Most businesses find that the design process results in a more efficient organizational structure, noticeably better outcomes (profitability, customer service, internal operations), and employees who are motivated and dedicated to the company. An all-encompassing, holistic approach to organizational improvement that considers all facets of organizational life is the distinguishing feature of the design process, allowing you to:
By design, we mean integrating people into key business procedures, technologies, and systems. A well-designed organization guarantees that its structure aligns with its goals or strategies, overcomes obstacles posed by business realities, and significantly raises the likelihood that the sum of people’s efforts will be successful.
You gather as senior leaders to talk about current business results, organizational health, environmental requirements, etc. and the need to embark on such a process. You create a charter for the design process that outlines the “case for change,” desired outcomes, scope, resource allocation, participation requirements, time constraints, communications strategy, and additional project-guiding criteria.
Before you start making changes, you should thoroughly understand the current organization. We facilitate a thorough evaluation of your organization using our Transformation Model to understand how it operates, its strengths and weaknesses, and its alignment with your core values and business strategy. The clarity that the assessment process provides to an organization’s leaders and members, not only about how the organization currently functions but also about how its various components are interconnected, its general state of health, and, most importantly, what needs to be done to make improvements, is astounding.
As crucial implementation dates are established and detailed, concrete action plans are made to implement the new design, the design process eventually transforms into transition planning. And a crucial component of this step is updating other organization members on progress. A strategy for communicating with the public is created to inform them of the situation. The beginning of commitment is brought about by everyone’s inclusion and education, which raise awareness.
Now the task is to make the design live. Individuals are arranged into naturally occurring work groups, and these groups are given training in the new design, teamwork, and startup team building. New job roles are picked up, and new connections are made both inside and outside the unit. Equipment and facilities are rearranged. Changes and modifications are made to reward systems, performance systems, information sharing, decision-making, and management systems. Some of this can be accomplished quickly. Some might need more explanation and take longer to implement.
We collaborated with a business in the aluminum industry a few years ago. The business realized it was becoming bureaucratic and unresponsive to the needs of its customers. After evaluating the organization’s strengths and weaknesses, they underwent an organizational redesign process in which they reorganized their front office functions to be more collaborative and customer-focused. The diagrams below illustrate, at a high level, this change.
In order to become much more cross-functional on the front end of their business, the company redefined structural boundaries, as shown in the second chart. Teams made up of individuals from various departments took full responsibility for managing customer orders. The business was able to increase margins by 25% while also increasing total billings for a significant product line by 50%.
The role of leaders and other support roles in the new organization, as well as improvements to workflow and system support, are all greatly simplified by this chart, of course. However, this gives you an idea of the types of integration and enhanced collaboration that organizational design can produce.
This redesign strategy yields productivity increases of at least 50% and dramatic improvements in quality, customer service, cycle times, turnover, and absenteeism. The good news is that it can be applied to almost any business type and size. The time needed to finish a redesign varies depending on the organization’s nature, size, and resources. Large-scale, intricate redesign projects can be finished in a few days. Smaller organizations require much less time and fewer resources.
What is Organization Design? | Kates Kesler
Why is organizational design important?
The management team must carefully consider how to design an organization if it is to be successful. The strategy must consider every facet of the company and view it as a whole rather than as a collection of parts. The goal is better integration of people and processes. The organization’s structure must be consistent with its goals and offer assistance during trying times. People must continue to cooperate in order to achieve the same goal.
What is organizational design?
An organization’s goals are pursued through the process of organizational design, which identifies the components of a system that aren’t operating effectively or correctly. The theory is applicable to workplaces, procedures, workflow, and other business-related systems. You can revise these areas to better fit the working environment and corporate objectives. Understanding and enhancing the technical aspects of the business and the human resources side are necessary to implement these changes.
What are some types of organizational structure?
All employees in a flat organizational structure, also referred to as a simple organizational structure, report directly to the owner and make all decisions. It is the one used by the majority of small businesses without multiple levels of management or a convoluted departmental structure. Like any structure, a straightforward design has advantages and disadvantages that you must be aware of in order to decide when it’s time for a change.
As the company expands, it moves beyond a basic organizational structure. The management team grows to include supervisory team members and other managers. This design is called a functional structure. Over time, the functions they perform become more specialized. A focused marketing department develops instead of one office employee handling payroll, marketing, and administrative tasks, and the business may hire a bookkeeper. Tasks that were once infrequent become routine as the company expands. It becomes necessary to have an internal information technology department rather than just calling a provider when something goes wrong.
A division may develop each one as products or brands expand, with some functions being centralized in a headquarters office. This structure is called a matrix. Although there are separate departments for each product line, some tasks are centralized.
Setting benchmarks will help business owners determine when their organization is ready to transition from a simple structure to a functional one, and then to a matrix one. These benchmarks could relate to workload, team member skill levels, budgets, or something else. It may be time to hire an internal marketer, for instance, if the business is spending a lot of money on contracted marketing services.
How to use organizational design to improve your business
Improving a business using organizational design involves some necessary steps. Depending on the organization’s needs and structure, the organizational redesign process may change.
1. Develop a plan for the redesign process
Business executives gather to discuss the company’s performance, the state of the market, and other important indices and factors. They talk about the need for organizational redesign and specify the results they want to achieve. Before they begin the process of change, leadership must have a clear understanding of the company’s current situation.
The availability of resources, including time, money, and human capital for this process, is a topic of discussion. Discussion topics include deadlines, expected participants, and the communication process. Sometimes the team decides that before beginning an organizational redesign, they need to spend time on strategic planning or team development. Chartering the design process refers to these first steps as a whole.
2. Plan for the future
Following completion of the self-assessment process, the management team must take the following elements into account when formulating the redesign strategy:
The business moves closer to a transition plan as it identifies the solutions to these problems and questions. Managers put together a schedule and assign action steps. The process for informing the team as a whole about the redesign comes together. Communication is education, and education instills a sense of ownership in team members. When your team is united in its vision, employee engagement is more likely.
3. Execute the plan
Teams adhere to the new structure when considering the redesigned workflow. Each group learns the new processes. People need time to establish new working relationships and adapt to new roles in this step of the process. Often, equipment and facilities change. It is common in this process for performance evaluation, decision-making authority, and other management mechanisms to change.
When you’re ready to put the plan into action, communication is crucial. Emails sent to the entire company and group presentations help keep the message consistent. This is a great place to post the plan if the company has an internal website or shared folders for information sharing.