HRM Case Studies
Boosting business performance through restructuring
by Bernice Yu, consultant, Hewitt Associates LLC
Performance-driven rewards and a targeted development path can help engage an efficient workforce
Regardless of business scope, nature and location, most companies recognise that improving the overall efficiency of their operations will drive their business performance. While business redesign and the implementation of more sophisticated IT systems are common ways for companies to accelerate growth, the recent economic downturn has also turned the focus to effective organisational structure.
Not all restructuring leads to staff cuts. The main aim is to align the company's workforce with its business strategy, enhance employee engagement and enable staff to spend more time on value-adding tasks.
To capture growth in the fast-paced finance industry, a global financial institution sought Hewitt Associates' professional assistance to review the organisational structure for its customer service team.
Faced with exacting business goals and increasing customer demand, the management team commissioned a restructuring project in order to enhance customers service and meet client expectations in a timely manner; and facilitate the flow of information between product teams to enable effective cross-selling.
The team also conducted a review of the department's pay mechanism, training curriculum and career progression path to implement a performance-based staff rewards system; provide training to equip employees to achieve desired business objectives; and provide career opportunities to better engage and motivate workers.
Hewitt was tasked with:
- Designing an appropriate structure to improve workflow
- Developing a motivating reward scheme
- Creating a training schedule to boost employees' skills and to engage staff with a targeted career path
Hewitt's approach to meeting the company's needs comprised the following action items:
- Understand its current challenges, future business strategies, key roles and responsibilities and major interactions
- Assess staff capabilities and whether they are sufficient to meet future goals
- Analyse employees' roles and whether their activities add value
- Identify opportunities to improve efficiency
- Develop an uncomplicated organisational structure that focuses on achieving business objectives
- Design a rewards mechanism that objectively measures employee performance and provides incentives
- Create a clearly defined career development and progression path
1. Organisational structure
Hewitt drew up a set of design principles based on the firm's business strategy and identified challenges and industry practices to provide the decision-making guidelines for the restructured department. It then developed a structure that divided the customer-service team into frontline sales, customer service and supporting functions.
The number of direct reports for every manager was streamlined and benchmarked against industry standards. Instead of assigning specific teams to sell particular products, multiple service lines were set up to handle a range of products. This increased cross-selling opportunities and broadened staff's knowledge. The consultants defined staff's key roles and responsibilities, as well as interactions across functions.
An interim model and transition plan were suggested to ensure a smooth changeover to the new organisational structure. This provided sufficient time for skills and knowledge transfers and to implement other resources such as new roles and technology support.
2. Rewards mechanism
Hewitt also developed a total-rewards framework to link performance with rewards and to motivate staff to function within a high-performance culture.
The total-rewards package includes four elements: basic salary, variable pay, incentives and non-monetary recognition. Basic salaries were adjusted to be closer to the market median and the new pay mix provides opportunities for high achievers to boost their earnings. Variable annual bonuses have been redesigned to tie in with performance measurements, enabling high performers to earn substantially more than their under-performing colleagues. Other cash and non-monetary incentives help to keep employees motivated and engaged.
3. Development and progression path
The final component used to drive employee efficiency was to define capability models for staff and managers based on their future business objectives. This enabled the financial institution to identify the key skills employees would need at different levels. A training curriculum and distinct career and internal progression paths were then created to provide a structured development framework with set goals and timeframes. Finally, a new department was created to govern this model.
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The new organisational structure, rewards framework and development and progression path were implemented over a period of three months. While transformation on this scale typically requires time to get on track, expected benefits include:
- An increase in sales with a greater focus on selling and improved sales incentives
- Enhanced customer satisfaction as a result of more timely responses and a smoother workflow
- A more engaged workforce, because of a greater sense of accomplishment and job satisfaction
- A reduction in staff turnover, since employees are more satisfied with their market-related rewards packages and structured development paths
Article contributed by Hewitt Associates LLC
Taken from Career Times 14 May 2010, p. B11
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