Client-driven organization structures
May 08, 1995
There has been a lot of talk in our industry the last few years about the need for more firms to adopt a client-driven organization structure. Firms of all types and sizes are trying to move away from an organization structure based on geography and technical disciplines in an effort to make themselves more marketable and to improve the quality of their service— both admirable goals.
Anyone who has ever worked with us or read our stuff knows that we are big advocates of client-driven structures. But getting from a geographic- or discipline-based structure to one that is geared toward market sectors or client types isn’t always easy to accomplish.
Sometimes, you can’t go from point “A” (geographic- or discipline-based structure) to point “B” (client-based structure) in one fell swoop. You may need to phase in change gradually, or have an interim structure for a period of time, before leaping headlong into an entirely client-driven structure.
Let’s take a look at some of the options for an A/E/P or environmental consulting firm that wants a more client-driven structure:
Keep a traditional geographic- and discipline-based structure, but market the firm to the outside world under a unique identity for each client group. Another way to describe this is: “Be the same, but look like you’re different.” The results of taking this approach will probably match the commitment behind it— in other words, not much will change. But this may set the stage for a more radical reorganization at some point in the future.
Keep a traditional structure, but name a specific individual to head the firm’s business in each market focus area— someone who is responsible for increasing the firm’s business in that area, but who doesn’t have anyone in the production organization physically reporting to him or her. This is similar to point #1, but different in that there is someone in charge who is accountable for the success or lack of success the firm has in serving each group of clients. We find that this approach works better than the first, although success tends to vary greatly depending on who is in the job of “sector leader.” Most of the time, one or two of the leaders are strong, most are mediocre, and a few do nothing.
Create a matrix of market focus leaders and office/discipline heads, and treat both types of units as profit centers. This is commonly an interim organization structure that will last only a year or two as a firm moves from a geographic/discipline structure to a completely client-based one. This kind of an approach obviously carries greater complexity and accounting cost. But it helps people get used to the idea of looking at the business some other way than just by project, or by office, or by department.
Set up the whole firm around integrated units that have everything they need to serve particular clients or client types. Of course, this is the ideal situation, but it’s not always possible for a variety of reasons. The biggest problem is that much of what a particular firm does may not fit into a neat box as it relates to client type. And on top of it, the firm is serving too many client types. Therefore, the company cannot be divided up (or at least that’s often the conclusion of management.) Another problem is that the geographic or discipline units are often headed by owner/principals, who in some cases, would lose power if their groups were disbanded.
Regardless of what kind of a structure you decide to put in place, here are some implementation pointers that will help it go more smoothly:
Announce to your employees what you are going to do before it takes effect. Show the boxes, but don’t include specific names of who will go where. That gets people thinking about the new organization conceptually before they get too bogged down worrying about who will gain or lose status as a result of the change. And giving people plenty of time to get used to the change before it happens will improve the odds that it will be embraced by all.
Make sure everyone who should be involved has a chance to contribute to the process of who goes in what box. This is a often a sore spot— top management will go away for a weekend retreat and come up with a new organization structure. And in the structure, each and every employee has been assigned to a box without consulting the current and future managers of those people, and without bouncing it off of the affected employees to solicit their concerns.
Supply everyone with the structure in writing. Once the names have been decided, all employees should be able to see where they fit into the structure— at least from the standpoint of who their immediate supervisors are. That’s why we believe in supplying a written organization chart to everyone— it makes the entire structure clear.
Regularly re-evaluate the structure. No matter how well you plan the change, no structure will last forever. At least once a year, the entire structure should be looked at and necessary changes should be made. And it’s equally important, if not more important, to evaluate the people in the boxes. They may be the cause of non-performance, not the new structure.
Use any change in structure as a PR opportunity. A new organization is a great time to get some external PR and let the rest of the world know that the firm is still alive and well. Many times, changes in structure are newsworthy— especially those that align the firm more closely with its targeted clients— and these changes can be portrayed as a benefit to the firm’s chosen clients.
One last point: Critical to the implementation of any client-directed organization structure is that the firm must decide what market sectors or what client types it really wants to serve— something that we have a major problem doing in this business. And it’s equally important to know what type of clients you don’t want to work for. Any firm that deals with this issue head-on will be more successful, regardless of its structure!
Originally published 5/08/1995
About Zweig Group
Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.