What Is Organisational Design?

November 19th, 2020 | 12 minute read

The buzz word started out as culture, and once everyone caught on to that and understood what culture was all about, there is a new buzz word in town – organisational design. This isn’t about design aesthetics, it is about applying the principles of design to your business culture, and the way in which people work. According to the CIPD organisational design is “the review of what the company wants and needs, an analysis of the gap between its current state and where it wants to be in the future, and the design of organisational practices that will bridge that gap.”

Essentially organisational design is simply about being really purposeful about the culture you want to create, and then putting in place the right people initiatives to get you there. In this post we are going to explore some key organisational design principles that you can start to explore in your business.

How Would You Benefit From Organisational Design?

All businesses can benefit from the simple process of being purposeful and strategic about the way they design their organisation in order to achieve business success, but there are a couple of situations that can trigger a more urgent need for organisational design principles:

1. There is a need for an urgent change in the business

Often there are external or internal triggers that businesses need to respond to. These could include a significant change in the market you operate in like a legislative change, it could be that a new competitor has come onto the scene, or it could be that you are looking at implementing a new technology system or way of working into your business.

The important thing to note if this is a trigger for you looking at organisational design is to make sure your process isn’t just focussed on the silo of the topic in hand, and that it looks at the impact on the wider business, and both the short and long term needs, otherwise you could end up too focussed in one area and lacking in others.

2. The business intrinsically changes at its core

This could be driven by a change like an acquisition or merger, a new leadership team, or a re-development of the businesses core products or services – it is essentially a large scale organisational change that requires a completely new strategy and direction. A key useful element of this trigger is that it gives you an opportunity to completely start from scratch with your organisational design.

Organisational Design Checklist Items

When you are looking at organisational design and creating cultural initiatives, or people processes it is important to think about some key elements for each one:

  • What is the purpose?
  • How will it be used?
  • By who?
  • What should it look and feel like to the different stakeholder groups?
  • What would define success?

If we apply this to an example to implementing an appraisal system it could look like:

  • Purpose – to create a structure that facilitates discussion of employee development
  • How – via an annual sit down formal conversation between manager and team member
  • By who – manager & team member
  • What should it look & feel like – this is where the design of the appraisal system would come in and you would cover things like, will it be paper based or electronic, will the team lead or team member lead the process, what should it feel like at the end of it, what will be discussed, what will be the method of feedback etc
  • What would define success – that employees feel they have a method for specific conversation around their own development and it is helping them develop

Models for Organisational Design

There are lots of models that you can use to develop an organisational framework. In our work with our clients we design bespoke models around a client’s needs so that it is sure to drive the expected outcomes. If you are looking at more in-depth insight, below are two of traditional frameworks around organisational design that provide interesting reading:

The Galbraith Star Model

Burke Litwin Model

A simple process to look at to get started with organisational design for your business:

Define Your Current State

Here you would look at what is currently working, and what isn’t working. We talk about these as culture blockers, and culture enablers. The blockers stop you from achieving what you want to – these can be things like drama and internal politics, broken systems, a lack of engagement, low productivity, a lack of vision or strategy. The enablers are things that drive you forward and enable your business to perform at its best, these can include company values, company vision, positive behaviours, processes that work to their defined purpose, high levels of engagement etc.

At this stage it can be useful to use tools like a SWOT analysis, or an internal survey to really get some varied insight. If working on a SWOT as a leadership team as an example, it is useful to have each individual manager complete separately, then send for review so that you get really independent reviews versus a “follow the leader” type approach when you just ask people to share in a meeting.

Define Your Desired Future State

Looking at the areas that aren’t working in your current business culture – what would you like to see change about those elements? Are there any additional things that you would like to see in your business culture moving forwards? It is useful to think of this in two parts – one year and three years. That helps you define the shorter and medium term as there will be activities that take longer to change than others.

Design The Strategy & Actions

Once you have your existing review, and then your desired future vision, you can start to put together a plan to bridge the gap. The best practice for this would be to split these into one year targets, and three year targets. You would ideally have 5-7 points on your one year plan, and no more than 10 on your three year plan. If you have more than this it may become imageable. When you have your main points detailed it is useful to break them down into the following:

  • Inputs – For each action what would the input need to be? This could include the people involved, the time taken, any resources, knowledge or expertise needed.
  • Outputs – For each action what would be the output and result? It is important to make this as tangible as possible. A lot of our clients create scorecards that track these outputs as they go on the journey so that the incentives can’t get off track.

If you’re interested in exploring how you can utilise organisational design to make sure that your business culture is laser focussed on helping you reach your business goals, please reach out. 

 

 

 

 

 

You may also like