Organisational Design – 9 common mistakes to avoid

Organisational Design (OD) is the process for shaping the way an organisation is structured and run aimed at reducing costs, driving growth, increasing performance and business resilience. OD is a serious endeavour and, in the worse cases, can take years to implement or realise the benefits.

I was recently speaking to an old friend who described their current restructure project as a ‘beast’. If this seems relatable to you, rest assured, that they are not all like this and they certainly can be tamed.

Many organisations run into trouble as they go through this process so here is our nine most common mistakes to make sure you avoid:

  1. No clear vision of the future

It is crucial to have a shared vision for the future amongst the key people in the business. Without this, any restructure could be seen as a negative cost-cutting exercise, rather than a necessary step in your transformation journey. This may risk key team members leaving the business, which adds further uncertainty and vacancy challenges. In addition, limited communications of this vision to the wider business can lead to reduced motivation and loyalty amongst employees.

  1. Designing the org chart before the structure

Leaders are personally impacted by organisation restructures and so it is easy for the Executive Team to fall into the dangerous trap of looking at which people you want to keep or leave, rather than defining the required structures to deliver your vision.  Focussing on people first can lead to clashes amongst senior leaders or poor business decisions which damage the organisation. Get the structures right first, then look at the roles (not individuals) required within those structures. This will help ensure you build an organisation which is fit for the future. 

  1. Shuffling the deckchairs alone does not change the ways of working

The purpose of organisational design is typically focused around changing supporting structures to enable an organisation to deliver on a new strategy, however, the benefits of good organisation design are often realised when teams also shift certain behaviours. Changing personnel will not automatically influence the culture or behaviours.  Consider how decision making, levels of autonomy and resourcing models will be affected and make these changes explicit in your design and roll-out plans.

  1. Talent is not identified and lost

Restructures are often thought of as a mechanism to remove staff from a business, however, it is critical that you also plan how to retain key talent during this time. Many organisations have significant churn during restructures which is destabilising and causes unplanned knowledge loss. Do you know who your company’s rising stars are and where they sit in the current business structure? How will you encourage key team members to remain committed and go on this journey with you? Ensure you have a workstream which focusses on talent. 

  1. Limited support for middle-management

Managers are typically the ones who disseminate the messages from senior leadership and without being armed with sufficient information this can lead to difficult conversations or inaccurate information being given to team members. There is a significant amount of work involved in preparing relevant and timely information for managers so don’t leave it too late to get this information prepared and shared with managers before any company-wide announcements. Once the process is up and running, don’t leave managers to get on with it – actively support and check-in with them. This can also create an opportunity to capture bottom-up feedback.

  1. Unfair processes resulting in claims of unfair or constructive dismissal

You need to put a high level of governance and rigour around your processes for consulting with teams, interviewing for new positions and selection to avoid bias and potential claims. Ensure your communications are crystal clear and in no way open to misunderstanding. Our advice is to engage professional HR and Legal support from the outset to reduce risk.

  1. Don’t allow a slump in productivity

It’s easy to be sucked into the details of a restructure but, although this should be a priority, it is also important for the business to keep moving during this period. If your capacity is taken up with the restructure, this may create an opportunity to delegate operational responsibility to another for their personal development.  Be clear with your teams when you will be available to answer questions and, as it is an unsettling time, give clear directions on continued priorities to help remove any ambiguity about key areas of focus.

  1. Performance management not aligned to new organisational design

As structures and roles change, performance will often be measured in a different way in the new organisation design. We all know that rewards and recognition are important for employee motivation and engagement, so make sure that this is not an afterthought and that your performance management processes, rewards and recognition structures align to the new organisational design. Importantly, make teams aware of any changes to this from the outset, so they know how they can be successful.

  1. No clear success measures

How will you measure if your organisation design has been a success? Without quantifiable performance metrics, you may struggle to know whether you have fully realised all the anticipated benefits. Consider the ‘why’ in your decision to redesign and then establish tangible metrics for assessing this at an early stage in the process. This may not require throwing out all of your existing metrics, but you will need to identify where you are looking to drive different outcomes and what leading and lagging indicators will help you know when you are moving in the right direction.

Organisational design is a delicate, intricate process. Avoiding these common mistakes, paired with effective communication and engagement, will set you up for success and help tame the OD ‘beast’.

For any further support or advice on your organisation design, contact Esther McMorris estherm@ninefeettall.com.

 

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