11 minute read
Takeaway: Every organization has a design that is built either by default or deliberate choice. At the end of the day, this design isn’t determined by HR, but by the company’s leaders.
Do you know about organization design? Most likely you know something about it, because you’ve landed here. But I have no shame admitting that I didn’t really know about org design until October 2019. That’s when I joined ON THE MARK as the Digital Marketing Manager and learned business’s best-kept secret.
To be clear, I don’t come from an organization design or consultancy background. I worked in five positions at four different companies over the last ten years and never heard of organization design. What’s more shocking is that most people go even further into their career before learning about organization design. Some people in human resources aren’t even fully aware of how to utilize organization design.
My initial assumption was that org design took place within the realm of HR. This was largely because I associated HR with people processes and company structure. I thought of HR in the most traditional, transactional sense, where org charts and benefits were determined. I now know that HR can be an extremely powerful force within a company. CHRO’s may be heavily involved in a company’s strategic direction. Although HR sometimes partakes in org design, in reality, org design can take place anywhere in a company. Why? Because its success depends on leaders and not on one individual department.
My Org Design Realization
What I didn’t realize is that I talked about organization design throughout my entire career. When I discussed company structure, I was really talking about work boundaries. My prior complaints regarding accountability were directed towards the ineffective levels within each enterprise. The frustration with projects constantly changing direction was caused by an unclear value stream. All of these elements – business direction, management mechanisms, employee development – are aspects addressed in the org design process.
In short, some companies I’ve worked for were operating, but not operating at a sufficient level. The truth is, organization design is fundamental to any business. In my short tenure at ON THE MARK, I am now a believer in the power of organization design. Every single company needs to implement good organization design in order to operate efficiently and effectively. So why is it not a bigger topic in the business community?
Business’s Best Kept Secret Revealed
I can’t imagine an organization that couldn’t use organization design, especially given how quickly everything evolves these days—not to mention all the emerging technology and how AI impacts our work. Nobody can be certain what the future of work will look like, which means developing a strong foundation through organization design now is essential. Companies need a sturdy model that allows them to easily move resources and pivot when unexpected market changes occur.
How a company operates should be part of quarterly review sessions, not just five-year planning workshops. You wouldn’t go 5 years without going to a doctor or changing your oil, so why do companies think their operating model can run indefinitely once it’s set up? Since operating models must constantly develop to keep pace with ever-changing markets, it can never be assumed that a company’s design will last in perpetuity.
How can we ensure that more companies consider organization design as an integral part of their business? Here are three solutions that can be incorporated.
Leaders can increase their influence and impact on their companies by utilizing systems theory. I’m not suggesting that all leaders become experts in systems theory, but I am suggesting that a better understanding of systems theory can benefit businesses. Working up through the ranks may mean you know aspects of your business, but a business is more than its individual parts. Businesses function as a whole system. More importantly, the value that a company can provide to its customers decreases if the organization doesn’t function well. If leaders are able to better see how the pieces function as a whole, more thought can be given towards how an organization should be set up to achieve its value stream.
Companies need to make sure their employees know and understand the operating model. People want to feel that they’re part of something larger and explaining how the company functions upfront can help employees connect to the organization at large. This should be a regular part of the onboarding process and clearly documented within a handbook to be as transparent as possible. We regularly create operational handbooks for companies as part of the redesign process, which ensures that employees have access to the operating model throughout the transition phase. It means that employees can constantly reference their operating model and take part in its evolution. Of course, the handbook will have to be updated as the company evolves, but that’s a separate discussion.
Lastly, companies need to include their people in the design process, with more and more employees becoming involved in each phase. Leaders shouldn’t assume that an external third-party expert will be able to provide a solution. It’s likely that an expert won’t know the ins and outs of your specific company, which means there will be holes in the redesign from the outset. There’s also evidence that “solutions” don’t stick when employees are forced to fall in line. Instead, leaders should work with an external organization design firm to collaboratively discover the solution. Involving more people within the organization will mean the employees feel ownership of the solution and see that their input is taken into consideration in a real way. Often times the solution becomes clear when companies take the time and effort to delve deep into their organization and approach the process with honesty about what needs to change.
We’re All in This Together
What I now realize is how important an operating model is to achieve a company’s purpose and how important organization design is to an operating model. On top of that, an operating model cannot and will not function properly without good organization design. This is why I want to share business’s best-kept secret.
Every organization has a design that is built either by default or deliberate choice. At the end of the day, this design isn’t determined by HR, but by the company’s leaders. We should all be holding each other accountable to make sure our company is fit for purpose.
As for me, I’m an idealist by nature. I like to imagine a world where all companies take organization design seriously as businesses grow and evolve. What did John Lennon say? “Imagine, all the people, living life in peace.” I know organization design won’t solve the world’s problems, but it would create a purposeful, powerful path.
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OTM is the leading global boutique organization design consultancy with offices in the USA and UK. With over 450 successful redesigns and operating model modernizations completed, OTM is owner of the industry’s most integrated, comprehensive and holistic organization design solution. OTM enables its clients to realize their future ambitions.