Module 3.0 Example of Organizational Design for F&A Cabinet

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.)

The Old Structure

The New Structure

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

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

Key tools that assisted in this process included... 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 These tools may help improve your agency’s administrative services structure and operations

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

Finance and Administration’s Design Criteria (cont’d) t Effectiveness and Efficiency t Promotes quality of service t Potential for Revenue Generation/Cost Recovery t Effectiveness and Efficiency t Promotes quality of service t Potential for Revenue Generation/Cost Recovery t Promotes teamwork and collaboration t Promotes innovativeness t Provides broader career options and opportunities t Promotes teamwork and collaboration t Promotes innovativeness t Provides broader career options and opportunities IMPROVES SERVICE DELIVERY ENHANCES WORK ENVIRONMENT

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

The Cabinet then assessed the description of common Organizational Design Models Model Description StrengthsWeaknesses 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 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 Service 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

Description of Organizational Design Models (cont’d) Model Description StrengthsWeaknesses 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 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

Design Criteria/ Organizational Attribute FunctionalServiceGeographic The Cabinet then completed the Organization Models/ Attribute Fit 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 Matrix Process Centered Customer Focused

MATERIAL AND PROCUREMENT SERVICES CAREER PATH PROGRESSION Purchasing Associate Sealed Bid Purchasing Officer Purchasing Technician II Purchasing Technician I Serve as agency Purchasing Associate Serve as agency Purchasing Assoc. or Sealed Bid Purchasing Officer Assistant Director for Purchases CUSTOMER MATERIALS AND PROCUREMENT SERVICES After 6 mos. 1 year2 years3 years After 1 year After 6 mos. 2 years4 years2 years Division Director Strategic Procurement Specialist I & II Procurement Branch Manager Assistant Director for Purchases Customer Resource Center OTHER KEY AREAS Customer Resource Center Small Purchases Team Leader Accounting Services Division