Our Unique Approach to Align Organization Structure with Strategy
In our last blog we provided some valuable and practical tips for executive leaders about what they can do to manage risk and ensure success while transitioning to a new organization structure. In this week’s article, we’re discussing the importance of process, education, change management and executive coaching in successfully evolving your organization.
For executive leaders there are few strategic shifts bigger than deciding to design your organization in a way that better aligns with your strategy. Getting the transition to the new organization right (the process we call implementation) means a transformation in the way your organization works—accelerated performance, better metrics related to talent acquisition and retention, peak levels of innovation and roles designed with the right level of accountability and authority.
Once you’ve made the decision to redesign and implement, it’s hard to go back. After all, once you’ve become clear that your organization is not working as it should, hoping that it will fix itself is simply not an option. Still, deciding where to start and how to proceed can be daunting.
A 3-phase approach, with critical supporting activities
The amount of restructuring an organization requires depends on the degree of change to the strategy. When only tweaking the strategy, it is best to determine the areas of the business that will be impacted, identify required changes, test how those changes will impact the rest of the organization, and then make the necessary adjustments.
If the new strategy represents a significant change in what the business does and how business is carried out, then a more significant change to the organization structure may be required. Regardless of the extent of change required, an overarching question remains: “How do we get there?”
Our approach to organizational design, implementation and sustainment focuses on four key areas to assure success and manage risk at all stages of the journey. In addition to Design, Implementation and Sustainment phases, we have included a critical fourth area of focus that starts with our earliest interactions with our clients: Continuous Learning, Education, Change Management and Communication.
Here’s our approach to the process and the high level steps we take with our clients to align organization structure with strategy.
Phase One: Design
The starting point for any organizational design efforts is to answer some key questions, such as: What work should the organization structure enable? What are the key strategic imperatives that must be achieved and what roles are required to carry out that work? Answering these questions will facilitate the development of design criteria outlining the attributes that the new organization must have to successfully execute the strategy.
In addition, it is important to understand how the work is currently distributed into roles throughout the organization. What work is being done where? Are there things that work really well in the existing system? Are there things that need improvement? Current role holders have important information that needs to be gathered and analyzed in order to assess the efficacy of the existing organization.
Once this data is gathered and analyzed, leaders can agree on design criteria for a new organization, and the detailed work of designing the new organization can begin.
As a final part of the work of this stage, models are developed based on the design criteria. Each model is a high-level organization design outlining roles and accountabilities in a way that will support strategy execution.
The final activity in this stage is to select the design of the future state organization.
Phase Two: Implement
Once a design is selected implementation activities start, beginning with the detailed work of building out the new organization. Leaders take the high-level organization design and identify the roles required at every level, cascading the structure down to the frontline. Final decisions are made regarding the number of layers required, grouping of functions, and the nesting of systems, and processes. The organization will have new roles but will also retain many roles that currently exist, although the work of these roles may change.
Our process for ensuring role clarity involves cascading role definition down through the organization in a way that implements the new organization structure and roles in a permanent way. The process is highly participatory in order to secure buy-in at every level.
Leaders throughout the organization will need to answer the following questions:
- What is the critical work that we are not doing today but that needs to start?
- What work needs to continue or adapt?
- What work needs to stop?
Roles are then built out with high level accountability, decision authority, and cross-boundary role relationships in a way that will enable managers to map current employees to new roles and identify any talent gaps. Undertaking this work ensures that the entire organization is aligned to the new strategy, allowing the organization to deliver the future and not remain stuck in the past.
Phase Three: Sustain the new organization structure
The final phase is focused on integrating and aligning the structure and managerial system with talent acquisition, talent management, learning and development, total rewards and recognition, and leadership practices that currently exist in the organization.
Working closely with executive leadership and HR,. we ensure that the new structure and managerial system is aligned with existing and new HR policies and practices so that the structure and roles remain sustainable over time, continue to be aligned with the business strategy.
Embedded: Continuous Learning, Education, Change Management and Communication.
Our interactions with our clients start the process of education and change management as early as possible—often at our very first meeting.
This approach recognizes some very basic principles of change management and shaping desired behaviours: if you want to have everyone “singing from the same song sheet” it’s helpful to have them speaking the same language and agreeing on basic principles.
Our approach includes education in essential organization design principles, coaching in effective managerial leadership practices, timely communication and change management interventions, and continuous coaching and feedback for the leadership team.
We observe first hand how our client organizations evolve and begin to describe the organization and roles within it using a common set of terminology and language. This approach is a powerful element in successful change.
Successful transition to a new organization structure
We have helped hundreds of organizations make the transition to an organization design that is better aligned with their strategy.
While no such undertaking is entirely risk free, there are ways to manage risk to a tolerable level—including following an established and predictable process that employs approaches and tools that have been honed by decades of experience.
This blog is part of our ongoing series Organizations that Work. To see all of the blogs in the series that have been posted so far, click here.
Every Tuesday over the next few months, we will be posting blogs that take you from the pain of poor organization design, to identifying the root causes, to the benefits of undertaking strategic organization review. We will discuss the steps needed to effectively align your structure and work with your strategy, and we’ll discuss the processes that take out the guess work and help you to get it done. Through it all we will discuss how to lead the change from start to finish.
If you’d like to speak with us about how we can help you on your journey to an organization that works, please follow us on LinkedIn or book a call directly with one of our partners.
This blog was written by Ed McMahon. Ed is the managing partner with Core International, and specializes in creating organization designs structured to deliver strategy and improve performance.
Our approach draws on several bodies of work including Stratified Systems Theory, the work of Dr. Elliott Jaques. For more on Dr. Jaques and his work visit the Requisite Organization International Institute at ROII Requisite – ROII Requisite.