Even the best strategic plans fail when leaders run into organisational boundaries that stop them from moving forward with their executions. In this article and case study we explore the role of structure in achieving strategic goals and explain how HCF restructured for success.
It’s a truism that an organisation’s strategy sets the business direction. Logically, it’s just as obvious that everything within the organisation should align in that same direction. In reality however, many organisations soon realise that while the strategy points one way, the organisational structure points in an entirely different direction. And as those two directions diverge, a gap opens up between the strategy and its successful execution.
Aligning structure and strategy is certainly nothing new, but in today’s market the need for this alignment is more important than ever. When once the lifespan of a Fortune 500 company was around 75 years, today, it’s less than 15 years – and getting shorter all the time. In this environment, failing to achieve the strategic goals could mean the end of the business. At the very least, the inefficient use of resources in a misaligned structure risks the business falling irreparably behind its competitors.
On the other hand, when the structure is aligned to the strategy it does more than merely facilitate execution. Designing the structure based on a shared understanding of the organisation’s purpose and strategy signals to employees and the market that the company is committed to both. What’s more, it shows how these priorities will be achieved by making accountabilities clear, framing expected behaviours and aligning leaders on working collectively to deliver.
Structuring around the organisation’s purpose and strategy has another powerful but often overlooked effect: it helps spark employees’ motivation. Alignment at the strategic level encourages employees to align their individual purpose and aspirations with the wider organisation, tapping into their inner drive and unleashing the innovative thinking that powers competitive advantage.
A healthy alignment: HCF restructures for success
When HCF, Australia’s largest not-for-profit health fund, launched its 2020 Strategy to make health care understandable, affordable, high quality and customer-centric in 2016, this was the very issue the organisation faced.
While the strategy had been rolled out across the organisation, the structure did not support key strategic goals, in particular, member centricity. No one at the executive table had the word “member” in their title, while complexity within the business thwarted efficient decision-making and resulted in disjointed interactions with members of the fund. It was clear that the strategy looked in one direction – towards members – while the structure looked in another – one still mired in siloed ways of working.
HCF worked with Korn Ferry to develop a new structure that aligned to the strategy and actively facilitated execution of HCF’s strategic goals. Dissolving the silos, the new operating model was focused on the four key delivery units critical to achieving HCF’s 2020 strategy, namely, to become the partner of choice in enabling people to care for their health.
“The new structure has provided enormous clarity within the business as to who is responsible for what and where issues are best resolved. The model has created a strong matrix structure which has greatly contributed to elimination of the silo mindset” said Ian Clubb, Chief Officer, People, Culture and Corporate Services for HCF.
By aligning their structure to their strategy, HCF can now deliver on their promise to members that health comes first.
Read the case study to learn more about how HCF restructured their business for success.