5 Essentials to Making Your Organization Design Work

Last year we published an article on the essentials to effective organization design, focused on increasing the probability that a new organization design would support the execution of an organization’s goals. Of course, you followed our approach and implemented an amazing design that your entire organization has accepted, seamlessly transitioned to and is currently operating in today.

Right?

Designing the optimal organization is one thing but implementing that design is another. According to a 2015 study by McKinsey research, less than 25% of organizational redesign efforts are successful, and a third of redesign efforts fail to meet goals set for the redesign*. Getting your design to function as planned can be difficult, but it doesn’t have to be. Based on our experience with clients, here are five essentials to making your organization redesign work.

Encourage new behaviors
Your new organization design created new roles that required new work. Often, new roles fail to leave behind old habits so you should assess how well everyone is demonstrating their new skills and responsibilities. The team is used to doing things a certain way, so encouraging new ways of working and ensuring old behaviors do not creep into the new design is important to true change.

We recently had a services client who went through a major change where everyone’s role shifted. The company had grown up rather quickly so the team was used to having accountability scattered and people pitching in where needed. The result was that roles were not clearly defined and it was difficult to understand responsibilities, especially for new hires. Our approach was to get very detailed on their strategy and goals and be clear on who had accountability for each task. We also created some specialist roles so each key business process had one designated “owner”. This enabled employees to focus on performing work in the new operating environment without the burden of being an expert on everything.

Measure, measure, measure
Remember that your design was created to deliver value. Now that it is in place, it’s imperative that you measure this value. What were the original goals you sought to meet by implementing this new design? A consistent set of metrics will help you tell the story. Take a look back on the capabilities you believe were required to win in your market. These capabilities should be tied to measures that can be tracked. Work with your finance team to build a scorecard for the new design. Not only should this scorecard include traditional measures of revenue and costs, but it should also focus on productivity, customer feedback and employee data. If the design has resulted in improved performance across a variety of measures, then it is driving value for the organization.

Another one of our engagements exemplifies this tenet perfectly. During a slumping economy, our client took a unique approach to an organization redesign by aligning its resources to the unique needs and expectations of various customer groups. Evaluation metrics were put into place at each functional step – from manufacturing to customer service – to be able to measure customer satisfaction and its effect on revenue. Because the intent was to persistently track metrics, it was easy to see the value created by the new design.

Consistently communicate
The staying power and effectiveness of your new design will be greatly impacted by how well your employees understand and support it. Collect data and observe how the change is being implemented – and then share some great stories using this data. Work with your communications or public relations teams to directly connect the organization change to the business strategy. Review key initiatives the company is focused on and show how the design is making them come to life. This is a good opportunity to engage your employees again in the conversation. Conducting small focus groups or brief pulse surveys will give you some qualitative and quantitative data on how well your employees understand the purpose of the changes and how they perceive the impact the design is making. Not only will this provide valuable insights, it also creates a platform for you to reinforce the purpose and intended effects of the changes.

Communication is arguably the most important element to any change management effort. Even in times of business as usual, employees crave more communication than they typically receive from their employers. In times of change, we as leaders need to make an extra effort.

A manufacturing client used their established quarterly town halls to provide employees with regular status reports on the overall progress of a major organizational change. However, they supplemented this process by having senior leaders hold small group sessions with employees two, three and four levels down in the organization. The purpose of the small group sessions was simply to answer employee questions. Employees helped to identify barriers and gaps in the implementation plan so leaders could provide the necessary input or resources to continue moving forward.

Formally review the design
This is the first of two steps that are specifically focused on the executive leadership team. Many in this group are engaged in the design process early and likely the biggest stakeholders. Similar to a new product launch or major capital project, there should always be a formal review of a major organization design. The organization design leader should prepare a presentation on the goals of the design, the major intended shifts and the scorecard. Each key leader should be given the opportunity to provide input based on their experience and that of their team. Any data gathered from focus groups or surveys should be summarized and reported. Finally, there should be a facilitated discussion where executives share their feedback and make recommendations for improvement. This results in an action plan that should be revisited later in the year.

Evaluate leader commitment
Figuring out if executives are demonstrating the new behaviors and serving as role models can be a bit tricky, but it is extremely important to the success of your new design. Many executive team members were likely intimately involved in the design process. They need to be pressed to continue to preach the positive message of the change and “walk the talk”. There may be some leaders who are less committed. This may be due to a skill gap that is making it difficult to serve as a role model. The organization design leader in this case needs to privately work with the executive to admit the gap and then develop a plan to improve. We often forget that senior leaders are also victims of their circumstances and may not have benefited from development initiatives that occurred after they rose through the ranks. By showing a personal interest in their development, they can regain their footing and become stronger advocates for the new design.

Employees take their cue on how to behave from their leaders. If the person they report to shows to be unsupportive of the redesign, it will be much more difficult to gain buy-in from the employee to change their own behavior.

The work to embed a new organization design is never complete. External market forces require adjustments as competition changes and the economic environment intervenes. New employees will need to be educated in the design and its genesis. The organization design leader will need a plan to review and renew the design regularly. Through developing a management routine with the executive team, learnings should be shared and progress measured. This change took a significant investment of company resources to execute and should be treated like any major financial decision where the return is carefully monitored.

If you would like to refresh on our original post, click here or contact us with any questions or feedback.

Reference: http://www.mckinsey.com/business-functions/organization/our-insights/getting-organizational-redesign-right*

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