Pricing and Profitability Management: A Practical Guide for Business Leaders

Designing Robust Organizational and Governance Structures

The challenge with any corporate restructuring is to redesign the organization so that it reflects the company's culture and serves its objectives without becoming co-opted by political considerations. In essence, the structure is a framework of rules and policies through which an organization defines roles, including their assigned rights and duties. The structure also determines the flow of information through formal—and informal—communication channels. The term governance refers to the rules that define and regulate an organization's decision-making authority and reporting relationships, as well as the ways stakeholders from multiple functions and lines of business interrelate. It also defines to what extent power and responsibilities are centralized.

Companies with effective organizational alignment and governance capabilities:

• align incentives and performance metrics with pricing strategy
• engage leadership to drive pricing excellence and cultural change
• clearly define areas of responsibility and accountability for all aspects of pricing
• focus on processes for continued improvement
• offer career paths for people involved in pricing processes so a firm can retain high-performing talent
• focus on creating buy-in and ownership for change, which will accelerate full optimization of the pricing strategy
• align the vision of the pricing organization with the company's culture.

As difficult as people find it to change, organizations ...