Organizational Network Analysis

Overview

The strength of a company is spread across its people, processes, technologies, and intellectual capital. While a significant effort is directed at improving efficiency of processes and technology, to be both efficient and effective, a company must understand how to tap the value that resides in the firm's human capital: defined as the people, the network of relationships, and the knowledge embedded in that network. A company's ability to drive innovation, improve employee satisfaction, increase productivity, and deliver value hinges on the strength and architecture of the relationships of its people. When one understand the underlying structure of interactions among employees, managers, vendors, and partners, you can drive new value by:

• Identifying bottlenecks, key influencers, hidden experts, and knowledge brokers.
• Increasing the flow of useful knowledge and information across internal and external boundaries
• Making the implicit structure of the organization work for the company rather than against it

Organizational Network Analysis (ONA) is a proven methodology for assessing and mapping the underlying structure of how work gets done in a firm. It provides visual and quantitative measures of the relationships, knowledge, and structure of a firm.

Organizational Network Analysis

ONA tools provide managers with both a visual map of the underlying connections between individuals, teams, and departments and the quantitative data that backs up the maps and inferred patterns. The example below show how employees within a small company connect with each other to get work done. A key aspect of ONA is capturing and understanding the context of the network. Interviews done before and after data capture ensures that the data is interpreted in the right context given the organizational structure and operation.

From K. Ehrlich, Viant, 2002

 

With a clear understanding of the organizational network, metrics, and processes, managers can plan and make the appropriate changes that positively impact knowledge transfer, communications, and achievement of business goals.

Where Organizational Networks Matter

Companies focus on their formal structure as a way of deploying assets and resources to meet the goals and objectives of the business. In almost every case, the formal structure does not reflect how work actually gets done in the company. Unless leaders understand the difference between the formal and informal, significant unintended consequences can occur to the detriment of shareholder value, employee satisfaction, and customer satisfaction.

Using ONA managers can evaluate how well their organizational networks operate:

• Internal connections: What's the level of connectivity within departments, business units, or teams? How redundant are the connections to mitigate the risk of losing key personnel? Does the connectivity meet the needs required of that entity's mission and goals? Does the organizational network help or hinder the formal structure?
• External connections: How well connected is a firm across it's business units or with an outside partner? How many ties are there across the boundaries where innovation often occurs? Are the external links redundant?
• Formal Structure: What is the extent to which the formal and informal structures complement or conflict with each other? How do the processes and procedures reflect the organizational networks and are they synchronized. Where are there structural arbitrage opportunities to improve processes? Is critical expertise isolated or over-exposed to the detriment of the firm?
• Relational Capital: What's the degree of trust among and between employees? What is the extent of reciprocal behaviors and activities? Does the organizational network help to create or remove social capital?
• Expert Location: Where is expertise located within the organization? Can innovation and ideas easily flow across to the enterprise to where they can do the most good? Are the experts connected to where they need to be?

ONA Benefits

• There are some key benefits that organizations experience using ONA:
• A better understanding of the hidden organization – ONA will pinpoint key individuals critical to the success of the business, reveal bottlenecks and gaps where better connectivity would increase or create new value, and make explicit the way that business really gets done in a firm. ONA will allow managers to make surgical changes in structure to address issues.
• Specific, measurable approaches to improving connectivity – ONA mapping will show the level and effectiveness of the connections inside and between parts of a company so that changes can be made to address needs. This can be especially useful after a merger or acquisition.
• Increased knowledge flow, innovation, and productivity – Through better organizational networks, companies have improved these factors and have increased not only profitability but employee satisfaction as well.
• Any of these benefits can address common issues that companies face including retaining key employees, improving collaboration across the firm, and facilitating innovation.

ONA Process

Depending on the size of the company, an ONA usually takes less than a month to execute and includes four basic steps:

• Define the business issue and context for the analysis and determine desired outcomes.
• Design and administer the ONA survey
• Analyze and interpret results within the context of the firm, its structure, strategy, processes, and objectives.
• Presentation of results and recommendations to senior management

How to Use the Results Of ONA

Using ONA, managers can explicitly understand the flow of knowledge and work in a company and relate it to how the firm generates value. Following the analysis, specific actions can be undertaken to address identified issues including changes to the organizational structure to eliminate bottlenecks, open up connections between parts of a company, or increase the number of connections overall.

The effects of these actions can be measured either by tangible increases in business results or in terms of internal measures such as productivity or satisfaction. Ongoing ONA can be performed to track improvements over time and confirm changes.

More Information

To see if Organizational Network Analysis can help your firm or to get more information on ONA, please contact:

Nathaniel Welch

Welch Consulting

37 Main Street, Suite 4

Concord, MA 01742

978-369-1886

nat@welch-consulting.com

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