When an organization’s structure is not well planned, the organization will be unable to deliver on its strategy and business plan. Often this is because the organization itself gets in the way. Deadlines are missed and departments seem to actively work against each other i.e., the “dysfunctional silo effect”. New leaders, brought in with much fanfare as difference-makers perform only marginally better than their predecessors if they do not address the root cause of the organizational dysfunction.
Well-designed organization structures are the backbone of work systems. Organization structure is the basis upon which work is distributed into roles. Structure is an organizing mechanism which brings logic and clarity to the work of hundreds and thousands of people – It provides the map of where work is nested. Titles give information as to the nature, level and complexity of the work and managers ensure the right interactions take place to ensure the work gets done.
Organization design is the tool by which the leaders create the conditions to deliver their strategy. We have worked in hundreds of organizations and have seen the results of poor organization design play out in the following ways:
Strategic Misfires
Is your organization structured to deliver its strategy? Can you see how the organization will deliver strategy—the right roles, doing the right work at the right levels? When the structure is not aligned to deliver the strategy, execution is not only slow and costly, but you may never hit your target.
Innovation Gap
Has your organization built the ability to innovate and win in the marketplace? Innovation is a critical capability for all organizations in driving growth. There is a direct link between organization structure, leadership capability, and innovation execution in the knowledge economy. Innovation should be designed into roles for continuous improvement, development of new processes, development of new markets, products, and services and the development of new business and industry models.
Poor Engagement
Is your organization driving employee engagement by providing challenge, growth, opportunity, and development, to all employees? If your people cannot see how their work matches their capability and interests, that their development is a priority for the business, that they trust their leaders, and that they can truly contribute to the business’s growth and success, then you likely have both an engagement and an organizational design problem.
Sluggish Responses
Is your organization able to respond to emerging opportunities and beat out the competition? Slow business decision-making and poor execution can result from several organizational structure factors, including; too many or too few layers, poor grouping, separation of related work, and narrow scope of roles to name a few. Poor organization design clogs up the work system, increases costs and execution times, and demotivates employees as productivity slows and costs climb.
Bureaucracy
Has your organization become bloated and lethargic? Is your organization experiencing excessive cost, poor profit margins, and low industry productivity metrics? Implementing new strategies while maintaining old structures and processes from the past, will slow you down. Supporting growth by simply adding “bodies” is a recipe for failure. Before long, your cost structure is out of line and the increased size adds further to the bureaucracy and operational sluggishness. It creates a never-ending cycle of decline unless properly addressed through better organization design.
Value creation
Do you have the management structure and talent to drive current performance and future growth? Many organizations are so focused on delivering this year’s plan that they cannot see past December 31. Creating and growing shareholder value requires balancing in-year performance and profitability targets with building and evolving the organization’s capabilities to support future growth and long-term viability.
Over the next 2 weeks, we will share with you case studies which show how these problems impact real organizations and how good organizational design helped resolve them.
Mike Brush
As a partner with Core International Inc. since 1997, Mike Brush has worked with many of Canada’s largest companies in structuring to deliver strategy and improve performance. For more information on how Core International can help you get the best out of your business, book a call to talk things over here, contact Mike at mike@coreinternational.com or call 416-977-2673 ext. 13