December 2016

Organic management structure – its advantages in a mining consultancy

  • By G Pitkin MAusIMM(CP), Principal Consultant and D Sorley MAusIMM, Principal Consultant, GPPH & Associates

An alternative organisational structure that is flexible and meets the needs of the dynamic and cyclical nature of the mining industry

The purpose of any consultancy is to provide a superior service for its client. Organisational structure is a key element in providing this service and differentiating between consultants.

In an organic organisation, the emphasis is on effectiveness, problem solving, responsiveness, flexibility, adaptability, creativity and innovation. Such an organisation is able to respond in a timely manner to change because employees are empowered to be creative, experiment and suggest new ideas. The process of innovation is triggered by employees throughout the organisation in a collaborative manner.

Problem solving becomes a core competence of the consultancy. A multi-disciplined approach arrives at superior solutions that are rigorous, holistic, achievable and often novel. It allows the mining consultancy to extract the most from a very talented and experienced team.

This article highlights the advantages of an organic structure for a mining consultancy and how to implement such a structure. It draws on examples of innovative problem solving taken from feasibility and strategic studies carried out in Australia and Africa.

Organisation structures

The selection of an organisation structure for a mining consultancy is closely related to the strategy adopted. A generic marketing strategy may be implemented as a filter to narrow down a firm’s marketing strategy. This strategy looks at focusing on one of the following: branding, innovation, distribution or price (Cravens, Merrilees and Walker, 2000). Firms that follow a branding focus are likely to use a hierarchical or mechanistic structure due to the level of control and uniformity that this affords. Similarly, a low-price focus comes from the efficiency afforded by the centralised control and standardisation of a mechanistic organisational structure. Sole traders and partnerships may also achieve a low-price focus due to the low overheads possible in a simple organisation. Where distribution is the primary strategic marketing focus, a matrix organisation structure is likely to be the most successful (McDonnell, n/d).

But where strategic differentiation of the consultancy is based on innovation, an organic organisational structure is most suited. The distributed decision-making, shared power, team building and horizontal communications make the organisation highly adaptive and foster innovation.

Burns and Stalker (1961) defined organisation structures as being either mechanistic or organic based on a study of Scottish firms in the late 1950s. They argued that companies facing a dynamic and uncertain environment may have to develop or maintain an organic organisational structure. Companies operating in a stable environment may benefit from developing or maintaining a mechanistic organisational structure. Organic structures process and distribute information and knowledge faster within the organisation. This results in an increased ability to respond or react to change, thereby leading to rapid innovation.

Mechanistic structures act as an effective and efficient organisational structure for companies operating in a more stable and certain environment. An organic organisation takes into consideration the higher-order needs and capabilities of its employees as individuals, leading to group leadership and superior teamwork. Leadership is shared by several people, rather than one person telling everyone what is expected. Organic organisations take into consideration the ideas of the employees, thereby fostering teamwork among employees instead of competition and powerlessness. The use of an organic structure provides strong incentive to participate and perform. In hierarchical structures, performance is often repressed by the superior/subordinate relationship. The narrow scope typical of work allocation in a hierarchical organisation often restricts individual impact on value creation.

While organic systems are not hierarchical, they remain stratified. Positions are differentiated according to expertise. The lead in joint decisions is frequently taken by seniors, but is always taken by whoever is most informed and capable. Authority is settled by consensus.

The requirement for commitment to the firm is far greater in organic than in mechanistic systems. Commitment is expected to be totally professional to the work. A consequence of this is that distinguishing between an ‘informal’ and ‘formal’ organisation is difficult.

Control is exercised by the development of shared beliefs about the values and goals of the company, rather than the command structure of a hierarchy. The growth of a shared culture and professional ethics take the place of structures and rules.

Case study of an organic management structure in a mining consultancy – GPPH & Associates

Company organisation is a continuum between organic and mechanistic structures. No company perfectly conforms to either extreme. GPPH & Associates is a small consultancy that leans strongly towards an organic management structure. The company has nine employees and a large number of associates, and the company mission is strongly oriented towards exceeding client expectations through innovation and professionalism. The company goals focus on individual professional development as part of a team.

Teams are the basis of all work, which includes both professional services and support tasks. Each team has a leader or manager, plus one or more additional members. The make-up of all teams within the company has changed over time to allow for the development of employees. Teams may be expanded or additional teams formed on an ad-hoc basis to meet specific requirements. Support tasks undertaken by separate teams include administration, management, training and HR, marketing, computing and safety.

