We’ve been doing a lot of organisation design consulting work and running many organisation design courses recently. Hot off the back of a global pandemic and in a changeable world, it’s no wonder that many top teams are taking stock right now. They want to adapt to seize new opportunities arising from changing markets, changing technologies and changing ways of working.
- There is no ideal organisational structure. There are many different ways that you can organise your business activities. Each structural configuration will have advantages and disadvantages. For example:
- market-led structures may help you to stay close and responsive to customer needs, but they may not lend themselves to global co-ordination and economies of scale
- functional structures may offer clear career pathways and accountabilities, but they may not lend themselves to adaptability, and they tend to lock-in cost
- hub and spoke models are pretty popular right now, but are they right for you? Well, it depends…
- Organisation design is about much more than organisational structure. If you look at any of the organisation design models, you’ll see that ‘structure’ is just one of many inter-related components. Strategy is the north star in organisation design work. And if you’re embarking on organisation design work, it’s going to have to do some heavy lifting. Organisational structure plays a supporting role in helping you to realise your strategic intent.
- Culture eats strategy for breakfast! So says management guru Peter Drucker, and I agree. But here’s the really important thing – culture trumps structure every time. Many, many restructuring efforts fail to deliver, despite huge economic and human costs, because they assume structure drives culture. It doesn’t. Organisational culture is incredibly resilient – or as some people put it, culture is sticky. Organisational culture either enables your structure, or it tramples all over it as people creatively recreate what they care about.
- So, successful organisation design needs to proceed with both strategy and culture in mind, and both ready to do some heavy lifting. You might think it’s time to dive into organisational structure and organisation charts now, but it’s not. First you need to think about your organisation design principles and your organisation design criteria. These will help you to weigh up your different organisation structure and design options. You’re going to need this because many people will have strong views on what the organisational structure should look like.
- On its own, organisational structure is a blunt instrument. Structure is good at specifying what activities get management attention and resourcing. It’s very good at specifying formal hierarchies. Sometimes it’s too good, because focusing on the organisational structure often draws attention away from all the non-structural items that play a vital part in organisational effectiveness and business success, or not. For example:
- Customer loyalty
- Employee commitment and engagement
- Knowledge sharing
- Learning and adaptability
- Leadership and management style.
- Organisation design and organisation development work hand in hand. Ideally, they’re integrated: Organisational Design and Development (OD&D). It’s common to think that organisation design comes first to design the organisational structure and the supporting mechanisms, and then the organisational development work happens to implement the design. That’s a change management view.
Organisational development work prepares the ground and smooths the path for organisation design work in more fundamental ways. It expands the scope of what organisation design can achieve. After all, there’s no point drawing up an ideal organisation design and structure that can’t be realised in your world, with the resources available to you.
If you have more questions about Organisation Design, or you’re thinking about what organisational structures might support your business, then contact us. Our OD Partner service guides you through the process and helps you to think through your organisation design and structure options more fully. We’re on your side with an independent voice. We help you to make the best decisions for you. Workable is better than idealistic.