Organization Design: Why you should renew?



What it means & why renew?

Is your organization able to achieve its current vision? Optimism prevails, although our research reveals that one out of five CEO’s lack the confidence in their organizations ability to achieve their vision. In fact, a recent study, which surveyed 300 leaders in IT, marketing and operations, found that less than half of the survey respondents (44%) are extremely confident in their organization’s ability to achieve its growth vision [i]

Organization design is the “…deliberate process of configuring structures, processes, reward systems, and people practices and policies to create an effective organization capable of achieving the business strategy” [ii]. Renewal refers to the ongoing process of building innovation and adaptation into the organization [iii].

As the marketplace evolves, the challenges in our environment increase in complexity, and business processes or systems that once worked become barriers to success. Change is inevitable and goes on at all levels including individual, sub-unit, organizational, as well as nationally and globally. During times of change, a critical question that often confronts organizations is whether or not they should renew their design, but more precisely - - why renew?

Many organizations renew their design in order to: -

  • Obtain a tight alignment between strategy & design
  • Engage the team & drive innovation
  • Reduce operational costs
  • Implement a reward system

Organizations must re-visit and continuously assess their designs to keep with the evolving marketplace. Studies from empirical research confirm the value of an effective design and have documented the risks associated with inappropriate designs [iv]. To create strategic alignment, the organization will either need to change the formal structure by separating or integrating roles, units or functions, or adjust the work process interdependencies [v]. A design that supports the organizations strategic goals is critical for continued growth and success. No matter the industry that your organization may be in, your processes may need to be renewed to adapt to change.

--Renew to mitigate risk:

Organizations that do not renew their processes in response to our swiftly changing environment are prone to risk. Lack of a proper organizational design can create animosity and resistance from employees. In turn, this inhibits performance and may lead to decreased productivity. We are asserted that --

“…if a company is to survive in an increasingly competitive marketplace, the organization must continuously adapt to its environment” and “…without renewal, management cannot maintain excellence [iii].”

According to Galbraith, [vi] organizational designs should make it simple for the client to do business with the organization. Design should also make it easy for the employees to make contact with their clients as they execute their roles. But…if we create designs that make it simple for clients and employees, conventional wisdom suggests that such designs make it complex for management. This complexity should be identified and managed concurrently. The leaders who are able to manage complex organizations will attain competitive advantages. Simple designs offer no advantage and can easily be duplicated. Yet, they are the most popular. To achieve a competitive edge from organizational design, management must not only be able to create complex designs, they should be able to oversee them.

-- So What: When an organization has a renewed structure with new ways of working, the renewed culture introduces new organizational routines, accelerating performance once integrated adequately [vii]. Managing integration with a clear plan to effectively integrate people, processes and technology becomes extremely important when determining how to structure the organization in order for the organization to reap the intended benefits.

At QualTransform, we work with you to assess your organization and align your business processes to your structure. We believe that having an objective view of your current strengths and weaknesses is the first step in the design/renewal process.

Contact us, to learn more.

[i] Coleman P., (2017) “Study reveals majority of businesses lack confidence in their own digital future” PointSource. Supply Chain Digital. Web

[ii] Galbraith, J. R., Downey D., and Kates A., “Designing Dynamic Organizations: A Hands-on Guide for Leaders at All Levels.” New York: AMACOM, 2002. Print.

[iii] Syed, F., (2009), "Organizational Renewal: Adapting to Change." Organization Development. Web

[iv] Worren, N., (2012), "Organization Design: Re-defining complex systems." Essex, UK: Pearson Education

[v] Worren, N., (2011), "Hitting the Sweet Spot between Separation and Integration in Organisation Design." 34 (4): 25-30

[vi] Galbraith, J. R., (1995), "Designing Organizations: An Executive Briefing on Strategy, Structure and Process." San Francisco, Ca: Jossey-Bass, Print

[vii] Faulkner, D., Child, J., and Pitkethly, R., (2003), "Organisational change processes in international acquisitions." Advances in Mergers and Acquisitions, 2: 416