Organizational design: Is your CU set up to support your strategy?

The world is evolving quicker than ever and financial services is not exempt from these market changes. Through these changing times, credit unions have helped members find new ways to connect by leveraging online channels and redesigning branch experiences. They have deployed employees remotely, and teams are working efficiently and productively. Now, leaders should focus on their organizational structure; how it’s been affected with the changing landscape, how it’s impacting the way work gets done, and how it’s preparing the organization for the future. A well-designed organizational structure will improve work efficiency and output, bring more value to members, and help employees through future changes in business direction as the financial industry continues to evolve.

Make a connection to strategy

Long before COVID-19, the credit union industry consistently delivered exceptional value for members. And now, it’s a more opportune time than ever to evaluate how an organizational structure can drive business strategy and an improved member experience. Understanding how the structure delivers on the mission and vision and the strategic plan should be the primary focus. It helps to start by evaluating the current structure and ask questions like: have projects and initiatives strayed from delivering value? Are their employees whose role have changed and should be deployed to new teams? Clearly defining how departments and divisions impact the mission, vision and values will be imperative as our businesses pivot, ultimately helping employees understand why changes are happening. 

Create the ideal state, then add the people

It is a best practice to design organizational structure without individual people in mind for roles, evaluating how work and decision making should happen to be most productive. It’s hard not to take into consideration personal relationships and individual strengths of people. Along with the challenges of letting current employees dictate the structure, business events like leadership exits can cause changes in structure that never get reviewed. A good example is the temporary re-assignment of departments or projects during a vacancy, and when a new hire is onboard, the decision is not revisited. Important questions to ask: how will work get done most effectively, with little friction, with expedited decision making? Is the structure a result of personal relationships or aged decisions that need to be reviewed? When organizational design review is a frequent occurrence, it addresses gaps much quicker and improves people’s experience with these changes.

Connect employees to the bigger picture

Employees are keen at identifying where there is inconsistency in reporting and titling due to an unmanaged organizational design, and often times we can’t deliver a thoughtful response as to why. Leaders need to be able to adapt on the fly, add new roles with needed skillsets to remain competitive, yet understanding and evaluating differences in organizational design is key. It is important to address reporting irregularities that create silos and frustrations for employees. They want to understand how new roles impact the overall success of the credit union, how they will have access to information (that is often cascaded down from the top) and desire access to leaders who can help elevate their challenges.    

Ensure equity within roles 

Expectations of employees with reporting relationships that skip levels can create performance inequities. For example, if a Director reports to an executive team member, yet a Director in a different division reports to a Vice President, might there be differences in expectations and deliverables? What if one Director is expected to create strategic plan, but that’s not in the Director job description? If this leader is expecting more from the Director, could there be pay inequities? Evaluating roles and responsibility by each title, and then reviewing reporting structure and its impact on role expectations is an essential activity.

Provide guardrails for leaders

Leaders are morphing their teams to meet the needs of members by reassigning functions or even moving employees to different departments as business direction changes. Without thinking of the larger organizational picture, these leaders may have already designed their future team structure and it can be difficult to undo or change course. Without guardrails and best practices documented with considerations like reporting layers, span of control for teams, or titling requirements, it can create inconsistencies across the business and create confusion for employees about variations.  

Get started today

Find a trusted, outside partner who will stay true to going through the process, respectfully challenge decisions and continually encourage new ideas. This partner is important because they won’t know the reasons why the current structure is the way it is and can offer industry specific trends that align with your strategy. Invite key senior leaders to the table, set the stage that nothing is off limits, and start digging in. Here are a few questions as the project kicks off:

• What are the most important focus areas needed to deliver more value and improve the member and employee experience? What would really drive the mission and vision forward?  
• If the organizational structure could be totally redesigned to align with the strategic plan, and there weren’t any employees hired yet, what would it look like? 
• What is the current state across all teams?  Is a centralized/decentralized model working? Is there misalignment in reporting structures? 
• What process is needed to review the current structure? How will the redistribution of functions, reassignment of reporting relationships, and titling inequities be addressed? What is needed to create best practices for other leaders? 
• What if people in key roles make an exit for retirement or other job opportunities? Do you have a robust succession plan in place to fill any talent gaps?

Pivoting to address our changing world includes understanding how to leverage people to achieve strategic objectives. This focus will improve work efficiency and output and drive high levels of engagement for employees and leaders. A good organizational structure helps employees understand how work gets done, how decisions are made, and how they fit into the bigger picture.