Best practices for organizational analysis

Best practice guidelines for monitoring organizational effectiveness and efficiency.
 

1. Establish a set of key organization measures

“What gets measured gets managed”.  Establishing a set of key organizational measures sets the foundation for managing organizational effectiveness and efficiency.   Every organization has its own specific requirements, and the measures which can be generated will depend on the properties included in your dataset.  However, Orgvue’s template packs for organizational analysis contain a wide range of commonly used key measures. Review, iterate and agree the key measures with stakeholders to ensure the needs of the business are met.

2. Define and communicate key measures explicitly

A typical requirement is to build a shared and common understanding of organizational effectiveness across an audience of stakeholders.  Poorly defined key measures or a lack of clarity on how measures have been calculated can result in different stakeholders forming different conclusions.  Consider perhaps the most basic question relating to the organization: “What is the size the workforce?”  The answer will be notably different:

• If headcount or FTE is reported

• Whether this is based on only on in situ employees, or includes vacant, open positions?

• Whether this is based only on direct employees, or includes contractors and other off-balance sheet employees

• If it is based on a point in time, or an average between points in time?

If you are preparing key measures for the first time, adopt a deliberate process:

• Propose the key measures, what these will be based on, and how these will be calculated

• Run a pilot and share the findings with stakeholders (note point 8, below)

• Finalize the approach with stakeholders and get their individual explicit agreement.

Whilst this may appear laborious, it’s informed by experience.  There is likely to come a time when your findings are challenged (see point 8).  Alternative measurement approaches leading to different outcomes will be proposed.  A different approach to measurement may be beneficial for an individual stakeholder, without being in the best interests of the organization.  When advance, explicit agreement has been gained from each individual stakeholder, you are in a much stronger position to remain focused on the needs of the business.
 

3. Set targets for key measures

With targets specified for key measures you can quickly identify which issues require attention and where action needs to be taken.  For example, with span of control as a key measure, and a target range of 8-12 direct reports, you can rapidly identify where in the organization there are people managers below target, within target and over target.

People Managers color-coded by Span of Control Group

4. Set a regular reporting frequency in line with the business reporting cadence

Organizations constantly change.  The overarching requirement of ongoing organizational analysis is to prevent inefficiencies emerging over time and becoming so severe that drastic, costly and disruptive action is needed. To this end, analysis needs to be undertaken with sufficient frequency to get ahead of performance dips.  Good practice is to report key organization measure at the same frequency (and ideally integrated with) other – financial and operational – business performance metrics.  This does not need to create a high administrative burden.  Orgvue synchronizes with your HRIS system of record with an agreed refresh cadence, and your Orgvue analysis packs are immediately updated with the latest version of the underlying data:  there’s no need to recreate your analysis as the org changes over time.
 

5. Treat averages with caution; categories provide richer insight

Averages are commonly used in organizational analysis but need to be treated with caution because they can obscure underlying variation.  Consider the hypothetical example below.  Average span of control has been established as a key measure and a target range of 8-12 has been set.  Across the organization, the average value of 8.01 (shown at the bottom of the card) suggests on-target performance.  However, this overall average obscures the fact that only 30% of people managers have on-target spans. More than one-in-five (22%) are managing micro teams and there are there are ten managers with only one direct report.  At the other end of the scale, 10% of managers have more than 12 direct reports.  Best practice is to supplement overall averages with categories to show the distribution of cases.  Orgvue’s template analysis give you the ability to specify how categories are defined for reporting key measures for you to tailor analysis to your organization’s specific requirements.

Example visualization (Orgvue Spans & Layers template pack):  Average span of control and distribution of cases across span of control categories.



 

6. “Slice and Dice” your key measures to identify sub-group variation

Whilst organization-wide headlines on key measures are always needed, “Slicing and dicing” key measures to reveal sub-group differences identifies where action needs to be focused.  Best practice is to adopt the same sub-groups used for reporting business performance (e.g., functional departments, geographic locations, business units, or cost centers).   In Orgvue, you can use ‘Pages’ to slice and dice data visualizations and rapidly compare subgroups.

 

7. Internal benchmarking usually provides more benefit than external benchmarking

“How do we compare to our competitors?”  A common question when data is being reported, but accurate, up-to-data external comparisons can be hard to come by.  And knowing how your organization compares to other organizations may provide false reassurance:  your performance on a given measure may compare favorably, but does this mean there are no opportunities for improvement? 
Internal benchmarking usually generates richer, more actionable insights.  As noted above (point 5), getting beyond headline, company-wide data to understand subgroup differences identifies where there are pockets of best practice to be applied elsewhere, and where there are lower performing areas requiring targeted actions.  Where high performing areas are identified, you can follow-up to identify the specific factors which can be applied to improve performance in lower-performing parts of the organization.
 

8. Avoid surprising stakeholders

Organizations can be political environments.  People can get very protective of themselves and the parts of the organization they are responsible for.  Resistance is a predictable response to even relatively minor organizational changes.  The two most common responses when sharing challenging observations are:

• “I don’t recognize your data”

• “My part of the organization is different”

There are practical actions you can take to overcome these challenges

• Invest the time to take stakeholders through your analysis individually or in small group settings where they will not feel exposed.  Whilst your analysis will usually need to reach a wide audience, avoid leaders of lower performing business areas being surprised in group settings.  If they feel exposed their reaction is unlikely to be constructive.  It is usually beneficial to send your analysis in advance so there is time for it to be ‘processed’.

• Be explicit on your methods and approaches.  As explained above in point 2, be precise and communicate how data has been analyzed and the underlying assumptions.

• When you hear ““My part of the organization is different”, invite clarity on the characteristics which are considered exceptional.  And test these with data.  If it can’t be tested with data, it’s an opinion, not a fact!

9. Visualize to build a shared understanding

How people see the world is how people understand the world.  A fundamental requirement is to build a shared understanding of the organizational reality.  The fastest route is to provide visualizations:  get everyone seeing the organizational reality. 

• Typical business questions
• Example Key Measures
• Meet the business need for insight
• Orgvue’s template packs for organizational analysis