HAY GROUP
Singapore - Matrix structures may not necessarily be the "best" organisations structures for large, global companies. Neither are functionally organised structures and international business units. However, companies that provide tools to help their leaders become effective will such efforts pay off.
According to the latest findings from Hay Group and Fortune magazine's 2009 World's Most Admired Companies survey, it studied 1,400 companies worldwide to understand how organisational design and operating models can help the top companies build more effective organisations than their peer.
And the truth is there is no one "best" organisational structure. Israel Berman, managing director of Hay Group’s Asia Pacific and Africa and global managing director of Building Effective Organizations practice explains that for every World's Most Admired company with a highly centralised structure, there would be another company that was the opposite - sometimes even within the same industry.
"These organisations don’t look to others for what will work for them. As long as the structure is aligned with the business model and how the company can win the market, it can work,” Berman says.
However, these Most Admired Companies all have one thing in common - robust operating models that support the organisational structure to ensure that work gets done as expected. This has allowed for World's Most Admired Companies to operate differently in high growth markets compared to developed markets without changing the organisational design.
In addition, the Hay Group study found that while an aligned strategy and a dynamic operating model are a good start to organisational effectiveness, World's Most Admired Companies do more to enable their leaders to be effective.
These companies provide better tools and better equip their leaders to work in a more cross-functional, horizontal way, the study reported. “Why else would 83% of executives from the World’s Most Admired Companies feel that they manage the matrix organisation effectively, compared to only 58% of the peer group?” Berman adds.
The report also found that:
• 96% of World's Most Admired Companies were able to identify leadership within the company on a global basis, compared to 74% of their peers.
• 92% of them were investing in training leaders as general managers, compared to 77% of their peers.
• 87% of them were exchanging leadership practices between business units, compared to 61% of their peers.
"Ultimately, organisational effectiveness among the World’s Most Admired Companies is predicated on having a strong, stable strategy. These companies change their strategies less often, which enables them to build out and refine the organisations that they have, rather than continuously change them," the report added.
In the study, Hay Group compared organisations that ranked in the top three within their industries against their peers who scored lower in the rankings. Respondents, including executives, directors and industry analysts, were asked to rate companies on an overall basis and relative to their industry peers.
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