Module 3.0 Example of Organizational Design for F&A Cabinet

1. Module 3.0Example of Organizational Design for F&A Cabinet

2. The Finance and Administration Cabinet went through the organizational design process • Established design criteria • Identified the desired Organizational Infrastructure Characteristics • Identified the weaknesses of the current characteristics • Conducted benchmarking and best practices research • Conducted design workshops • Developed a conceptual design • Developed proposed characteristics • Created a briefing document • Implemented (Career Paths, Rewards, Policies, etc.)

3. The Old Structure

4. The New Structure

5. As noted, the Finance and Administration Cabinet is moving towards an integrated services structure Office of the Secretary Customer Resource Center Administrative Policy and Audit

6. As a result, the Cabinet identified the following compelling reasons to change... • Current structure did not promote customer service • Redundancies in activity (especially with agencies) • Current procedures and policies did not map with new system functionality

7. Criteria mapping against model organizations (Organizational Fit) Analyzing Span of Control Independent design workshops Organizations characteristics assessment Design criteria and performance objectives Change readiness assessment Organizational Briefing Document Career Path Templates Common Organizational Models Key tools that assisted in this process included... These tools may help improve your agency’s administrative services structure and operations

8. The Finance and Administration Cabinet developed design criteria to shape their design activities EASE OF TRANSITION TO NEW ORGANIZATION ENHANCES RESPONSIVENESS TO AGENCY NEEDS • Ease of transition • Duration • Cost • Complexity • Degree of Change • Reduction in cycle times for services delivered • Enhanced customer accessibility • Ease of establishing partnership arrangements with customers PROVIDES STREAMLINED STRUCTURE AND PROCESSES PROVIDES FLEXIBILITY TO ACCOMMODATE ENVIRONMENTAL CHANGES • Minimizes Costs to Manage (e.g... layers, spans of control, administrative overhead) • Fewer process steps and hand-offs • Minimizes duplication • Clear delegation of authority and accountability to front-line staff • Ability to adapt to new technologies • Ability to respond to new departmental priorities • Ability to evolve to alternative service delivery modes as appropriate

9. Finance and Administration’s Design Criteria (cont’d) IMPROVES SERVICE DELIVERY ENHANCES WORK ENVIRONMENT • Promotes teamwork and collaboration • Promotes innovativeness • Provides broader career options and opportunities • Effectiveness and Efficiency • Promotes quality of service • Potential for Revenue Generation/Cost Recovery

10. They then designed high-level performance objectives for the F&A Cabinet: • Supportive to agencies • Work Quality Improvements • Cost Reduction • Other Agencies’ Satisfaction • Vendor and Customer Satisfaction • Employee Satisfaction • Speed/Responsiveness • Service Levels Increased

11. The Cabinet then assessed the description of common Organizational Design Models Description Model Strengths Weaknesses • Activities and employees grouped according to their business function • Rely on functional expertise to support core competencies • Most logical and simple form, focusing on a narrow range of skills/expertise • Applicable when technology is routine, small number of products, and/or if interdependence across functional units is minimally required • Ideal when specialized resources are required • Can be efficient given economies of scale and cost controls • Collaboration and quality within each function • Supervision easier • Easier to mobilize specialized skills when needed • Difficult to manage when numerous services are offered • Quick action/decisions may be difficult • More difficult to manage performance/accountability relative to contribution • Loyalty to functional silos may cause lack of coordination/cooperation • Cost reduction and organizational efficiency may be a challenge Functional Service • Each unit is responsible for the design, development, and administration of a service • All resources are directly available to the unit • Each service unit is responsible for planning, within the context of Commonwealth business strategies • Adaptable to fast-changing external environment • Service contribution/revenue/profit are easily calculated • Accountability is clear • Coordination across functions easier, given all resources within a unit are supporting the same service • Speed and often quality of decision making is enhanced • Can lead to high cost structure due to poor economies of scale • Duplication • Reduced specialization of skill • Difficulty in coordination of multiple services within a single geographic area • Potential conflicts between service unit and business unit interests • Often slower rate of growth than other organizational structures • Geographic regions report directly to the cabinet secretary • Each region has full control of all activities within its geographic boundaries • Cabinet retains responsibility for strategic planning • Responsive to geographic demands • Economies of scale possible if regional facilities may be shared across cabinets • Emphasizes geography as a control center, which demands service development and marketing focused on a geographic area • Quality of local management with respect to customers and demands • Duplication and high overhead cost • Potential conflicts among regions and with central office • Product variations and new technologies are not easily transferred • Commonwealth-wide business strategy more difficult to implement • Functional areas are difficult to coordinate and achieve synergies Geographic

