Eyes on 2020

Eyes on 2020

Departments - Cream of the Crop

Readying your company for the new year doesn't need to be overly complicated.

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December 30, 2019

Cream of the Crop features a rotating panel from the Harvest Group, a landscape business consulting company.

This time of year, most landscapers are fixated on finalizing the year-end closing of their company financials, while concurrently preparing to develop a strategic plan for the next fiscal year. With increased revenue and decreased costs always top of mind, astute business leaders extend themselves beyond that elementary mindset and reflexively devote careful attention onto improved systemic efficiency through better alignment of their organizational components.

Alignment is one of those terms that is used so often that its original meaning has been diluted to the point of now being vernacular. To re-establish its principled definition, it is important to note that Galbraith (1977) developed the pre-eminent alignment model that every business owner should adopt in order to improve his/her company’s efficiency. Based simply on its self-evident configuration, the Galbraith view of alignment is often referred to as the Star Model, depicting the salient inter-relationships of five integral organizational components.

Strategy: Strategy is the starting point of the Star Model, representing the company’s direction, goals and key performance indicators. These numerical standards define “what” the company hopes to achieve. For example, as part of its new strategic plan, a landscaping company may decide to increase its design-build revenue by 20%, launch a new automated mowing service with a revenue goal of $25,000 per month or improve its percentage of YELP ratings above 4.5 (out of 5) to 90%.

Structure: Structure identifies “which positions” on the organizational chart are expected to achieve the strategic goals. This feature refers to: specialization (i.e., skill set and staff size), organizational shape (i.e., tall or flat), distribution of power (i.e., centralization or decentralization), and departmentalization (i.e., newly formed or consolidated). For example, given the strategic goal of increasing irrigation revenue by 50%, an aligned organizational chart would likely add an irrigation manager and three new irrigators.

Processes: Processes define information flow and decisions necessary for the structure to achieve the strategic goals. This component represents “how” the goals will be attained and may take the form of budgeting and planning, and/or inter-departmental collaboration or workflow design. For example, to achieve the strategic goal of improving customer satisfaction scores by 10%, a company would design and implement a new work-order standard operating procedure (SOP) intent on improving timeliness and quality, and minimizing bureaucracy and cost.

Rewards: Reward systems determine “how well” processes must be performed to achieve the strategic goals. To be effective, the reward systems must verify congruence between the individual’s personal goals and the company’s strategic goals. For example, a landscaping company that has a strategic goal of 95% annual contract renewal should have a lucrative field operations bonus program of up to 15% salary potential, capable of motivating and reinforcing those employees to attain the stated performance expectation.

People: The People element of the Star Model identifies “who” is accountable for fulfilling the company’s strategic direction. These individuals, and their respective skill sets, which must be aligned with the organization’s goals, need to be enveloped in a proper context inclusive of: recruitment, training and developing, and retention. For example, an organization with the goal of increasing the market share of its Tree Division by 25% in the local area over the next year, could begin hiring more certified arborists, as well as begin paying the related training costs for current employees to gain their own certified arborist credential.

In general terms, alignment is critical to effective organizational design and efficiency. Unfortunately, many companies talk more about alignment in a colloquial fashion, instead of understanding its intended competitive advantage. In that same breath, most organizations tend to focus inordinate attention on Structure and not enough on Processes and Rewards, thereby creating misalignment. Likewise, many companies fail to see the significant impact that organizational policies, culture, and communication can have on alignment effectiveness.

While landscapers routinely focus on increasing revenue and decreasing costs, they should take a larger view of their organizational design and commit themselves to improving efficiency levels through better alignment.

With the Star Model as their singular frame of reference, they will quickly be able to leverage isolated internal components into a more cohesive, integrated and effective approach capable of producing sustained success.

Contact Steve Cesare at harvest@giemedia.com.