‘We’re going to re-structure the business.’
This short sentence evokes an array of questions, thoughts, and emotions. For leaders, it’s an opportunity to improve efficiencies, enhance performance, and increase profit margins. But for employees, job losses, disruptions, and ambiguity come to mind. Consultancies often promise big savings, but with the willingness to support enterprise-wide change at record lows, they often leave companies in an uphill battle with long, arduous changes to make.
So, where is the disconnect?
It starts when companies focus on one small piece of the puzzle, rather than Organizational Design as a whole. While good org design starts with structure, it also includes everything from processes and governance to technology, people, and culture. Each of these components should be assessed and potentially revamped based on a function’s purpose and strategic priorities. And so, while each function’s design will look different, they should all focus on enabling the company’s business strategy.
Let’s look at the realities of org design and how you can make yours a success from the start.
A common part of business.
According to a Harvard Business Review study, 80% of employers are expecting to see re-orgs at an equal or faster pace over the next three years. A myriad of external factors – from economic challenges, to technological advances – are accelerating the need for teams to rethink how they operate. Companies need structures and operating models that enable them to adapt and thrive – especially during uncertainty and constantly changing conditions.
But despite this increased prevalence, only 16% of organizations are successful at creating value and delivering the expected results, according to Harvard Business Review. To understand why this occurs, and what to do as a result, let’s explore what we’ve learned to be true about organizational design, based on our experience helping clients articulate their purpose and design structures and systems to achieve it.
1. Good org design creates value for the future while solving the problems of today. Treating org redesign as a cost-cutting exercise will only result in failure. Solving the crucial current state problems is foundational for the design process. But it’s not enough. Good org design is an investment that brings the future into the present vs. just fixing the past. For example, when one of our clients was tasked with cutting costs, they came to us with the goal of fundamentally redesigning the entire team based on the needs of the future. But, through our work together, they were able to successfully refocus their efforts, with strategic investments in the right place.
2. At its heart, org design is an inclusive process that puts people at the center. From strategic alignment to process design, each step is a critical and creative opportunity to gain buy-in along the journey, and for people to become part of the solution. Failure to do so will create significant challenges in the future, and risks crucial value being lost in the end design. For example, one of our clients took a multi-phased roll-out approach for their new operating model, starting with a pilot group before expanding globally. This allowed for real-time feedback to refine the model and also sped up adoption as people were involved in the journey.
3. There is no perfect model. There is only the model that is perfect for you. Organizations often rush to redefine the organizational structure as a panacea, sometimes copying what works for other places. However, rearranging the deck chairs will not yield the desired outcome. You must consider multiple factors – strategy, process, culture, technology, and the needs of your stakeholders – as part of your unique ecosystem to make it work for you.
4. The design is your map, and implementation is your GPS. The perfect model alone does not ensure an organization gets where it needs to go. It comes alive as a result of thoughtful change implementation that builds over time. And that requires investment in people to get to the next level. With one of our clients, taking care of the ‘human factors’ was a key driver in making the new model come to life in practice, beyond just lines and boxes on a page. A clear and compelling desired state was communicated to all employees, and leaders and team members were equipped and upskilled to handle new processes and ways of working to support the new model.
5. Flex and iterate as you go to build resilience for the unknown. If you’ve followed these truths, the foundations of your org design should serve you for many years. Be a student of your own design, continuously evaluating what works and what needs to change, and act quickly as required. Being nimble means you can evolve to meet changing needs, and your organizational design should reflect this. For example, another client set the functional accountabilities for the team, and while the specific individuals, reporting relationships, and projects changed over time, the core sentiment of what the function stands for did not change.
Regardless of the function, or reason for change, by following these five truths and doing what’s right for your business, you can help the benefits of good organizational design sooner and for longer.