All professional service jobs have a job manager and a job director. Most jobs have at least one additional team member. There is an effort made to include a broad input into every job due to the diversity of views that this brings. The job manager carries out traditional project management and control functions as well as providing leadership and a focus for facilitating communication. The job director is commonly a more experienced professional who acts as a mentor to the job manager and team members. Quality assurance is also ensured by the job director.

Features and advantages

In an organic management structure, there is an emphasis on effectiveness, problem solving, responsiveness, flexibility, adaptability, creativity and innovation. All jobs are approached on a first principles basis, with problems being solved based on the evidence and data collected. This contrasts starkly with the alternative approach of fitting each job within an established methodology. While having a standardised approach can simplify job execution and provide consistency, it often does not adequately address the principal problems. A flexible, team-based approach commonly produces innovative solutions that address the root cause of the principal problems. New or modified tools are developed to provide solutions to problems.

Consulting is a knowledge-based industry, and the cyclical nature of mining markets, combined with the rapid pace of modern technological change, mean that consultants must be able to adapt. An organic management structure allows a rapid response to change. Employees are empowered to be creative, experiment and suggest new ideas. This allows the development of new products and processes and entry into new markets. The company does not stagnate and fall victim to changing times.

Knowledge transfer and personnel development are features of the organisation. The ability to work on a range of projects and activities with various responsibilities provides numerous development opportunities for all levels of consulting personnel. Relatively inexperienced personnel are exposed to different aspects of the job or activity due to a lack of the need to ‘fit into pigeon holes’. Job manager roles are assigned based on ability and personal development opportunities, while more senior personnel commonly report to a more junior manager.

Collaboration, consultation and convincing are used for communication rather than control, feedback and instruction. The organisational structure minimises hierarchical and positional power. It removes the ‘tradesman/apprentice’ structure and makes it easier to challenge assumptions. No value is assigned based on the originator’s position in the organisation, but rather on the merits of the case presented.

Disadvantages

Some of the strengths of an organic organisational structure also highlight its weaknesses. Much emphasis is placed on communication and normative affirmation of core values. This requires frequent informal discussions between team members. The lack of structure does lead to some time inefficiency, and care must be taken to ensure effective time management. There is also an increased requirement for training in communication and other ‘soft skills’.

For those employees more used to a hierarchy, an organic structure presents particular difficulties. It is easy to regress to old habits. Continual diligence is required to ensure that lines of communication are left open. Allowance must also be made for differing personalities and communication styles.

The lack of clearly defined procedures can also be a disadvantage when performing jobs requiring little originality or innovation. This influences the nature of jobs sought by the consultancy. ‘Body hire’ types of work are not well-suited to an organic organisation.

Core ring structure

As company size increases, an organic structure becomes unwieldy without additional superimposed structures. GPPH & Associates utilises a core ring structure to extend the enterprise scale. Figure 1 (Wood et al, 1998) shows a typical core ring organisational structure. The current inner core of nine employees is supplemented by an outer ring of associated companies, retirees, specialists and subcontractors. This outsourced expertise allows a rapid response to market and customer requirements, allowing teams of 20 consultants to be fielded for larger jobs. Specialisations can be added to augment existing team capabilities and to allow competition with much larger consulting companies. In the changing marketplace, this structure is very efficient and allows rapid adaptation to market requirements.

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Implementation

Implementation requires an understanding of expected outcomes. This must be embraced by the whole organisation. Change will only be successful if the whole team is committed to the new organisational structure; it cannot be successfully implemented by a decree from the top.

To leverage the potential for innovation within the team, a suitably wide range of skills and experience is essential. The recruitment strategy of an organic consultancy must be aligned with this goal. Personnel with different but complementary skill sets must be actively sought. 

Also of importance is the right ‘fit’ with the organisation. During recruitment, soft skills must be assessed, in addition to more technical skill sets. Personnel who are chosen must be able to operate in an environment that relies heavily on communication and collaboration.

Different points of view are the foundation for developing successful solutions to problems. Differences are celebrated in organically structured organisations. Valuing people for the unique skills that they bring to the team is essential in promoting effective communication. This cultural difference gives people freedom and confidence to ‘wonder out loud’ in a supportive environment. This assists in identifying root issues and process interactions and develops a wide range of possible solutions to assess.

A successful organic consultancy will strive to create an extremely flat organisational structure. Deep hierarchies must be eliminated. Due to the job-based team approach, personnel will change roles depending upon the job. As such, job titles associated with hierarchies are not relevant as they can often hinder the process of developing an organic structure.

