Designing the target operating model
The operating model defines how an organisation implements its business model given its specific geographical coverage and how it allocates functions between the corporate centre (CC) and other assets (e.g. business units and divisions). It allows management to analyse options for creating centres of excellence and shared services centres (SSC).
We help our clients to define the degree of the CC’s operational involvement, the role of which may vary from strategy architect to operations supervisor. The type of CC selected influences the relevant functions and processes directly, as well as affects the balance between the CC and other assets (e.g. business units and divisions) that affect the managerial headcount.
We have vast international experience and knowledge in establishing SSCs. Cutting-edge tools enable our teams to not only create a SSC to receive the benefits from the economy of scale in cases of wide geographical coverage, but to also build centres of excellence.
Our experience in structuring businesses shows that top companies are more likely to have a lean corporate centre and increasingly independent and autonomous assets (e.g. business units and divisions). Maximum reasonable decentralisation allows the business side of a company to maintain high levels of motivation and focus on achieving target financial results.
Designing the target organisational structure
Changing the organisational structure is a strategic decision and it should coincide with the company’s development strategy.
Each element of the strategy affects the design of the target organisational structure. For instance, your company’s vision, mission and values may determine the type of organisational structure, the decision-making process and the speed of it (e.g. the number of layers of governance and the span of control). Strategic goals and required business processes determine the functional blocks and structural units.
To apply limitations in a transparent way, we develop the principles and framework of roles and divisions to support your organisational design and establish the “rules of the game” for building the target organisational structure. The number of layers of governance, the span of control, the principles that need to be established, naming units, and roles – all these elements of organisational structure have a direct impact on the size and overall efficiency of a company’s operations.
Tools for organisational design, such as business process models and functional structures, enable us to define the functional content of a client’s target structure (e.g. the tasks to be performed, the sequence of tasks and related labour efforts), which allows us to build a more balanced and efficient business structure. When designing target business processes, we use our Leading Advisory Enterprise Playbook (LEAP), an international knowledge base of best practices for setting up business processes in various industries, ranging from power and utilities to the retail and service sectors.
Fit for Growth, an international benchmarking metrics database, helps to deliver a highly accurate analysis output of best practices when assessing the target headcount for your organisational structure.
Improving the organisational structure in place
PwC’s global presence and wealth of experience in various industries enables us to help you to analyse the best practices in the market and to benchmark your company against leading global peers. Benchmarking is one of the most efficient ways to identify quickly the weaknesses and headcount deficiencies in an organisational structure, both at the company level and in separate functions.
Excessive layers of governance, small spans of control and excess managerial staff members are among the most common issues in organisational structures. The Fit for Growth Span & Layers tool models the company’s organisational model as part of AS-IS and target structure analyses. We can make real-time projections of changes in cost-side and in the size of your organisational structure after decreasing the size of the leadership team, increasing the number of subordinates per manager and eliminating duplicate functions.
Analysing the key drivers behind business processes along with benchmarking is also a powerful tool to boost your organisational structure’s efficiency. After defining the labour effort required for a specific function, we not only benchmark our results with comparable companies and industry leaders, but also study your business processes in detail (using daily timesheets) to identify all possible reserves for optimising existing processes.
Change and transformation management
A case for change is a key driver of any transformation initiative because it provides a crystal-clear outline of the pros and cons, i.e. why the company needs to transform. A detailed transformation and follow-up plan make sure that the project is implemented within the set deadline and at a minimum risk.
PwC has established a dedicated change management practice to enable our employees to master strategic communication tools, stakeholder management and people engagement during organisational change.
The omnichannel approach, leading by example and key manager engagement are the foundations of a successful transformation project.
Today, we increasingly encounter cases in which companies spend considerable resources on developing new business strategies but still fail to adapt their current operating model and organisational structure to the new development roadmap. As a result, risks increase, change is not implemented, the business strategy remains theoretical and productivity plummets.
When a company fails to adapt its operating model to the changing strategy, it quickly loses flexibility and the competitive edge it has built up over the years.
In order to stay abreast of things, today's CEOs need to make decisions on current asset restructuring, mergers with emerging companies, decreasing headcount, meeting changing customer needs, going digital, implementing agile governance models, optimising decision-making structure and procedures, etc.
CEOs today must always be one step ahead and know how to not only react to external factors like competition and globalisation, but also how to foresee them and take action.
We provide our expertise in organisational design to equip your business with a flexible operating model, an up-to-date organisational structure, business processes and a lean headcount, all of which enable you to retain and strengthen your leading market position.