Alignment
Consistency is the hallmark of successful brands. Enduring brands consistently supply their products or services to consumers. I think of McDonalds, Southwest Airlines, Starbucks and other companies that deliver the same experience no matter the location, route, or store. No doubt, there are times when these brands stumble, or profits flag, but companies of this type find ways to survive and outperform peers regularly. Consumers love consistency, and arguably these brands are loved for the consistency they promise, and deliver, to consumers.
What sets them apart? How is it that they have found the ways and means to maintain their successes? Their structures are aligned with their core purpose, their reason for being, and rarely do they make mistakes that result in misalignment.
When you explore the failures of their competitors, you find structural mismatches throughout the enterprise. Essentially, strategy is disconnected from the way things are done.
Consider the full service airline circa 2008, competing with Southwest by offering more “services” but at higher fares. The promise to consumers, particularly in consumer advertising, is that you aren’t just a boarding letter, you’re a person. You are valued, you can relax, you aren’t cattle to he herded into the transport truck.
While that is the promise, when you step foot on the plane the policies and procedures governing the real experience you will have means an experience quite different than advertised. Planes are cramped, peanuts are considered gourmet food, checking a bag costs as much as buying the bag, and the staff are often surly.
The strategy may be to make consumers feel welcome and comfortable, but the way the organization is structured, makes it impossible to live up to the strategy. The end result is inconsistency, failed strategy, and an underperforming airline.
So if “structure alignment” is a critical component to a successful institution, what does it really mean? Here are two definitions to consider.
Structure is the arrangement and relations between the parts and elements of something complex. In the case of a credit union, structure is simply the arrangement of departments, processes, and job functions.
Alignment is a position of agreement or alliance.
Essentially, structure alignment is what you get when your departments, processes, workflows, job functions and people work in harmony to support your long-term direction, mission and/or vision.
So why is it such a challenge to align the elements of structure to the point where you deliver consistent results to members? Let’s explore.
There are basically three main areas of focus, or consideration, that if not properly addresses often undermine the alignment of structure. They are:
The strategic plan
Office politics
Structural flexibility
Let’s break each of these down a bit more, starting with the strategic plan.
The Strategic Plan
The primary concern of the leader of any institution should be that the institution’s strategic plan succeed. The question, then, when working to drive success is whether the structure of the organization properly suited to support the main objectives defined in the plan. To better understand the situation, consider the simple example of an institution that has defined strategic success as delivering above-average service to consumers.
In considering how this might look, we may assume that front-line employees have ample opportunity to uncover member-specific needs. Perhaps rather than a typical teller-line, service workstations are erected to accommodate more intimate, face-to-face discussions. So far so good, but now for the misalignment between plan and structure.
Suppose a branch-based goal is to have consumers wait no less than 2 minutes to see a staff member. Training is geared to quick service and transaction processing. Systems modules designed around collecting demographic data ancillary to the transaction (but perhaps critical to a deeper understanding of the consumer) are bypassed in favor of a speedy end to the transaction.
We see this near exact situation quite often across the credit union landscape. Case in point, we were asked not to long ago to conduct a mystery shop for a client in preparation for their strategic planning session. They wanted to see how they were doing in living their vision and mission of service. I think their expectation was to go to the planning session touting their progress on the plan. What they received instead was a wake-up call for the very reason just described. While their plan called for escalating service, and deeper member relationships, the practice in each and every branch served an opposite purpose - to move consumers on their way as quickly as possible. In our extensive review, the best an employee did given the opportunity to open a new account was to hand out a brochure pack and say “thanks”, and “next.”
While speedy transactions are in no way bad unto themselves, they way in which they were done at this institution and at countless others served to undermine the long-term plan of improved knowledge of the consumer and ultimately more tailored product and service offerings. What the institution needed was to make doubly sure that the front-line staff and branch managers not only understood the root detail of the plan, but were given the opportunity to identify what needed to change to support the plan. In this particular case, the plan was set, but nothing about the direct connection between consumers and institution with regard to the plan was ever assessed.
Again, the first area of consideration in aligning structure is to make sure that the ways in which the current structure, policies, and procedures impact a strategic plan are measured and corrected.
