails defining all employees’ tasks, segregating duties, and delegating responsibility to individuals, committees, and the board for approval of core risks, risk limits, exceptions to limitations, and risk reporting, as well as general oversight.
#6. Kotter’s 8-Step-Change Model
The 8-Step-Change Model was established way back in the mid-1990s by a Harvard Business School professor named John Kotter. He developed this change model based on his research wherein about 100 organizations were going through some sort of change.
As the name suggests, there are 8 steps in this particular model, and it is mandatory to go step by step otherwise you may encounter serious problems. Thus, the 8 steps in the Change Model by Kotter are listed below.
Step 1: Creating An Urgency
The creation of an urgency can be done in several ways such as identifying and highlighting future hazards and consequences and ensuring that successful treatments take use of the opportunities that are out there. It can also be done by initiating honest talks and discussions to make people think about current concerns.
Step 2: Forming Powerful Guiding Coalitions
Bring the all leaders together in a coalition and help them to develop a sense of mutual trust. They will serve as role models, since they are well-respected counselors within the organization.
Step 3: Developing A Vision & Strategy
It can be done in a number of ways such as identifying basic principles, ultimate vision, and changing tactics in an organization. Also, making sure change the leaders can articulate the vision clearly and effectively.
Step 4: Communicating The Vision
Communicate the shift in the vision on a regular basis and in a compelling and convincing manner. And also, ensure to connect the vision to all of the critical components of the organization including performance reviews, training, etc.
Step 5: Removing Any Obstacles
On a regular basis, check for any obstacles or people who are reluctant towards any change. And take proactive steps to remove the roadblocks that stand in the way of any change-management efforts.
Step 6: Creating Short-Term Victories
By establishing short-term successes early in the change process, you may instill a sense of victory during the transformation’s early stages. Also, make sure you create numerous short-term objectives rather than a single long-term one that is more attainable, less expensive, and less prone to failure.
Step 7: Consolidating Gains
It is imperative to consolidate gains and this can be done by continuously improving. Hence, make it a point to analyze individual success stories and learn from them.
Step 8: Anchoring Change In The Corporate Culture
In order to anchor the change in the corporate culture, it’s necessary to talk about success stories relating to change initiatives. It should also be engraved in the company’s culture so that it’s visible in all aspects of operations.
To learn more about Kotter’s 8-Step-Change Model, you can purchase the book titled “Leading Change” by John P. Kotter.
A Quick Round-Up
In today’s business world, having a proper management model as well as an appropriate organization coupled with the correct management processes is of paramount importance. And nowadays, businesses are focusing more and more on the management and organization side of things.
Thus, with that in mind, it becomes imperative to implement some management and organization frameworks such as the ones mentioned above. Doing so will only help the business to flourish because such management and organization frameworks will help in better planning, better controlling, and better directing.
Laurent is the Chairman and Co-founder of Consulting Quest. Focused on greater value creation, and being thoroughly familiar with Consulting, Laurent has sourced and sold millions of dollars worth of Consulting over the course of his career. Prior to joining Consulting Quest, Laurent was Executive Vice President Oil and Gas at Solvay and Senior Partner Transformation at Oliver Wyman.