ORGANIZATION DESIGN
Organization design largely determines how an organization does it`s business. The process focuses on improving both process and people side of the business, may involve strategic decisions, but is properly viewed as a path to effective strategy execution. It involves determining the size and scope of the organization, necessary functions, how communication happens, and how decisions are made. The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that touches all aspects of organizational life, so you can achieve:
- Excellent customer service
- Increased profitability
- Reduced operating costs
- Improved efficiency and cycle time
- A culture of committed and engaged employees
- A clear strategy for managing and growing your business
- A consistent execution of the strategy
A well-designed organization ensures that the form of the organization matches its purpose or strategy, meets the challenges posed by business realities and significantly increases the likelihood that the collective efforts of people will be successful. As companies grow and the challenges in the external environment become more complex, businesses processes, structures and systems that once worked become barriers to efficiency, customer service, employee morale and financial profitability. Thus, organizations should periodically renew themselves to stay fit and win the competition.
At the highest level of business, an efficient operating model is the cornerstone of successful strategy execution. It translates strategic intent into a blueprint for how the organization will deliver value. It includes design principles for how the organization will operate, how decisions will be made and what behaviors will drive performance. An effective operating model enables organizations to deliver growth and scalability, improve the customer experience, drive operational efficiency and develop a sustainable business.
Methodology: Adaptable to the size, complexity and needs of any organization, the organization design process consists of the following steps;
1. Charter the design process: As senior leaders, you come together to discuss current business results, organizational health, environmental demands, etc. and the need to embark on such a process. You establish a charter for the design process that includes a “case for change,” desired outcomes, scope, allocation of resources, time deadlines, participation, communications strategy, and other parameters that will guide the project.
2. Assess the current state of the business: You don’t want to begin making changes until you have a good understanding of the current organization. Using our Transformation Model, we facilitate a comprehensive assessment of your organization to understand how it functions, its strengths and weaknesses, and alignment to your core ideology and business strategy. The assessment process is astounding in the clarity it brings an organization’s leaders and members, not only regarding how the organization currently works but how the various parts are interrelated, its overall state of health and, most importantly, what needs to be done to make improvements.
3. Design the new organization: The senior team (and/or others who have been invited to participate in the process), look to the future and develop a complete set of design recommendations for the “ideal future.” At a high level, the steps in this process include the following:
- Defining your basic organizing principle. (Will you organize primarily around functions, processes, customer-types, technologies, geographies, etc.?)
- Streamlining core business processes—those that result in revenue and/or deliverables to customers.
- Documenting and standardizing procedures.
- Organizing people around core processes. Identifying headcount necessary to do core work.
- Defining tasks, functions, and skills. What are the performance metrics for each function/team? How are they evaluated and held accountable?
- Determining facility, layout and equipment needs of various teams and departments throughout the organization.
- Identifying support resources (finance, sales, HR, etc.), mission, staffing, etc. and where should these should be located.
- Defining the management structure that provides strategic, coordinating and operational support.
- Improving coordinating and development systems (hiring, training, compensation, information-sharing, goal-setting, etc.).
At some point the design process morphs into transition planning as critical implementation dates are set and specific, concrete action plans created to implement the new design. And a key part of this step includes communicating progress to other members of the organization. A communications plan is developed that educates people in what is happening. Education brings awareness, and everyone’s inclusion brings the beginning of commitment.
4. Implement the design: Now the task is to make the design live. People are organized into natural work groups which receive training in the new design, team skills and start-up team building. New work roles are learned and new relationships within and without the unit are established. Equipment and facilities are rearranged. Reward systems, performance systems, information sharing, decision-making and management systems are changed and adjusted. Some of this can be accomplished quickly. Some may require more detail and be implemented over a longer period of time.
Model: The Transformation Model is the framework we use to help leaders understand their organization and guide a successful redesign. The model reduces the complexity of an organization to eight key variables that must be understood and aligned for a business to be successful. Alignment implies a holistic or systems point of view that finds the best “fit” between all organizational elements. Paying attention to and understanding these variables will result in major improvements in customer service, quality, efficiency, cycle time, profitability and satisfaction of employees.
These eight variables form the “big picture” or context of an organization and ultimately determine its success. When we talk about organization design we are talking about the relationship and balance between each of these variables. The role of leaders could be defined as understanding and managing these variables.
Environment - Organizations, like all living systems, can survive only to the extent that they maintain harmony with their external environment. This includes being sensitive to the evolving needs and perceptions of customers, understanding changes occurring in technologies, knowing your competition and understanding the legal, social and political climates. Most organizations eventually die because they fail to maintain a responsive attitude towards their environment.
