The last several years have tested many companies. Keeping up with—and adapting to—rapidly shifting market conditions, regulations, workforce trends, and global supply chain issues has been challenging for leaders across industries, economies, and geographies. Many organizations have struggled to remain agile enough to respond and adapt.
Of course, these conditions are nothing new. In 2015, McKinsey published survey results showing that almost 60% of executives had experienced a redesign within the past two years—and that was before a global pandemic shifted the ground beneath us all.
Dynamic organizational design— a design approach that leverages classic organizational design principles and makes them actionable for the new, rapidly changing operating environment. It is an important skill for organizations to develop to stay competitive in the modern business environment. However, even in organizations dedicated to remaining nimble and adaptive, there are several clear indicators that they may need a more formal organizational design effort.
Here are eight signs that it’s time for your company to invest in organizational design.
1. Inefficiencies Across the Organization
Inefficiencies could be due to outdated processes, inadequate technology, or an imbalanced organizational structure. Are employees weighed down with repetitive tasks? Is there frequent frustration over the lack of the right technology tools to perform tasks? Those are signs it’s time to look at organizational design.
2. Mismatches in Functions and Roles
Suppose employees are consistently underperforming or expressing feelings of low morale or frustration. In that case, it may be time to examine whether people are matched to the right roles and functions for their skill sets. Training and development can help, but leaders and team members sometimes can’t adapt to current roles or functions. It may be time to reassign people or redesign the organization to ensure better job fit.
3. Recent Shakeups in Leadership
You don’t necessarily want to redesign the organization immediately after a big leadership change; change is tough for people, and too many changes at once could lead to employee turnover. However, if new leadership is struggling to accomplish goals or if new leadership spots inefficiencies, a redesign could help improve outcomes.
4. Losing Ground to the Competition
There could be many reasons why your organization is falling behind the competition. Did a competitor make a sudden huge advancement and capture new market share? Are market trends moving away from your company and toward the competition because your organization has fallen behind in products? If competitors are suddenly gaining ground, think about how your company engages with the customer and consider redesigning processes or strategies into an approach that is more customer-led.
5. Lack of Collaboration
If teams, functions, and roles struggle to work together or are tightly siloed, redesigning could help break things up and improve collaboration. Creating cross-functional teams or improving cross-functional workflows may help improve efficiencies and speed by eliminating some process steps.
6. Managers are Burned Out and Overworked
There is a clear crisis within the ranks of managers across the workforce. If frontline managers or middle managers are expressing overwhelm and frustration, or if you’re experiencing high turnover at this level, it might be time to redesign some processes and systems to improve the manager experience.
7. Lack of Adaptability
How quickly could your organization adapt to a sudden shift in the market or an unexpected scenario? If new regulations were imposed on your products or services, could you quickly retool or shift to stay in business and thrive in a new environment? If your answer is “no,” that lack of adaptability could indicate cumbersome communication, decision-making, or operations processes. A new organizational design could help improve those processes and prepare your company to adapt quickly to unexpected future scenarios.
8. Misaligned Incentives
When incentives and strategies aren’t aligned, employees at all levels may learn how to meet their goals without those personal wins translating into company performance. In other words, if the company starts with structure and incentives before defining strategy, it risks creating an organization that can’t meet strategic goals. Good organizational design starts with strategy and works its way down, ensuring that every part of the company is tied back to the overall strategy.
At Stewart Leadership, we start our organizational design process by assessing six dimensions of your organization to determine how to best achieve desired outcomes.
- Strategy: Good organizational design always starts with strategy. What is your organization’s purpose? What is its value-add? Where is the organization trying to go?
- Process: Step two examines whether the company’s current processes support the overall strategy. Who is responsible for what? How effective are hand-offs? How much variance is allowed in each process?
- Systems: Do your systems support your strategies and future growth? Step three assesses your current systems and evaluates what improvements you need to support initiatives and keep your organization competitive.
- Structure: Without first nailing down direction, processes, and systems, the structure will be off-balance. Only in step four is it appropriate to consider what kind of structure will support the overall strategy. How many people are needed, and how should they be organized? Who is responsible for decision-making, and how are those roles assigned?
- Skills: Once the structure has been developed, identify the skills and responsibilities appropriate to each position. Only then is it appropriate to start assigning people to roles. By identifying skills and responsibilities first, you can ensure proper fit. Gaps in the organization can be filled with new hires or targeted development of existing employees.
- Incentives: Finally, step six looks at incentives and aligns them to ensure that individuals, teams, and the organization are all appropriately rewarded and compensated to achieve company strategic goals.
If you think it might be time for a thorough assessment—and possible redesign—of your organization, contact us to learn more. The experts at Stewart Leadership can help you design an organization that delivers business results and people results.
SELF CHECK:
- Do you recognize one of the above signs in your organization? Which one?
- If you could redesign one function or area of your company, what would it be?
- Is there one function or structure in your company that is operating exceptionally well? Which one? What can you learn from that well-run function?
