Organization design can and should provide an effective and practical resolution to many stubborn strategy and business-execution issues. If a redesign is to work, senior executives need to recognize that all three elements of design—structure, individual capabilities, and roles and collaboration—are essential in making a change.
If an organization’s structure is its skeleton, then individual capabilities are its muscular system, providing energy and vitality, and roles and collaboration are its nervous system. All three are necessary.
The best design will collapse if the right people with the right skills are not in the right jobs, and if their roles are unclear, overlapping, and confusing. Role charters can help unify all three parts of an organization into a well-functioning design.
The power of a role charter lies in its creation. This process develops buy-in and commitment by fostering mutual understanding among executives and across management teams.
First, the CEO (or a business unit or functional head) translates overall corporate
objectives into five related components of his or her role:
- Accountabilities that are critical to the success of the organization and for which he or she is solely responsible
- Accountabilities that are critical and shared with other senior executives
- Key performance indicators (KPIs) used to measure the execution of these accountabilities
- The decision rights that he or she requires in order to execute the individual and shared accountabilities
- Leadership behaviors deemed critical to the success of the enterprise
These accountabilities, metrics, decision rights, and behaviors serve as the “charter” for the leader, who then meets with all of his or her direct reports, sharing the charter and discussing each overall corporate objective. Next, all of these senior executives write their own charters. This is important because employees are the ones who know their roles best and how those roles overlap with others in the organization.
When all the direct reports have completed their charters, each presents his or her individual charter at a workshop convened by the leader. This workshop is not just another corporate meeting. It is a whiteboard on which the ambiguities, conficts, and confusions that naturally exist in any organization can come to the surface. It is here that the tensions among senior executives, between business units, and across the organization can be resolved.
The chartering process is effective in two ways. First, it creates alignment on accountabilities from the top of an organization to the bottom. Because the process is structured, proceeding layer by layer, people throughout the organization are on the same page. And because employees have had a role in the process, they have a stake in seeing that the transformation succeeds. Discovered insight is always more valuable than insight delivered from above.
Source: “Role Charters”
Original Publication: Boston Consulting Group
Subjects: Management, Organizational Behavior
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