Organisational design is not for the faint of heart. Get it right and your business unit, function or organisation is ready for whatever the 2020s continue to bring: rapid growth, digital transformation, merger, downturn or inflation. Get it wrong and you can destroy shareholder value, disrupt operations, reduce employee engagement, invite litigation or negative media coverage and undermine faith in the organisation’s leadership.
It’s a complex task that is much more than shuffling boxes on an organisation chart. With so much at stake, HR should be at the heart of any organisation design, yet the profession is often relegated to implementing the plans handed to them by other leaders. To make a full contribution, HR leaders need to be data driven, systemic, big picture thinkers and comfortable contributing their unique insights into the design process.
With organisation design you must take a step back to take a leap forward.
If you’ve been tasked with redesigning your organisation you’re probably thinking ‘Where do I start?’, ‘What if I get it wrong?’. To stack the odds of getting it right in your favour, before embarking on any organisation design process, you need to ask yourself and your leadership teams some tough questions. Here are three critical areas to focus on upfront to give yourself the best chance of succeeding.
1. Be clear on what you need to achieve
With organisation design you must take a step back to take a leap forward. High quality organisation design focuses on how to best organise to deliver on strategic priorities. But are those priorities clear and understood by everyone?
Too many strategies are full of vague statements, conflicting priorities, and big promises. All of which leads to a lack of clarity and makes your task as a designer difficult when you try to align processes, structures and roles with the strategic direction. Never be afraid to ask basic questions even at the risk of looking stupid.
It is also important to test if the real purpose of the design exercise has been uncovered. Many organisation design exercises start out as a covert, elaborate way of dealing with challenging individuals or situations rather than tackling them head on.
So, bring your leadership group together to clarify the strategy and the priorities. Discuss and agree the problems that must be solved and the opportunities that should be capitalised on and the scope of the exercise. Does it entail altering management hierarchies? Re-drawing reporting lines? Changing staff numbers, skills, and roles? Modifying salary bands? Redesigning processes? By having these conversations early on you will surface differences in perspective and build a greater sense of alignment.
One third of a leader’s expectations are unspoken and unconscious. They don’t know what they expect of you until they see it. So, ask three simple questions at the start:
What does the redesign mean to you?
How would you know we’ve achieved it?
What would a successful result look like?
2. Decide how to decide
Choosing your organisation design is a complex strategic decision. Any substantive redesign will be disruptive and there’s no one right way of doing it. One of the biggest determiners of a positive outcome for strategic decisions is introducing options. In Paul C Nutt’s 2002 book Why Decisions Fail: Avoiding the Blunders and Traps That Lead to Debacles he writes about a 20-year study that found 72% of strategic decisions are binary, ie. based on the question ‘are we going to do it or not?. By considering just one additional option the failure rate for strategic decisions dropped from 50% to 30%. So, make sure you develop different design options to improve the chances of success and reduce the impact of bias.
Evidence shows that bringing in diverse voices and opinions improves the collective IQ of a decision-making team. Due to the sensitive agendas of some redesigns (down-sizing, cost-cutting), leaders are prone to limiting the decision processes to just a select few leaders. This can lead to a phenomenon the military calls ‘Incestuous amplification’ – categorised by narrow thinking and a failure to understand the complexity of an issue.
We need to involve a sufficiently wide range of stakeholders to ensure that any new design reflects the intricacies and realities of the situation and doesn’t reinforce or create damaging imbalances between teams, hierarchy or geographies. Early engagement of the wider organisation can also build buy-in and support for the new design. Without it, what started as a hard to make decision for your leadership group becomes a hard to swallow decision for your people.
Some people will have painful memories from previous restructures. Don’t expect people to buy-in as you tell them about the exciting opportunities that come with your big idea.
3. Understand your context
When you start to evaluate different organisation models you will typically encounter a few organisations held up as shining examples for you to emulate. While it is tempting to import other people’s successful approaches wholesale into your own organisation you have to consider the unique context in which their successes occurred – and how your own context differs.
For example, if you’re leaning towards self-managing teams the global home appliances company Haier will be on your watchlist. However, Haier have had the same CEO since 1994. This stability provides a platform of trust and executive support that creates fertile ground for more radical ways of working to develop and succeed over time.
You’re unlikely to be the first person who set out to redesign your organisation with noble intentions and a compelling business case. Some people will have painful memories from previous restructures. Don’t expect people to buy-in as you tell them about the exciting opportunities that come with your big idea. Many people will have invested a lot of their time and energy to support previous changes and may have been burned by their experience. You need to engage these people, understand their concerns and help them understand why this design is different.
HR’s role in good organisation design
Good organisation design requires introspection, rigorous research and an open mind. It presents an opportunity to rethink the future of your people, your culture and your business.
With their unique understanding of people throughout an organisation, HR leaders can help bring a successful organisation design to life through insisting on clarifying the objectives, agreeing the design approach and ensuring everything aligns with the organisational context.