K3 Insights

Consider for a moment:

• Is your organisation designed to ensure you get the results you want?

• Did it just evolve?

• Did you consciously sit down and ‘design’ the way you work, and does it really make a difference?

 How your organisation is designed does matter and it can either impede or help you to achieve your strategic goals.

 So what exactly is Organisational Design and what’s involved?

The need or desire for an organisation to change the way they are structured often comes from the need to solve a problem i.e. lost revenue, disengaged employees, lack of customer service etc. Organisational Design focuses on realigning all the aspects of the way a business operates to enable it to deliver the business strategy.

 Investing time in ensuring your organisation is designed to achieve commercial success will reap benefits including improved customer service, increased profits, reduced operating costs and more committed and engaged employees.

 Having the right design for your organisation is about aligning your critical organisational choices at both a macro and micro level. Redesigning the way an organisation operates starts with analysing the results. You’ll need to take a careful look at the market, your financials, internal performance metrics and recent customer and employee engagement surveys. This ensures you are starting with the end in mind and being clear on where you need to get to, to achieve your strategic goals. For example, you may want to increase your customers or market share by 20% or reduce your costs from $20 million to $15 million.

 Getting the right design also means looking at the environment you are working in. What’s it telling you? Are you able to respond quickly to changes in the market and if not, why not? And what would need to change to make this possible? Are you clear on who your stakeholders are, what their demands and requirements are, and can you meet and exceed them?

 Driving for an in-depth understanding of your environment gives you the opportunity to both validate and question your strategy. It also provides useful information to help you understand how you (could) differentiate yourself in the market. Structure follows strategy not the other way around. For example, when a global airline decided they wanted to be able to engage the mass market with low cost airfares they realised they couldn’t do it with their existing structure. They needed to design the relevant parts of the organisation to make sure they were focused on and able to deliver on the new strategy.

 The best approach is determining a clear set of design principles directly linked to the overall strategy, which can evolve as your strategy develops. These principles are then used to not only guide the organisation design process, but to also assess the outputs of the design work to ensure alignment back to strategy.

 When K3 works with a company we use our globally recognised organisational design methodology, developed with our strategic partner, US-based AlignOrg Solutions. We work closely with an organisation’s senior leadership team to develop the re-design of the organisation that will get them where they need to go.

 Leaders are constantly searching for solutions to complex issues. Robust organisational design approaches and tools help them reach sound solutions, while also continuing to build an understanding around the use of robust design skills. This last point is critical given the rapid pace of change, which is the new norm.

 The re-design will involve looking at the macro and micro level structures.

Unfortunately, a lot or organisations fall into the trap of spending 80% of the time of the macro level and only 20% on the micro level.

 The macro level re-design is all about the structure of how people will be organised at the highest level so they can best deliver the strategy that has been set for the business. Should employees be organised according to their function, product or via a matrix where the management of a task is organised across normal departmental boundaries?

 At the micro level it’s about interdependency mapping across teams/functions, process redesign, the design of individual jobs, how sign offs will happen, how will we make sure people have all the information they need to do their job and how will we attract and reward our people. Getting the details right is critical to making sure the new design works and employees are engaged and buy into the new structure.

Focusing on the micro level means that you’ll be sure that all your processes are aligned with your strategy. For example, if one of your goals is to improve customer service but your call centre team are audited on the number of calls rather than the quality of the advice and support they provide to customers, then your processes and/or reward structures aren’t aligned with your strategy.

 If you don’t invest the time in getting the details right, then chances are the money you spent on the new design for your organisation won’t reap the benefits you desired. The business needs to ask, are we empowering people to make changes at the micro level or only at the macro level?

 Organisational design isn’t about imposing a new structure. It’s about looking at what the business wants to achieve and developing an aligned organisational design that will best fit the business. It is not a one-size fits all approach.

 Ken Brophy, K3 Consulting Director, is a specialist in designing organisations to achieve commercial success.