Businesses are experiencing unprecedented disruption from the COVID-19 pandemic. While everyone’s number one priority is maintaining workers’ health and safety, managing the economic impact of the crisis comes in a close second. Government leaders have stepped in with loan programs, FMLA expansions and paycheck protection measures in hopes of providing adequate support to weather this storm. Meanwhile, business leaders are looking at the value drivers available to maintain cash flows and are assessing next steps — including improving collections, working capital optimization and strategic cost reductions.
While these are all necessary ingredients for strong near-term cash management, one often overlooked value lever that must also be considered is the organizational design. A well-designed organizational model can simplify and streamline how work gets done. Simply put, do more with less. Importantly, it can also help ensure that changes in resources you may be making now don’t cripple the organization’s ability to respond when the economic headwinds change for the better.
The optimal organizational design will vary by company’s size, industry, degree of integration with supply chains and more. However, there are a few vital components that go into any resilient, modern organization.
A well-designed organizational model should consider what roles will be needed across the organization, regardless of the staffing currently in place. To do otherwise inherently limits the organization to the current talent pool and puts undue reliance on key personnel who may ultimately decide to leave for other opportunities.
With a whole host of tools to support business process management, restructuring with digital in mind means the organization is built to easily “bolt on” new methods, including automation, business process management, working remotely with offshore resources, third party SaaS solutions and more.
While it may be tempting to reduce field teams and centralize efforts wherever possible to stretch back-office spend, ensure roles that are responsible for data and making decisions at the local level aren’t unnecessarily hamstrung by a bureaucratic back-office structure. While it makes sense for payables, for example, to be managed from one global business services group, other functions such as sales or production scheduling can suffer from being too far removed from conditions on the ground.
When it is easy to predict the demands of tomorrow, you can build the most efficient organization to specifically meet those demands. However, when the future is less clear, having an organization that is nimble and adaptable can be a distinctive advantage. Smaller teams with cross-functional and end-to-end process authority and accountability can help drive collaboration and innovation. These ‘network’ based teams can learn off the strengths of one-another, while breaking down traditional bureaucratic silos. While this structure shifts away from assembly line type efficiency, it becomes highly outcome driven, embracing change and transformation.
While some headcount reduction may be needed in the short-term to maintain operations, be careful where cuts occur. Be especially careful about eliminating positions that serve as pivot points between functions, for example, analytics teams that form a bridge between traditional IT and operations groups. Often, these are valuable resources who can flex into other work while also providing soft, intangible benefits of having significant influence and impact within the networks they touch.
Though this crisis is already having a detrimental impact in terms of life and economic well-being, one silver lining for businesses presented by the recent downturn is the opportunity to reevaluate where and how work gets done. By taking this chance to modernize your organizational model, companies can come out of this crisis better equipped to handle what’s next.
Contact Mary Washburn at mwashburn@cohencpa.com or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.