Organizational Design Assessment for Cost Reduction

ScottMadden worked with an energy company's human resources department and a leadership team from across the company to identify cost reduction opportunities through a thorough assessment of work, position mix and structure. Phase I included completely restructuring the organizational design and calculating potential savings.

Challenge

The companys O&M growth, cost growth, particularly labor, was outpacing its revenue growth
The organization had been lax in controlling labor cost in the past
The scope was large: every department in the company was analyzed to achieve labor cost reductions

Solution

Analyzed the work performed in every department and identified efficiency opportunities to reduce/consolidate/outsource
Assessed the mix of positions to ensure the level of positions matched with the level of work
Assessed the organizational design through analysis of spans and management layers; compared to best practice guidelines
Based on these three areas of analysis, worked with leadership to redesign all departments in the organization

Results

More than $65 million in annual savings is expected
Redundant work areas were consolidated
The organizational design was streamlined resulting in improved communication channels and greater overall efficiency

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