By Dr Kellen Kiambati
Frequency of organizational redesign reflects a high level of disappointment with the outcome. Less than a quarter of organizational-redesign efforts succeed. 44% run out of steam after getting under way, while a third fails to meet objectives or improve performance after implementation. The good news is that companies can do much better.
Success doesn’t just mean avoiding the expense, wasted time, and morale-sapping skepticism that invariably accompany botched attempts. A well-executed redesign pays off quickly in the form of better-motivated employees, greater decisiveness, and a stronger bottom line.
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Organizational redesign involves the integration of structure, processes, and people to support the implementation of strategy and therefore goes beyond the traditional tinkering with “lines and boxes.” Today, it comprises the processes that people follow, the management of individual performance, the recruitment of talent, and the development of employees’ skills. When the organizational redesign of a company matches its strategic intentions, everyone will be primed to execute and deliver them. The company’s structure, processes, and people will all support the most important outcomes and channel the organization’s efforts into achieving them.
When do executives know that an organization isn’t working well and that they need to consider a redesign? Sometimes the answer is obvious: say, after the announcement of a big new regional-growth initiative or following a merger. Other signs may be less visible—for example, a sense that ideas agreed upon at or near the top of the organization aren’t being translated quickly into actions, or that executives spend too much time in meetings. These signs suggest that employees might be unclear about their day-to-day work priorities or that decisions are not being implemented. A successful organizational redesign should better focus the resources of a company on its strategic priorities and other growth areas, reduce costs, and improve decision-making and accountability.
The following rules can apply very effectively in redesigning: –
1. Focus first on the longer-term strategic aspirations
Leaders often spend too much time on the current deficiencies of an organization. It is easy, of course, to get fixated on what’s wrong today and to be swayed by the vocal (and seemingly urgent) complaints of frustrated teams and their leaders. However, redesigns that merely address the immediate pain points often end up creating a new set of problems. Companies should therefore be clear, at the outset, about what the redesign is intended to achieve and ensure that this aspiration is inextricably linked to strategy. One retail company in the USA, strongly committed to creating a simple customer experience, stated that its chosen redesign option should provide “market segment–focused managerial roles with clear accountability” for driving growth. The specificity of that strategic test proved much more helpful than simply declaring a wish to “become customer-centric.”
2. Take time to survey the scene
Managers can too easily assume that the current state of affairs is clear and that they know how all employees fit into the organizational chart. The truth is that the data that managers use are often inaccurate or out of date. Knowing the numbers is just part of the story, leaders must also take time to understand where the lines and boxes are currently drawn, as well as the precise nature of talent and other processes. That helps unearth the root causes of current pain points, thereby mitigating the risk of having to revisit them through a second redesign a couple of years down the road.
3. Be structured about selecting the right blueprint
Many companies base their preference for a new structure on untested hypotheses or intuitions. Intuitive decision-making can be fine in some situations but involves little pattern recognition, and there is too much at stake to rely on intuition in organizational redesign. Many managers own up to basing decisions on “gut feel” late acknowledge that their chosen blueprint was unsuccessful.
4. Go beyond lines and boxes
A company’s reporting structure is one of the most obvious and controllable aspects of its organization. Many leaders tend to ignore the other structure, process, and people elements that are part of a complete redesign, thereby rearranging the deck chairs but failing to see that the good ship Titanic may still be sinking. Companies such as Apple and Pixar are well known for going far beyond lines and boxes, taking into account questions such as where employees gather in communal spaces and how the organizational context shapes behavior.
5. Be rigorous about drafting in talent
One of the most common—and commonly ignored—rules of organizational redesign is to focus on roles first, then on people. This is easier said than done. The temptation is to work the other way around, selecting the seemingly obvious candidates for key positions before those positions are fully defined. Competition for talent ratchets up anxiety and risk, creating a domino effect, with groups poaching from one another to fill newly created gaps.
This is disruptive and distracting. A talent draft that gives all units access to the same people enables companies to fill each level of the new organizational structure in an orderly and transparent way, so that the most capable talent ends up in the most pivotal roles. This approach promotes both the perception and the reality of fairness.
Powerful technology-enabled solutions allow companies to engage hundreds of employees in the redesign effort in real time, while identifying the cost and other implications of possible changes.
6. Identify the necessary mind-set shifts—and change those mind-sets
Leaders of organizational-redesign efforts too often see themselves as engineers and see people as cogs to be moved around the organizational machine. Organizations, however, are collections of human beings, with beliefs, emotions, hopes, and fears. Ignoring predictable, and sometimes irrational, reactions is certain to undermine an initiative in the long run. The first step is to identify negative mind-sets and seek to change the way people think about how the organization works. Actions at this stage will likely include communicating a compelling reason for change, role modeling the new mind-sets, putting in place mechanisms that reinforce the case for change and maintain momentum, and building new employee skills and capabilities.
7. Establish metrics that measure short- and long-term success
Hardly would anyone drive a car without a functioning speedometer, yet a surprising number of companies roll out an organizational redesign without any new (or at least specially tailored) performance metrics. Some older ones might be relevant, but usually not the whole set. New metrics, typically focusing on how a changed organization is contributing to performance over the short and long term, are best framed at the aspiration-setting stage. Simple, clear key performance indicators (KPIs) are the way forward.
8. Make sure business leaders communicate
Any organizational redesign will have a deep and personal impact on employees—it’s likely, after all, to change whom they report to, whom they work with, how work gets done, and even where they work. Impersonal, mass communication about these issues from the corporate center or a program-management office will be far less reassuring than direct and personal messages from the leaders of the business, cascaded through the organization. An interactive cascade (one that allows two-way communication) gives people an opportunity to ask questions and forces top leaders to explain the rationale for change and to spell out the impact of the new design in their own words, highlighting the things that really matter. This can take time and requires planning at an early stage, as well as effort and preparation to make the messages compelling and convincing. When a top team has been talking about a change for weeks or months, it’s all too easy to forget that lower-ranking employees remain in the dark.
9. Manage the transitional risks
In the rush to implement a new organizational design, many leaders fall into the trap of going live without a plan to manage the risks. Every organizational redesign carries risks such as interruptions to business continuity, employee defections, a lack of personal engagement, and poor implementation. Companies can mitigate the damage by identifying important risks early on and monitoring them well after the redesign goes live.
Most successful organizations combine stable design elements with dynamic elements that change in response to evolving markets and new strategic directions. Corporate redesigns give organizations a rare opportunity to identify the stable backbone and set up those elements ripe for dynamic change. Successful leaders and successful companies take advantage of such changes to “rebuild the future”—but a landscape littered with failed efforts is a sobering reminder of what’s at stake.
