Having outlined the history of McKinsey’s 7S Framework (developed by McKinsey consultants Thomas J Peters and Robert H Waterman) in an earlier blog, we are now looking at each of the seven elements in more detail.
As previously discussed, this groundbreaking Framework comprises three “hard” factors (Strategy, Systems and Structure) and four “soft” factors (Staff, Skills, Style and Shared Values). These all work together to help businesses and organisations improve their approach to change management and organisational effectiveness – and to achieve both short-term and long-term goals.
Previous blogs have investigated Strategy and Systems. This blog looks at the third “hard” factor, Structure.
How is Structure defined within the Framework?
Structure refers to the way an organisation is set up, comprising basic structure and hierarchy. In other words, how departments or other divisions relate to each other and the reporting structure.
This is relevant even in small organisations but absolutely vital in multi-nationals and other large businesses, especially those with multiple sites. Each member of staff working in each division or branch should know what the company structure is and who they report to.
In some cases, specific departments may be sited in one place but operate across the business, for example, accounts or IT. Some companies operate a centralised hierarchy, others prefer a decentralised structure.
How does Structure relate to the other elements of the 7S Framework?
The research carried out by Peters and Waterman that led to the development of the 7S Framework began by investigating the relationship between Strategy and Structure.
In McKinsey’s 7S Framework, the three “hard” elements – Strategy, Structure and Systems – are closely linked. When an organisation is considering its strategy, it’s important that it is structured to suit future development. If new systems are to be introduced or existing systems are to be altered, a company will require the right structure in place for any changes to be effective.
Structure should also work in partnership with the four “soft” elements – Staff, Skills, Style and Shared Values – for an organisation to be successful.
Establishing an effective Structure
The way an organisation’s Structure is set up influences how its management works and how individuals and teams communicate. The performance of a company and how it manages change is also affected by its Structure.
To establish an effective Structure, an organisation should:
- Study the current Structure, including hierarchy, organisation of teams, lines of communication and how decisions are made
- Establish how well the current Structure is working
- Analyse how the existing Structure relates to the other six factors in McKinsey’s 7S Framework
- Make any changes required to ensure the 7 elements are in alignment
- Establish a plan looking at the longer term aims of the company
As an organisation grows and develops, its Structure can often become too complex. This can lead to uncertainty among staff about responsibilities and reporting lines, and reduce accountability.
Most organisations tend to have a hierarchical Structure, in which each department has specific responsibilities and a section head, and each team leader answers to a higher level of management. However, another model is to have a flat Structure, with specialist teams set up for specific projects and fewer middle managers.
Having the correct Structure in place will help an organisation achieve its goals. As a business grows and develops, its Structure may need to evolve to better suit its size and activities, and to better align with the other six elements of McKinsey’s 7S Framework.
The four “soft” elements of the Framework will be analysed in upcoming blogs.