Having weathered the last few years, a number of businesses that I’m working with are now making decisions to re-visit their business strategy and where the main goal had been to maintain the status quo, they are now looking for growth.
They understand the need to change what they’re doing and how, but the first thought that the directors have is “we need to re-structure”, and they may do but before they jump straight in, they need to take a step back. Organisational design is about aligning the organisations structure, jobs, communication and inter-relationships with the business aims and objectives.
A good organisational design project will consider what the organisation wants to achieve, and then aligning the design criteria with this to meet the organisational strategic goals.
Aligning organisation design can yield efficiencies and enhance organisational performance. It can help redesign jobs and build new career paths, creating an environment where employees can thrive and innovate. Having a workforce that is more motivated and creative should not only help an organisation compete for and retain talent, but should also help it create more value.
Without understanding what the organisations needs really are and implementing a project plan effectively, there is a risk that:
- Without aligning to the organisational strategy, people are pulling in different directions, as those involved in the initiative may expect to have greater involvement and ability to influence
- Ineffective execution and lost opportunity for further improvements in effectiveness impacts on the ability to meet client needs in a timely and cost effective manner
- There is reduced collaboration across boundaries, as individuals don’t see the need for making an effort, long decision-making processes, difficulties and/or unwillingness to share information and best practice
- Reduced recognition leads to frustration and increase in employee turnover, as well as the possibility of reduced standards and the wrong results
- If having been enabled and empowered and part of something this is not continued, leads to low employee satisfaction, effort without results, and an overall lowering of performance
So what should you think about when starting an initial project?
We’ve already identified that the organisation design must support the strategy. So think about the organisation, if the organisation tends to be innovative then a hierarchical structure may not work. If however, the strategy is based on low cost and high volume delivery, then a rigid structure with tight controls may be the best design.
The design must take into account the size of the organisation. A small organisation could be paralysed by too much specialisation. In larger organisations, on the other hand, there may be economies of scale that can be gained by maintaining functionally specialist departments and teams.
If the market environment the organisation works in (customers, suppliers, regulators, etc) is unpredictable or volatile, then the organisation needs to be flexible enough to react to this.
What level of control is right in the business? Some activities have high skilled technical needs whilst others are more efficient where there is a high degree of flexibility.
The key activities of the project should include development of design criteria and assessment and selection of a preferred service delivery model for your organisation. This will then influence the development of a new organisational structure. From there you can move onto the development of an implementation plan and what support is required to make it happen.
Although we shouldn’t jump straight into reviewing the structure and how it operates, it is likely to be key to most projects. So when you’re working with the project group on this, you need to think about:
- Not what you’ve got currently and fitting the current team into roles, but start with a blank sheet of paper
- Accountability for areas of work undertaken by groups and individual roles within the organisation
- Co-ordination of different parts of the organisation and different areas of work
- Effective and efficient organisational performance, including resource utilisation
- Monitoring the activities of the organisation
- Flexibility in order to respond to changing environmental factors
- The social satisfaction of individuals (if employees are engaged and aligned with the organisation, they perform at a higher level)
The reason organisational structure is such a key part and why we tend to start here, is that an ineffective structure, particularly where you’ve made changes, may have the following impacts:
- Low motivation and morale
- Late and inappropriate decisions
- Conflict and lack of co-ordination
- Poor response to new opportunities and external change
- Rising costs
As with any project, the planning stages are crucial and it’s important to really think through what the organisation needs to look and feel like to achieve its strategic goals. Spending time early thinking things through and planning is more likely to result in an organisational design that allows the organisation to meet client needs, build for the future and engage and motivate its employees, thus establishing a sound foundation to move forward.
Peta Fry, HR Director, Monahans