8.18.2008

How Should You Structure a Lean Organization?

Does it matter whether the top lean person in a company reports directly to the CEO, or is a few levels removed?

Not much.

Or so says Bob Paquette, who discussed this issue in a presentation at the recent regional conference in San Diego of the Association for Manufacturing Excellence.

Paquette is a “master expert” in the Raytheon Six Sigma program at the defense and aerospace supplier – not the top improvement person in the company, but a middle manager. The Raytheon program, by the way, is not just about Six Sigma, but also involves lean.

He was concerned over the fact that the organizational structure at Raytheon has changed over the years. Back in 1999, the RSS VP reported directly to the CEO. But by last year, he said, that person reported to a senior VP, who reported to an executive VP, who reported to the CEO.

Paquette decided to research the subject. He sent out surveys to 60 companies, asking them to describe how improvement efforts fit into their organizational structures, and to rate the effectiveness of their improvement programs (along with many other questions).

From the results, he concluded that one factor affecting the success of an improvement effort is having at least one percent of your workforce in full-time roles as improvement specialists.

However, he said, “I couldn’t find a correlation between reporting level and level of effectiveness.”

If the top improvement person reported directly to the CEO, or was just one level removed, there was “an indication you had an edge. But it wasn’t conclusive,” he said. “It looked liked it helped, but it wasn’t necessary.”

His conclusion was that what matters is not organizational structure, but the organization’s commitment to making improvement a part of how it does business.

At Raytheon, he said, “It’s alive and well, and I need to get over the fact that It’s not like it was before.”

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