3 Critical Components of Organizational Success
Organizational success is dependent on a lot of factors, both internal and external. When it comes to the people in the company, there are three primary components that must be optimized: structure, talent, and behavior. Like a three-legged stool, if any one of these components is lacking, the organization gets less stable and less able to withstand external pressures. However, when all three components are fully developed and in place, the path to organizational success is much easier to navigate.
It’s important not to develop each of these pillars in vacuums. They all depend on each other and should be strengthened equally. Follow these tips to optimize the three components of organizational success for your company.
1. Structure: The Right Roles in the Right Places
No matter how much talent you have in the organization, if the right people aren’t in the right roles or don’t have the authority to execute their roles properly, they won’t be able to fulfill their potential. This is where structure comes in. There is no single structure that is right for every organization. Even similar companies in the same industry might have different approaches, and each of them could be effective. When determining organizational structure, it’s important to consider two criteria: aligning with the strategy and providing the appropriate authority.
Official and Unofficial Hierarchies
The structure of an organization is defined by both official and unofficial hierarchies. Official hierarchies are the relationships between executives, senior leaders, line managers, team leaders, and every individual in the organization. These relationships are critical for conveying the organizational vision, communicating the strategy for achieving it, and providing performance feedback.
Unofficial hierarchies exist in every organization, and the most successful ones recognize this and foster these relationships in a positive way. These are the day-to-day working relationships that allow individuals to learn from others’ expertise, make quick decisions, and operate productively. Because these unofficial hierarchies can play a significant role in performance, it’s important to empower people to build these relationships.
Clear Communication About Structure
Having a clear structure allows organizations to work more effectively toward a common goal. Every organization’s structure is different. Even two companies with the same official structure will have unofficial hierarchies that make each of them unique. The structure must be clearly defined and communicated to everyone in the organization, regardless of the parameters.
Without a clear structure, employees don’t know who to go to for approvals or where they should seek advice. This leads to confusion and potentially a diversion from the vision. It’s also important to remember that structures evolve over time, so continue to communicate as roles change.
Strategic Alignment
When deciding who reports to whom, don’t rely on company history or management theory. Always bring it back to the overall strategy of the organization and ask whether the structure supports it. This approach could result in the formation of new departments, restructuring of teams, changes in reporting relationships, or other decisions that might rock the boat. Don’t be afraid to make a change if your current structure is not supporting organizational goals—remember that this is a critical component of success. As the strategy evolves over time, check to make sure that the structure still supports it. If not, determine what changes need to be made to help you reach your goals.
Authority
Structure without authority does not fully allow individuals to execute strategies. Individuals must know what degree of authority they have and in what areas. However, providing the right amount of authority can be a challenge. Too much can be unwieldy and result in poor decisions; too little can impede progress.
Decide how much authority each role should have based on its goals and objectives and alignment with roles at higher levels. Ensure that the individuals in those roles have the right competencies to handle the level of authority they have, and provide the necessary training to fill in any gaps. It is also important to recognize when individuals are ready to take on more authority so you can maximize your talent pool. Don’t assume that the individuals at higher levels need to take on more and more authority. On the contrary, the more they can release to the rising leaders in the organization, the more time and bandwidth they will have to focus on strategy and the larger organizational vision.
2. Talent: Skilled Individuals in the Right Roles
The perfect structure won’t get you far if you don’t have talented people in each role. It’s also critical that people are in the right roles that allow them to perform at their highest level.
Understanding Talent
The skills and knowledge that each employee brings to the table make up the talent component of organizational success. Although talent can be innate, it can also be taught, shaped, enhanced, and developed. Because it can be improved over time, there is a certain amount of potential talent in any organization that should be accounted for in addition to the current stock of talent. It’s this potential talent that contributes to the longevity of an organization and provides a competitive advantage.
Talent Development
The only way to tap into this potential is to invest in it through training and development programs that enable individuals to continually learn and grow. This investment should extend to leadership training to ensure that executives and managers have the skills and knowledge to effectively harness the talent that is being developed. As individuals move through the organizational hierarchy, it’s critical that they learn the necessary skills for performing their roles; structure needs talent to maintain its integrity. Every organization has a certain amount of current potential talent available. It’s what you do with it that determines how successful the company will be.
Although it’s important to zoom out and look at the big picture of having the right people in the right roles, the only way to ensure that people are ready to step into those roles is to focus on individual talent. For each individual, look at their strengths and identify the areas that most need to be developed. These might be functional, interpersonal, or leadership skills. Set standards for each of these areas and assess how each individual performs relative to those standards. This helps you identify the competency gaps that need to be filled. Create individual development plans with goals and milestones to help individuals get to the next level. When they have done this, start over with new assessments and create a new plan that addresses the next set of goals.
3. Behavior: Effective Interactions Between Individuals, Teams, and Leaders
Having a solid structure in place with the right people in the right roles is still not enough to consistently achieve organizational success. The final piece of the puzzle is behavior. How those people interact with each other and perform in their individual roles will inform how the organization performs overall.
Even with the most talented individuals in the right roles, an organization will not reach its full potential if the behaviors of individuals do not promote success. Some of the success factors that heavily rely on individual behaviors include an organization’s ability to innovate, interactions between teams, and continuously improving processes. Some of the behaviors that promote or discourage success include the way employees interact with each other and leaders, the way leaders respond to employees, and the manner in which colleagues from different teams communicate.
Cultivating and Changing Behaviors
The goal is to have individual and team behaviors in alignment with the company culture and the vision of the organization. Every individual in the organization must understand the behaviors that are expected of them, and in many cases, training must be provided to teach new behaviors. Leaders must also model and coach the desired behaviors. Without these examples, it’s unrealistic to expect individual employees to make a change.
Finding the Right Balance
Organizational culture can range from one in which everybody is fully empowered to make decisions to one in which the leaders make all of the decisions. Where an organization falls on this spectrum informs the way people behave. Regardless of where your company is on the spectrum, make sure individuals have the necessary tools to operate in that environment. For example, in an empowered culture, employees must have the necessary skill set to consider and understand the consequences of their actions. The bottom line is, when an organization expects certain behaviors, it must provide the training necessary to enable individuals to meet those expectations.
Conclusion
The three components of organizational success—structure, talent, and behavior—cannot stand alone and must be in balance with each other. Take a holistic view when focusing on any one of these elements to ensure one area does not become disproportionately stronger than the others. Implement a training and development program to support each of these three critical elements to harness the full potential of every individual in the organization. Do this consistently over time, and you have the formula for organizational success.