Office Politics
The next area of consideration in structure alignment is to ensure that organizational politics do not conspire to undermine structural integrity or redirect resources to low priority initiatives. While this should be a common sense suggestion, it is worth stating simply because I personally have seen where resources are doled out based on political clout rather than where they will have the greatest impact on strategic success. In other words, common sense isn’t always so common.
The problem when politics reigns is that key structures become inappropriately weak or bloated resulting in inconsistent delivery.
Case in point. At a credit union I worked with long ago the facilities department held considerable sway in the allocation of resources. Here is how their base of power came to be. The credit union had just completed a new main office - a very nice building and a legacy accomplishment for the CEO who had been there for many years. The care of the building was, rightfully, given to the facilities department. There were rigid rules for the building, including not allowing employees to have even water at their desks for fear of ruining the carpet should something spill. Of course, this provided an interesting shift in power to the people in facilities, who could tell even senior executives what they could and couldn’t do in their offices. The CEO backed up this display of power in the context of preserving the beauty of the new building - the “members” building.
As time went by, the building needed a few tweaks here and there as most buildings do, but the facilities department went beyond in their request for funds. As their power grew, so too did their budget. They now knew the political game, and how to play it well with the CEO.
At the same time, the core system had, by the estimation of most users, outlived its usefulness, and seemed to be held together by duct tape and Band-Aids. Unfortunately, when the budget was drafted facilities won the arguments for resources, while the IT staff lost. They lost not because IT failed to make a strong case for the needed investment, but because resources allocation was so influenced by political connectedness. Though we preserved a beautiful building, which the members certainly did appreciate, the fact is that ultimately the general inconsistency of our core system made for inconsistent member experiences.
When the CEO retired, the new CEO had his work cut out for him in correcting the imbalance. There were quite a few subtle and overt attempts at rebuilding the political relationship lost in the transition to new leadership. As the CEO worked to re-balance the power and alignment of the credit union, the facilities manager worked just as hard to keep it tilted in his favor.
In all cases, an organization where resources are allocated based not on alignment with strategy but on clout/connectedness will most surely suffer diminished strength and service consistency.
Structural Flexibility
The final concern when aligning structure is preserving the ability to quickly modify structure when needed. A flexible structure is indicative of an institution with a defined strategic direction, devoid of political patronage, and skilled at communicating the core message in the strategic plan to all members of the staff. This is certainly a hard one to accomplish because it forces leaders to think not only about how an institution functions, but also why.
Leaders seem to fall into two categories. The first are those that clearly understand how to build structure. Under the watch of such leaders, policies and procedures are well written, everyone understands their role, and departments are defined with rigid clarity. The only problem is that no one knows the future plan. Staff is unclear when it comes to the long-term direction. The job they are doing becomes the means and the end, which can serve as a de-motivator driving increasingly ineffective performance over time.
Organizations led by this type of person end up out of alignment with the expectations of staff and members, again to the end result of inconsistent delivery. Though it seems funny that consistent performance can lead to inconsistent service delivery, it makes sense given that human expectations change over time.
The second category are those that understand the long-term reason the institution opens its doors each day. They are great at communicating a vision of the future to all staff, getting them to see past the day-to-day rigors of the job to what will emerge as a result of their collective efforts. The problem with this type of leader is that they provide no direction with regard to the day-to-day. They give no guidance in the form of articulated policies and procedures, and when policies and procedures do exist this leader is incapable of defining how they relate to the envisioned future. Internal bickering is often pervasive in this environment, and the politicization of resource allocation often emerges.
Of the two, the task master probably fares better over the short-term, but to really maintain structural flexibility requires solid expertise in both institutional strategy and organizational design. If you see a flexible institution that has quickly changed its structure in response to strategic demands, it means that a leader with both strategic and structural expertise is at the helm.
The End of Alignment
Organizations that make use of clear strategic plans, that minimize the corrupting influence of politicized resource allocations, and that maintain a degree of organizational flexibility/adaptability, are always better positioned than competitors who don’t do these things. Again, consistent service delivery and performance is the end product of an aligned organization. Doing all you can to ensure your organization is aligned is, indeed, a worthwhile and rewarding activity because people know and love consistent, aligned organizations.