The career progression of people who work within an organic structure is based on capability, competence, teamwork, leadership and expertise. It is important to note that career progression in this context is not upwards through an extensive hierarchy, driven by standing out as an individual. In an organic structure, career progression is largely driven by acceptance of your input by your peers. Career progression involves taking on more responsibility within the team environment. This can relate to managing or directing jobs or taking on responsibilities for assisting the development of colleagues.

Organic consultancies place great importance on effective communication skills. Training and encouraging personal development in these areas directly impacts the performance of the team. The interactive nature of problem solving relies totally on the ability of team members to communicate effectively.

Developing the emotional intelligence of team members within an organic structure also magnifies the benefits of collaboration. Robust debate is often required to achieve high-value solutions; however, the personnel involved will have very different levels of expertise on the subject matter. Team members with high levels of interpersonal skills are invaluable in guiding these discussions and ensuring that all team members have the opportunity to contribute. The success of the team is dependent on sound decision-making based on the relative merit of the argument, not the position of the proponent.

An organic structure requires team members to do more than simply turn up and get on with the technical aspects of the job. Being an active collaborator and team member is essential to extracting the maximum benefit of the organic structure. Value lies in sharing ideas and critical, constructive debate.

Building an effective team requires strategies that create opportunities for the team members to interact. This allows the members to develop the relationships that will enhance the team’s effectiveness at identifying and resolving issues.

Case studies

Drayton South

The Drayton South feasibility study was conducted by a large team of ten employees and six associates, led by a principal consultant. The project is located in an extremely environmentally sensitive area in the Hunter Valley, Australia. Significant constraints were also imposed by the strategy adopted by the client.

The recommended solution for the project involved innovative mining methods, which significantly reduced mining costs. An example of this was developing a method of mining based on combined dragline, bulldozer, excavator and trucks, which achieved levels of productivity similar to a conventional dragline operation. Operating costs were much lower than traditional truck and excavator methods. Also crucial to the recommended solution was the incorporation of environmental impacts into the mine design process. This was required to mitigate external stakeholder concerns.

This process led to a series of innovative methods and software developments that allowed ‘on the fly’ assessment of visual impacts of the mine design. This dramatically reduced the time taken to understand visual impacts compared to the traditional method of third parties conducting visual assessments independently of the mine planning process.

Dartbrook

The Dartbrook options and prefeasibility studies were conducted by a large team of seven employees and seven associates, led by a principal consultant.

The deposit has a very complex stratigraphy. A variety of sampling methodologies were adopted during the history of exploration of the deposit. A novel approach to coal quality interpretation was required to maximise use of the accumulated data. Standard approaches of coal quality interpretation were ineffective and rejected too much data, which could not be re-sampled because of subsequent underground mining. The team of coal quality geologists, mining engineers, metallurgists, a technical marketing specialist and a software engineer devised a method for determining likely coal products, specifications, yields and variability. This method allowed the highest-value product strategy to be developed. 

The proximity of the Dartbrook deposit to Muswellbrook and Aberdeen in the Hunter Valley led to severe environmental constraints on the mine plan. Standard mining methods were shown to have too high a dust impact. A novel mine design was developed, which dramatically reduced environmental impacts. Environmental consultants considered that this plan met all regulatory approval requirements. It also produced a first quartile cost structure. 

Conclusion

The dynamic and cyclical nature of commodity prices creates significant pressures for the consulting industry to develop suitable and flexible strategies in order to succeed. An organic organisational structure has long been associated with success under these conditions. Mining consultancies that adopt an organic structure are more nimble and more able to offer specialised services to help identify high-value strategies and solutions.

The collaborative nature of an organic structure allows information and ideas to be rapidly disseminated throughout the consultancy. The widest pool of potential solutions is able to be identified as a result of all team members’ input. The talent and experience of all team members is able to be brought to bear on the problem due to the flattening of the management structure. Novel and innovative solutions are generated by cross-functional teams.

Personnel within such consultancies are offered broad experiences and the opportunity to put forward their ideas without being restricted by defined positions within a large hierarchy.

While an organic structure is ideally suited to a small consultancy, a larger organisation can be accommodated using a core ring structure.  

References

Burns T and Stalker G, 1961. The Management of Innovation (Tavistock: London).

Cravens D, Merrilees B and Walker R, 2000. Strategic Marketing Management for the Pacific Region (McGraw-Hill: Sydney).

McDonnell S, n/d. Consulting firm organizational structure [online]. Available from: yourbusiness.azcentral.com/consulting-firm-organizational-structure-27072.html

Wood J, Wallace J, Zeffane R, Schermerhorn J, Hunt J and Osborn R, 1998. Organisational Behaviour: An Asia-Pacific Perspective (John Wiley & Sons Australia: Brisbane).

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