Recently, The Wall Street Journal reported on how Procter & Gamble’s CEO is under scrutiny by investors and the board for a stalling turnaround effort. For me, one of the most thought-provoking parts of this story was reported nearly at its end.
Former executives who worked for both the previous and the current CEO described the evolution of an informal, 45 minute meeting on Mondays at 8 a.m. At this meeting, seven to 10 executives met to discuss the state of the company and make decisions. They claim that today, this meeting has swollen to more than two dozen attendees, can last up to two hours, and that few decisions are made. The WSJ reporters apparently did not have to work too hard to find these former executives, as the article also cites a recent exodus of key talent.
Do you suppose the current senior leaders are energized by this experience? I wonder what they are reporting back to their teams. I can imagine the message is probably not all that inspiring. If pivotal employees were surveyed, I expect they would use words like “lack of clarity, disempowerment, conflict, and frustration.” And, one could safely assume that this apparently broken management process is mimicked further down in the organization. Most painfully, but all too common, this is occurring in the middle of a very difficult turnaround.
This story highlights a critical, but often overlooked lever in organization design—management processes. Leaders tend to spend a lot of time on organization structure and less time aligning the other design elements. To borrow a familiar metaphor, structure is the organization’s skeleton, but processes are the veins and arteries that carry information from place to place.
Organization design is a deliberate and aligned configuration of structures, processes, rewards, and people to deliver the strategy. The key is to design an organization that is no more complex than the strategy itself. Otherwise, the complexity can be negatively experienced by key stakeholders, and is not rewarded with an increase in company value. In this specific case, it seems that a simple management process was effectively integrating work and streamlining decisions across a very complex, global organization. The new, more complicated management process appears to be doing exactly the opposite. This is another reminder that the brightest strategies and most talented leaders can be severely diminished by poor organization design and execution.
Kates Kesler Organization Consulting