Strategy - There are two parts to strategy. Business strategy is a set of conscious decisions about how the organization will add value to customers and distinguish itself from its competitors. It also includes performance targets and strategy for growth. A well developed business strategy tells the organization where it is going and guides it like a ships rudder in a stormy sea. An Organization strategy is the “being” or character of the organization. It has to do with who we are and not just what we do. It includes the mission, vision of the future, values and guiding principles. A clear organizational strategy helps transform a company or office from a normal work place to one that inspires people and brings out their best.
Core Process - This is the flow of work through the organization. It is the sequence of events or steps necessary to get a product out the door or deliver a service. This also includes the technology and resources (equipment, software, space and materials) required to produce a deliverable. Core business processes are, or should be, the focal point around which all other business unit activity is organized. Understanding, streamlining and properly supporting core business processes is the central job of any organization.
Structure - How people are organized around business processes. It moves beyond box charts to understanding the boundaries, roles, responsibilities and reporting relationships among people. It is a sort of template that determines not only relationships but coordination of tasks and allocation of resources around business processes. The proper question about structure is not whether it is the right one, but whether it fits with the rest of the organization (core process, strategy) and helps rather than hinders performance.
Systems - Systems are the inter-related sets of tasks or activities that help organize and coordinate work. Examples include recruiting and selection, training and development, how people are promoted, communication/ information sharing, decision making, how people are rewarded, planning/ goal setting, personnel policies and procedures, performance feedback, etc. Systems are usually standardized and cut across the whole organization. They are often “owned” by management or special support functions. The most effective systems are often the simplest.
Culture - Culture is how the organization really operates. It consists of the leadership style, worker attitudes and habits and management practices that make up the distinctive “personality” of the organization. It is like the air that permeates everything and is both cause and effect of organization behavior. Culture mirrors the true philosophy and values that the organization actually practices. As such, it is a measure of how well an organization has translated its philosophy (organizational strategy) into practice.
Results - What is the organization’s current performance? Results define the success or health of an organization and are therefore the starting point for understanding how well the organization is functioning. Results indicate where the organization is strong and what it needs to keep doing, as well as where it is weak and what it needs to change. Everything is tied to results. Not being clear about current or future results is like being lost at sea; even knowing where you want to go, you don’t know how to get there.
Leadership - Leaders drive success. They set goals and monitor results, scan the external environment, define vision and strategy, design (consciously or by default) the infrastructure of the organization, develop people and build culture. However, traditional assumptions, roles and practices of leadership are no longer adequate to manage in today’s complex world. Successful leaders are changing their assumptions about work, organizations and people to build collaborative, more responsive organizations.
Process: We don’t come in as experts of your business or industry, partner with you in each of these steps, enabling you to make the critical decisions about your organizations future. The process is not rigid; we adapt it to your particular needs, resources and business situation.
Develop Charter: The process begins by establishing a project charter to define scope and goals. A snapshot assessment is conducted, leaders are educated on the design process, a design team is formed, and initial change management strategies are launched.
Create Strategy: This phase involves scanning the external environment, assessing the current mission, vision, and strategy, and setting a future direction. A balanced scorecard is created to align strategy with measurable outcomes.
Assess: A detailed analysis of processes, structure, systems, and culture is conducted. Findings are reported to the steering team, and change management efforts continue to ensure organizational readiness.
Design: Design guidelines are set, the business model is defined, and the organization’s structure, processes, systems, and culture are redesigned. The proposed design is verified and shared with the steering team.
Transition:: An implementation team is established to prepare for rollout. This includes refining the design, creating detailed plans, training staff, and reconfiguring equipment and workspaces.
Implement: The new design is launched, and progress is monitored. Structures and systems go live, and ongoing change management supports employees through the transition.
Evaluate & Renew: Performance is reviewed using the balanced scorecard. Adjustments are made as needed, and ongoing training ensures the design stays effective and aligned with strategy.
There are two parallel processes essential to your success as you go through the design process;
Executive team development is giving the organization’s top leaders the support they need to successfully guide and manage the design process. This often includes helping them clarify their leadership philosophy, shared core work and how they work together to manage business results. We offer coaching and team development activities to strengthen their ability to build a positive and sustainable organizational culture.
Change management is preparing all employees to embrace and succeed in the new organization. Many change initiatives fail because they don’t give enough attention to people, who ultimately do the work of an organization and make it succeed. We commission a change management team to assess organizational readiness and provide this team with tools to overcome resistance and positively engage employees as contributing partners in implementing your new design and achieving business success.