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Organization Design

Strong organization design can help organizations become more nimble and better able to deal with the complexities of today’s marketplace.

Organizational design ultimately affects how a company executes strategy and goes to market, how it engages its employees, and how it responds to change. Organizations should be designed to answer crucial questions such as:

  • How can we translate our strategic objectives into organizational requirements?
  • How can we align accountabilities with our organization’s configuration?
  • To what extent can productivity be improved?
  • How can we sustain growth?
  • How should we manage organizational complexity to create value and achieve competitive advantage without creating excessive complicatedness?
  • What characteristics do we need to be a high-performance organization?

Smart organization design goes beyond structure to look at other organizational enablers in a systematic way and make choices around important elements. Structure should help drive employee focus on strategic imperatives. Roles and responsibilities should be used to define mission-critical accountabilities, KPIs, and decision rights to facilitate execution. Individual capabilities should be reviewed to ensure the right talent is in the right roles. And other organizational enablers such as performance and talent management should be aligned with required behaviors. 

The purpose of smart organization design is to create an organizational context that encourages or shapes the optimal behaviors that will enhance company performance.

Designing an Organization for Success

When it comes to reorganizing, companies have little room for error.

Research shows that nearly 80% of companies have reorganized in recent years, but more than half of those companies failed to reach their objectives.

The good news is that there are critical success factors that successful companies use when reorganizing:

  1. Synchronize design with strategy. Regardless of the precipitating factor, the reorganization must align with the organization’s strategy and business priorities in the simplest way possible.
  2. Clarify roles and responsibilities. Of all the organizational capabilities most required for a successful reorganization, this set—clarifying roles and responsibilities, assigning accountabilities, and determining decision rights—is one of the most difficult to get right.
  3. Deploy the right leaders and the right capabilities. In reorganizations, a common pitfall is tailoring the redesign around the individual capabilities of a few important executives. Another pitfall is overlooking the capabilities required for the new design to succeed.
  4. Design layer-by-layer, not just top-down. A cascading approach to design puts companies in a better position for success. Address the needs of each layer, according to consistent design principles, rather than using a top down-only design approach.
  5. Lower the risk of execution. Execution is by far the most important capability for achieving a successful reorganization—applying a step-by-step, disciplined approach to implementation is crucial to avoid missteps.
  6. Don’t wait for a crisis to reorganize. Reorganizations that take place prior to a crisis have a much better chance of success. During a crisis, the odds of a successful reorganization are only 50/50.
People & Organization
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