Updated: Sep 1, 2022
With the ever-increasing pace of technological change as well as constantly shifting economic and competitive landscapes, organisations face many challenges when it comes to having an optimal organisational design that is fit for purpose.
Historically a CEO may have been a part of one or two major organisational changes in their whole careers. Today, CEOs and top management teams are in a constant balance of having a steady state organisation to maximise results for the organisation during their tenure and at the same time tweak and changing different elements of the organisation, running the risk organisational change fatigue.
Get it right, the CEO and their team are the running a well-oiled machine. Get it wrong the CEO and their team may find themselves herding cats.
In this blog we explore:
• What is organisational design?
• Why redesign the organisation?
• Impacts of an old/ineffective organisational structure
• Organisations and business functions
• Approaches to organisation design
What is organisational design?
To start with, organisational design is not just a reporting line and org chart exercise. It is the art of shaping an organisation to increase its effectiveness in achieving its vision and purpose.
Organisational Design encompasses the integration of structure, processes and people to support the implementation of strategy to meet business objectives.
It involves: the processes that employees follow, workflows, performance management at an individual level, the recruitment of talent, as well as employee skills and capability development.
Why redesign the organisation?
In some cases there is a distinct reason to redesign an organization:
• New innovation growth initiative in a channel, market, or region
• Operational changes resulting from manufacturing improvements
• Merger or Acquisition
Other reasons may lie just under the surface day to day and are less visible:
• A feeling that agreed ideas at or near the top of the organization are not being converted quickly into actions
• Executives spending too much time in meetings
• A culture shift in the teams which suggests that employees might be unclear about day-to-day work priorities or decisions are not being implemented
Impacts of an old/ineffective organisational structure
Over time an ineffective organizational design can impact business and lead to a reduction in performance and ultimately impacting revenue, cashflow and profit. Some impacts of poor organizational design Julius & Clark have witnessed include:
Functional silos from having too much structure and not enough cultural flexibility to offset them
Low momentum and wasted time from people not feeling empowered to take responsibility, resist taking on tasks outside their job descriptions, or hold off making decisions for fear of stepping on someone else’s toes
Reduced customer satisfaction products/service that don’t delight customers and ineffective problem solving due to a lack of coordination between different parts of the business
Reputational damage from inconsistencies in quality or missing something e.g. legal compliance or a quality aspect
Low morale from a lack of structure, trust and ownership, leading to high staff turnover
Organisations and business functions
Even though all organisations are different they tend to share common functions to drive towards their business objectives. Examples of some of those functions are below:
Approaches to organisation design
As no two organisations are the same a single organisation design approach for all is not feasible. At Julius & Clark we have devised the following guideline steps which we tailor to meet client's specific circumstances.
When it comes to organizational design there is no one size fits all approach. In our experience we find:
• Aspects such as competition, technology and markets are driving change much faster than in the past requiring an organization’s design to be optimum in meeting its vision and purpose
• Many reasons can exist to ignite the redesign of an organization from mergers to decisions not being actioned upon quick enough
• Even though organisations typically have the same business functions; how they are empowered, interconnected and communicated with gives organizations the potential for a competitive edge over each other. Examples include being Product or customer focused; regionally or centrally led.
• No set formula exists for determining the appropriate design for an organization. However, following a structured, unbiased and tailored approach with clear goals and ambitions will maximise success and minimize the need to re-design the organization every few years
• Yes the competitive and economic landscapes change however organisations need to be wary not to constantly change the organization as people will become disheartened resulting in change fatigue
If you have an organisational design challenge or are about to embark on an organisational redesign get in touch and we would be happy to have an exploratory conversation.
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