Organisational Design in 2020

Organisational Design

With the world of business going through a rapid period of transformation due to to the onset of Covid-19 now could be the perfect opportunity to redesign your organisation. In this article I look at Organisational Design and why it is worth considering right now.

Why now?

Change that usually takes years has happened in less than a few months. Look at the switch to remote working and how people have quickly adjusted?

With people’s resistance to change at an all-time low, having crossed various “dark sides” into paths unknown, people are now willing to embrace change and suddenly see the real value to change.

Take a subjective view of your business:

  • Was what your business doing working?
  • What frustrations did you have daily?
  • What frustrations did your workforce have?
  • Will how your organisation worked in the past worked in the future?

You have probably likely been impacted in some way whether having to make decisions to lay off staff, change the way you communicate or trade to staff and customers. Naturally, a new organisational design might be already occurring. While it may already be happening, it is worth trying to put a structure in place to ensure you make the most of any organisation redesign.

Organisational design is a process of aligning the structure of an organisation with its objectives to improve effectiveness and efficiency to continue to be successful.

Traditional and contemporary organisational designs

Organisational designs fall under two categories, traditional and contemporary. Traditional designs incorporate simple structure, functional structure and divisional structure. They are a familiar power dynamic; someone leads and others will follow. Contemporary designs have team structure, project structure, matrix structure, boundary-less structure and the learning organisation. The structure transfers power from middle management to employees.

Organisations are evolving

Organisations tend to evolve over time, and therefore how a business operates will need to change. We’ve seen this drastically increase with COVID-19 as organisations either need to grow or shrink.

As the challenges in the external environment get more complex, processes, structures and systems that once worked well suddenly become barriers to efficiency. They begin to hurt customer service, employee morale and financial profitability.

Businesses that don’t innovate or evolve will face problems such as:

  • Unproductive workflow with breakdowns and measures that do not add any value
  • Work becomes fragmented as teams work in silos
  • Lack of focus on the customer
  • Lack of ownership by individuals not regarding new tasks “as part of their job”)
  • Cover up, and blame occurs, rather than root causing and solving problems
  • Delays in the decision-making process as decisions as escalated upwards with individuals not wanting to take responsibility. Fearing the negative consequences of a wrong decision
  • Management, rather than the front line, is responsible for solving problems when things go wrong
  • Lack of communication between workers and management causing a “them and us culture”
  • Employees lack training and skills to do the job required in today’s climate

The process

Organisational design done correctly will identify dysfunction in all facets of workflow, structures, systems, and procedures. It realigns them to better fit the current business context and goals and then develops concise plans to implement the changes. The process focuses on improving both the people and the technical side of the company.

For Organisational Design to work, it involves more than just designing a new organisation chart. Effective organisational design will need to put people at the heart of its process. The high-level tasks involved in the design include:

  • Understanding the purpose of the change
  • Understanding the external environment
  • Looking at future trends and building it into the new design or leaving capacity for it
  • Familiarising the business processes, workflows, roles and responsibilities. Analysing what is working well and what can be improved
  • Understanding the volumes of work, the activities and how long they take, and what resources are available
  • Creating and testing new models or structures
  • Planning and managing the transition to the new structure
  • Implementing and monitoring the change

Benefits of effective organisation design

For most organisations, the design process can bring, significantly improved results to things such as, profitability, productivity and customer experience) The hallmark of the organisation design process is an in-depth approach to organisational improvement that touches each and every aspect of organisational life, businesses, as a result, can achieve:

  • More engaged and committed employees trough a positive culture
  • Less employee turnover
  • Less absenteeism
  • Excellent customer service
  • Increased profits
  • Reduced operating cost
  • Improved productivity
  • A clear strategy for growing and managing the business.

By design, businesses will get the integration of people with core business processes, technology and systems. A well-designed organisation makes sure that the shape of the organisation matches its purpose and strategy, meets any challenges posed by the external environment and dramatically increases the chances that the collective efforts of people will be successful.

Principles to successful organisational design

A study conducted by Whittington and Molloy in 2005 indicated that to achieve success in organisation design, it is necessary to:

  • Involve HR, right from the start – involving HR has been proved to affect on a range of performance outcomes positively
  • Obtain senior management support and have their buy-in as they will be responsible and leading the change and must role model daily for it to be effective
  • Avoid uncoordinated change initiatives by making a strategic business case that anticipates implications across the entire company
  • Involve employees in the change process, going beyond communication to active engagement
  • Communicate with external stakeholders, including customers, suppliers and investors
  • Use project management methodologies

Build a highly skilled change management teams – with the correct mix of experience and abilities from across the business

Organisations that are supported by an HR professional will have the right skills and knowledge. This will help ensure that people remain at the heart of the process. An HR Professional can help to analyse and make decisions using people metrics and data, using this to provide insight across the organisation.

Often when people hear the word “organisational design” they assume it means moving around rectangle boxes on an organisational chart. While the structure of an organisations hierarchy is essential, it’s only one part of organisational design.

In a 2015 article from McKinsey summed this up with this metaphor:

“Many leaders tend to ignore the other structure, people and process elements that are part of a complete redesign, thereby rearranging the deck chairs but failing to see that the Titanic may still be sinking.”

This is where an outside consultant comes in. A redesign expert helps leaders understand the best ways to customise a model for their business. They will be able to draw on experience where they have seen which changes work and which don’t work for similar organisations.

Need help with your organisation redesign? Get in touch with Beagle HR today