Organisation Design in Uncertain Times
Companies in all sectors all around the world are having to adjust to changes in government policy, customer requirements, new technologies and, of course, new ways of working following the coronavirus pandemic. These are challenging times. Organisations are struggling to preserve, never mind improve, their efficiency, effectiveness and economic performance. Many are struggling to understand where they are now, let alone realise their plans and aspirations for the future.
In our experience as organisation design consultants, we have found there are many approaches to improving performance, such as lean, scrum and process redesign. These approaches can be successful and produce a series of small incremental improvements that, in time, lead to effective transformation. There are situations that many organisations face today, however, that require substantial increases in productivity and sizeable cost reductions in the space of weeks. The question is what needs to change to make it possible?
An often-overlooked way to generate a substantial improvement in an organisation’s overall performance that does not take years is organisation redesign. However, many of the current methods and approaches are trailing the needs of today’s organisations. Some amount to little more than a process of shifting people about on PowerPoint, while others are too rigidly mechanistic.
There is a better way. And it involves allowing form to follow function. An organisation needs a vision, a reason for being. A vision needs goals and objectives so that we know when it has been realised. Goals and objectives can only be achieved with a coherent strategy. And strategy can only work if its needs are served by structure. Each role within that structure must be aligned with the specific processes, activities and skills required to achieve the end goal. The real purpose of organisation design is to ensure that these elements are all correctly aligned.
Along the way, there are common pitfalls to avoid. The first is reading too much into an organisation chart. When doing organisation design, people often fixate on where their position sits relative to the person at the top. It is as if an obsession with prominence and power is more important than what needs to be done. And this can lead to designing around personalities rather than end goals.
Secondly, be prepared to challenge the empire builders, for whom work merely expands to fit the available resource, rather than the resource being matched to the work required. Having many people reporting to you is often considered a proxy for importance and significance. But good organisation design looks at more than layers and spans and examines what is ‘in the box’: the objectives, accountabilities, competencies, projects, risks managed and clients served. In other words, see the system. Where the content of the work done does not fit the end goal, be prepared to cut back.
Thirdly, organisation design is not just about who reports to whom. The number and location of managerial positions ultimately define how and where accountability will be measured; so in this respect, the reporting structure is a critical element of design. More importantly, though, it is about what each role is required to do and how decisions get made. It is about the activities that need to be done, the competence needed to do these things and developing a workforce with the right set of skills for each role. It is not where the box sits, but the contents of the box that counts.
Here are some hard lessons learned when it comes to conducting organisation redesign:
Change only at the high level is not the solution
Focusing solely on keeping the political power brokers happy will ultimately result in disappointment
All changes, large and small, can have unpredictable or unintended consequences
Adding complexity merely renders opaque that which is transparent
Making changes based on insufficient or biased data is a recipe for disaster.
Designing an organisation needs to be performed in two phases:
Phase 1 – the macro-structure, which sets the vision and strategy and high-level goals, and then examines structural options and summary processes. Structure follows strategy
Phase 2 – the micro-structure, which analyses and designs teams’ and employees’ objectives, processes, activities, competencies, responsibilities and then right-sizes the number of employees.
The world may be changing, and at pace, but when it comes to designing organisations that are fit for their intended purpose, the old adage that ‘form follows function’ still holds true. Your environment is changing. So too, therefore, is your function. What are you doing about your form?