INTRODUCTION
Organisation design is a critical aspect of any company’s success. It involves the process of structuring and aligning an organisation’s resources to achieve its goals effectively. This is particularly important in the highly competitive and constantly evolving port industry, where effective organisation design can provide a significant competitive advantage.
The span of control is a crucial component of organisation design that determines the number of subordinates that a manager can efficiently oversee. A proper span of control is crucial as it can impact employee morale, communication, and productivity.
It’s important to ensure that the span of control is balanced, so that managers can provide adequate support to their subordinates, while also maintaining control and achieving organisational objectives.
In this context, the relevance of organisation design lies in its ability to ensure that the span of control is optimised for the most efficient and effective performance of the organisation. With numerous departments and teams in play in Port Operations, effective management of roles and responsibilities is vital to ensure smooth operations.
THE CHALLENGE
Our Client is a global leader in investment, development and port operations. They manage some of the most famous waterways in the world and serve as a distribution network for various major trade routes.
The company engaged with Renoir Consulting to develop and sustainably implement changes to the Organisation Design and Management Control System that would support the company and improve productivity, efficiency and employee satisfaction. These changes would be rolled down to the lower command structure and support any further reorganisation of the management structure in the future.
PROJECT APPROACH & OPPORTUNITY ANALYSIS
The aim of the analysis was to review the current organisational structure, including the roles and responsibilities and the reporting lines. As part of this investigation, processes, procedures and systems, and organisational behavior were reviewed to determine improvement areas through such activities as:
- Evaluation of the organisation structure (size and shape) and how it supports the current operational and financial objectives
- Analysis of the organisation’s span of control, delegation of authority, functional alignment and communication interfaces
- Manpower allocation, clarity of definition of roles, functions, accountabilities, responsibilities and activities to evaluate resource utilisation and optimisation
- Use of tools and compliance to existing processes and procedures, safety, risk and quality standards and control systems across the business
- Review of planning processes and cycles to identify inefficient use of human resources
As a result of the analysis, the organisation’s span of control showed significant room for improvement. The average span of control by area was established to be around 3:1, which is extremely low compared to an average target of 8:1 for the industry.
The analysis also looked at some of the KPIs by area – across all levels – to assess their effectiveness. It was found that much data/information existed, but few KPIs measured productivity and performance. Systems had grown organically with poor orientation to the company’s strategic targets.
IMPLEMENTATION
In the first phase of the project, Renoir implemented the workload and master scheduling method in order to identify the opportunities relating to a “new” organisational structure. In the second phase, the new organisational design was implemented with all effected personnel trained and performing new working practices as defined.
Renoir also reviewed and documented 180 processes with standard operational procedures. In addition, 185 Job descriptions were re-written and in accordance with new structure functions, roles and responsibilities.
The assignment was designed for the Client and Renoir personnel to work together to effect knowledge transfer. It included internal development of a management system that involved operational and support areas, complemented with training at all operational levels in order to ensure sustainability.
“ Congratulations on the work! Today the communication between areas has improved. Now we discuss the problems together (operations and support areas) and we find solutions together. ”
Operations Planning Senior Manager
As a result, the organisation achieved:
- Implementation of best management practices in processes redesign. Formal Communication, Management Performance and Action Plans to increase sustainable improvement of Functional Performance.
- Redesign of the organisational structure and created tools to scale the correct amounts for each function in order to reduce the labor costs.
- Training of ‘Task Forces’ as ‘internal consultants’ to identify, quantify and qualify future areas of opportunity through Renoir Methodology, and developed solutions that are geared to preventative rather than corrective action.
- ‘Coaching – Shoulder to Shoulder’ in the field alongside those responsible for the execution of processes using the tools developed thematic and implemented during the project to perform their duties.
- Design and implementation of a management control system in all areas which involved Task Forces, enabling them to multiply knowledge when required.
- The collaboration resulted in a 90% compliance with the management control system
KEY RESULTS
100%
Achievement of the targeted financial result to Cost Reduction
4.8:1
Project ROI
14.3%
Headcount reduction
$10.3M
Reduction in annualised labor costs
3:1 to 5.2:1
Improved Span of Control
In addition to the labor cost reduction, the project also delivered:
- A structure for the operations, administration and support functions.
- Key processes and interfaces aligned with operating procedures and improved communication levels within the organisation.
- An internal group of qualified professionals to multiply the knowledge acquired.
CONCLUSION
The case study of the global port operator showcased how Renoir Consulting helped the company achieve a more efficient and effective organisation design, with improved span of control and KPIs measurement.
The implementation of best management practices, processes redesign, and training of task forces resulted in a significant reduction in labor costs, a clear structure for operations, administration, and support functions, and improved communication levels within the organisation.
The project achieved its targeted financial result and ROI and was implemented in a sustainable manner, ensuring that the benefits will ensue for years to come.
