by Jeff Chan, Adjunct Faculty, Wisconsin School of Business Center for Professional & Executive Development December 8, 2017
Have you heard the saying, “Every organization is perfectly designed to get the results it gets”? Unfortunately, the design is usually not the product of an intentional and deliberate process. Instead, organizations tend to evolve through a series of independent changes in structure, operations, people, and management practices. These changes result from specific challenges, or through the adoption of various processes in different departments. For this reason, it’s not surprising that some businesses may have more in common with a Rube Goldberg contraption (like the one above) and struggle to perform at a high level.
Jeff Chan, Adjunct Faculty, Wisconsin School of Business Center for Professional & Executive Development
Organizational design is not just structure, it consists of multiple elements shown in the graphic below. Each of these elements need to be designed and aligned properly to implement strategy and achieve the desired results.
Align these six areas for success
Below are six elements of organizational design that are needed to execute strategy. Use each one’s corresponding tips to help avoid dysfunction and poor performance.
1. Process and technology – Which processes are critical to execute your strategy? How well are these processes performing? If your organization is struggling to achieve its goals – this is the place good place to understanding why.
2. Talent – Do your people have the skills needed to execute the processes critical to your strategy? Are your leaders aligned on how best to execute the strategy?
3. Structure – Does the organizational structure focus on the people and priorities on the areas most needed to execute the strategy? How well do people work across organizational silos to meet customer needs?
4. Metrics and goals – How aligned are your metrics and goals with your priorities and strategy? Do you have key indicators in place that help you make adjustments to better reach your goals?
5. Culture – What behaviors, mindsets and values (culture) are needed in your organization to execute your strategy? How aligned is your current culture to the culture that is needed to execute your strategy?
6. Leadership practices – Do your leaders have the capabilities and characteristics to motivate teams and support the strategy?
When should you adjust your organizational design?
Organizational design is key to executing your strategy, and you should review it regularly to ensure the six elements are aligned and effective. Think of this review like an annual checkup with your doctor. You should analyze your organization’s key elements and assess how they fit into the overall strategy. In some cases, no action is required, but this practice will help ensure the organization remains in good health.
Here are three common situations that should trigger an organizational design review.
New strategy: The organization has developed a new business strategy, often in response to changing customer or market needs.
Performance issues: Leaders often feel a need to restructure the organization or piecemeal a solution. Resist this and take a comprehensive approach instead.
Change in structure, systems, or regulations: Acquisitions, mergers, divestitures, or the implementation of new technologies should kick-start a full review of your organizational design.
When you are faced with any of these situations, it is important to properly identify which of the key elements require change. This will ensure that you are not making any unnecessary changes and that the situation is resolved across the entire organization.
Organizational design is a skill you can learn to align people, processes, and technology to meet ongoing business realities. When it is done well, it ensures sustained performance and yields positive results.