12. Description of Organizational Design Models (cont’d) Description Model Strengths Weaknesses • Multiple reporting relationships represented by grids and webs • Formal systems of multiple decision making, communications, and balance of power • Common in engineering and project intensive organizations • Multiple contacts are intended to facilitate collaboration and coordination • MARS project had a significant Matrix orientation • May provide simultaneous attention to geography, function, and product/service • Forces consideration of all factors and may lead to agreement on mid/long-range actions • Multiple expertise focusing on problems • Allocation of scarce resources more efficient • Wide range of communications • Career opportunities for technical specialists to generalize easier than in traditional pyramid structures • Complex and often difficult to manage • Encourages power struggles and political units • high cost • Decision making slow and encourages meeting intensive culture Matrix • Business organized around client groups such as by Cabinet, agency, types of vendors • Teams with shared expertise in client area and functional areas are assigned to client group(s) • Decisions are driven by client demands • Support levels refined based upon client needs -- both unique and recurring • Responds to client/customer needs (e.g.. agencies, constituents, vendors) immediately • Performance is easily measured based upon client input • Excellent when client base is segmented and defined • Good for regional/large geography coverage • Potential for redundancies in team activities may make efficiencies harder to achieve • Need to have a large enough client base • Not conducive to inflexible environments that cannot change with demand • Requires understanding of client needs and operations Customer Focused • Business organized horizontally around linked, end-to-end processes • Foundation is multifunctional teams, often self directed and self managed • Teams, not functions or individual jobs, define the structure • Rewards focused on team performance • Decisions are made at point of contact by empowered employees • Decentralized, with few supervisors • Functional expertise maintained through centers of excellence • Business outcome, customer focused • Productivity, speed, and quality likely to be improved • Layers of supervision removed resulting in cost reduction • Fewer power bases and political problems • Cost management more effective • Operating culture difficult to change • Roles and responsibilities must be completely redefined, employees trained, and leaders coached • Ability to maintain technical excellence may be more difficult • Most public sector personnel policies do not support team or matrix organizational management. Process- Centered

13. The Cabinet then completed the Organization Models/ Attribute Fit Design Criteria/ Organizational Attribute Customer Focused Process Centered Functional Service Geographic Matrix    Enhance responsiveness to agency needs (speed) Clear delegation of authority Flexible to new technologies Ease of transition Quality conscious Transparent to customers Promotes teamwork & collaboration Revenue generation/cost recovery Vendor-customer focus Clear definition of roles & responsibilities                        

14. MATERIAL AND PROCUREMENT SERVICES CAREER PATH PROGRESSION Serve as agency Purchasing Assoc. or Sealed Bid Purchasing Officer Serve as agency Purchasing Associate After 6 mos. After 6 mos. CUSTOMER Assistant Director for Purchases After 1 year After 1 year Purchasing Technician I Purchasing Technician II Purchasing Associate Sealed Bid Purchasing Officer Strategic Procurement Specialist I & II Procurement Branch Manager Division Director MATERIALS AND PROCUREMENT SERVICES Assistant Director for Purchases Small Purchases Team Leader 1 year 2 years 3 years 2 years 4 years 2 years Customer Resource Center Customer Resource Center Accounting Services Division OTHER KEY AREAS