Audit of The Organizational Structure and Incentive System

The organizational structure and the current incentive system directly affect the labour productivity in the company. As a consequence, they affect the level of costs. Managing them is a powerful tool in the fight to reduce the cost.

This area of management science seems to be the most popular and at the same time the most populist. There are many words, theories and classifications in the existing information field about organizational structures. But at the same time, we have not met anything that could be recommended for reading (or listening) for you yet. Rather, on the contrary, much we would not recommend reading or listening because it seems as pseudoscience. Building an organizational structure (working out the principles of its existence and transformation in time, that will be more precise) is a private and purely practical task for your company. Its unique environment, accessible human and cash resources, the current competitive must be taken into account necessarily.

The organizational structure actually exists in any company. This can not depend on whether it is understood equally by employees and whether it is fixed on paper.

In our practice we proceed from follows:

• A typical and generally accepted organizational structure for your business does not exist. Each effective structure is unique in its own way;
• The organizational structure can not be considered in isolation from the personality of the leader. The actual division of powers between him and shareholders or with other top managers should also be taken into account;
• The degree of inconsistency of the declared structure to the on-going processes critically affects the level of costs of the company. Also, it directly determines the number of daily questions that are asked to managers "not at the right address";
• The degree of inconsistency of the incentive system to the levels of authority and/or responsibility of management is the main driver of low labour productivity.

We offer to:

• Identify the main processes of operational activities, prioritize them and identify the allowable level of indirect costs for each;
• Model the "ideal" structure of the considerate business and the principles for determining KPI of units based on processes and personalities of top management;
• Compare the actual system of labour organization with a conditionally "ideal" one. To analyze the causes of deviations. To propose measures to change for each of them.

If this approach is close to you, write to us.