Doing Org Design Right from Day One - Part 2
By Jodie Goulden
Part 2 The organization as a whole system
In part 1 of this blog, I argued that organization design is ‘all about the people’ and also ‘all about the work’. When you bring these principles to life in an organization design effort, you’ll have a good chance of creating change with a real impact.
At Orgdesign Works, there’s another fundamental idea that we always bring to organization design projects: to consider the organization as a whole system. This second part of the blog describes 2 typical cases that leaders present, and how considering the whole system is a way to develop solutions to each of those cases.
Organization chart changes
One case that clients bring to us is at a moment when they are planning to adjust the organization chart and want to know how it should look. They expect to learn, for example, how many direct reports should each manager have, how should the functions or geographies be split? You probably have an idea of how an organization chart looks, but have you ever wondered what it is based on?
The traditional organization as a “pyramid hierarchy” emerged during the industrial revolution and was a factor in driving efficiency during an era of mass production. Today this is still the underlying structure for most large established organizations - if you work in one, you might not have given any thought to alternative options. However, things are different now - organizations are characterized by highly skilled employees, technology enabled communication, and the need for accelerated change. Your choice of organization structure demands a more nuanced approach that directly supports your specific strategy.
Not only is it a good idea to consider and evaluate multiple options for your org structure, but you should also consider more than just the structure itself, such as technology, policies, and indicators, which together influence behaviors and performance. It's common for leaders to think immediately of changes to the org chart to solve organizational issues, but we encourage you to take a step back and take a more holistic view to diagnose and make precise changes where they will have the most effect. If you are planning changes to your org chart, remember this should not be your starting point. The org chart is simply a deliverable (albeit an important one) of a well-managed org design process. As org design consultants, we offer clients a ‘whole systems’ model to help them understand the bigger picture.
Training needs analysis
When focusing on people, well intentioned leaders and human resources departments sometimes focus their attention on employee competencies and the need for training. They understand that competencies, i.e., skills, knowledge, and abilities, play a crucial role in shaping organizational capability. Having a clear view of the work that is needed and the competencies required of people to get the work done is indeed important, but again, it's only one part of the whole picture.
One potential trap we've seen companies fall into is jumping straight to training as a solution to organization problems. When the leadership team believes that employees need training, but employees say that there are other factors preventing them from working effectively, this is a signal that a deeper diagnosis is warranted.
If you invest in training without understanding other organizational elements like process, technology, and key performance indicators, then you might not see the improvement you are hoping for. Once again, our recommendation is to adopt a ‘whole systems’ approach.
Whole system framework
In an organizational system, there are levers or choices that significantly influence organizational performance and culture. These choices have substantial influence over how organizations operate. Collectively these choices lead to all the ways in which organizations can be intentionally designed to achieve specific outcomes. It can feel daunting to try to figure out which organizational elements to change.
Should you create new roles, invest in training, design a dashboard of KPIs, implement a new technology, reduce headcount, change the incentive system, launch a communications campaign? There are so many possible solutions but it’s not clear which ones will deliver results.
You might be surprised to hear that at Orgdesign Works we don’t have all the answers, but we do know how to guide leaders through a systematic review, weigh up options, and test potential solutions. Using a whole system framework, we’ve helped our clients to navigate through the chaos and decide on changes that are the best ones for their specific strategic challenges. At the heart of org design is the understanding of an organization as a whole system, which is key to designing for real impact.
If you are faced with a situation like a push to change an organization chart or a request to develop a training program, we recommend that you first evaluate the whole system and identify the priority areas for change. You can use a framework that offers an overview of the different parts of the organization to review. We’d be happy to offer suggestions or to share our framework with you, simply contact us at info@orgdesignworks.com to learn more.