Organisational redesign: Six pitfalls – and how to avoid them
Organisational redesign: Six pitfalls – and how to avoid them
Strive for alignment
Organisational redesign is one of the most disruptive initiatives an organisation can undertake. The bigger the structural change, the bigger the impact on people, culture, productivity and business performance, particularly in the short term.
This holds true for corporate, public and non-profit organisations; no entity is immune to the challenges posed by such transformations.
In this article, drawing on our more than 25 years of collective experience, we shed light on six pitfalls that organisations often face in a redesign. We offer recommendations on how to avoid these traps and ensure organisational redesign initiatives yield the desired results.
Pitfall 1: Pursuing an organisational redesign for the wrong reason
Before leaping into an organisational redesign, it is essential to assess whether it is truly warranted. An organisational structure should only be changed if the current structure is not set up to deliver on the business strategy.
We have seen organisations jumping into organisational redesign in instances where issues could have been resolved with improved processes, systems and people management. Frequently, what is required are clear accountabilities, robust performance management systems and close monitoring of organisational performance – rather than resorting to reshuffling teams and personnel.
Recommendation: Carefully analyse the challenges and determine the specific problem(s) you aim to solve. Take a step back and evaluate whether an organisational redesign is the best solution to the challenges faced.
Pitfall 2: Relying on organisational redesign to solve culture issues
Many organisations change organisational design in the mistaken belief that changing it will move the organisation from an undesirable to a preferred culture. Changing organisational design may help, but it is not enough on its own to achieve culture objectives.
To achieve a desired cultural shift, use comprehensive strategies that encompass multiple drivers of culture, such as leadership behaviours and whether the organisation lives its values, capability and processes. (Our Nous colleague Davina McArthur has previously written about how to drive successful culture change.)
Recommendation: Integrate cultural initiatives with organisational redesign efforts to create a holistic approach to cultural transformation.
Pitfall 3: Using organisational redesign to manage an executive’s performance
Attempting to address performance issues of specific individuals through organisational redesign can do more harm than good.
An organisational redesign should primarily seek to align with the overall business strategy, not serve as a tool to replace or relocate underperforming executives. If such considerations drive a redesign, then the likely outcome is an organisational design that does not fully meet the organisation’s strategic needs and disrupts the stability and morale of the broader workforce.
Recommendation: Deal with performance issues directly through appropriate performance management measures rather than relying on organisational design as a workaround for addressing individual performance concerns.
Pitfall 4: Treating organisational redesign as a mere box-moving exercise
Merely reorganising individuals and teams without considering broader implications diminishes the potential of organisational redesign. Instead, view this opportunity as a chance to align the entire organisation with your strategic goals.
Consider your business strategy, existing and future functions (what work will need to be done), projected growth and capacity requirements and assess different structural options using design criteria. Nous uses a six-step methodology to organisational design that can guide you through the process.
Recommendation: Ensure that the organisational redesign supports your business strategy by adopting a systematic approach that accounts for critical factors including growth expectations, functions/work, capacity, and pre-established design criteria.
Pitfall 5: Lacking clarity in decision-making authority
Decisions in redesigns are complex and have significant implications for individuals in the organisation. Decision-makers often find themselves determining the fate of long-serving and dedicated employees, which adds an emotional layer to the decision-making process. This is exacerbated by differing views among leaders on what needs to change and ambiguity in who makes decisions, leading to confusion and lack of progress.
This is where a courageous leader with a commitment to making timely decisions becomes crucial. Having clarity in decision-making authority for the future organisational design will facilitate progress and help you navigate potential disagreements more efficiently.
Recommendation: Appoint a decisive leader to effectively work through conflicting views and enable timely decision-making, thereby reducing the length and level of uncertainly for staff.
Pitfall 6: Locking constraints in through initial communications
When initiating an organisational design project, avoid committing to outcomes beyond absolute necessity. We sometimes hear leaders say that “no one will lose their job”, which is a difficult promise to keep. Imagine a situation where the number of full-time equivalents remain unchanged, but the structural analysis reveals the need for new capabilities that current staff cannot easily acquire. This will likely result in new hires and job losses.
Additionally, avoid vague statements about organisational change. Prioritise clarity, recognising that structural changes are some of the most unsettling for staff. Respectfully communicate what you can share and provide a timeline for additional information and updates.
Recommendation: Communicate with clarity and empathy, being honest about what can and cannot be guaranteed during the design process. This will grant you more flexibility during the design process and help to maintain staff trust.
You can position your redesign for success
Organisational redesign needs to be carefully considered and executed. Done well, it can support your organisation to better deliver its strategy, increase the motivation of your people and drive substantial value.
Get in touch to explore how we can help you to optimise your organisation’s design.
Prepared with input from Simon Guttmann.
Published on 27 September 2023.