Over the years, we’ve partnered with companies around the world to design organisational structures typically as a component of other initiatives – transformational changes, wider organisational redesigns and leadership assessment & development programmes, to name a few.
The company’s driver to design an organisational structure is often because they’ve realised an uncomfortable truth – the entire way the business is structured is not conducive to achieving its goals.
This is a difficult conclusion to reach because designing an organisational structure requires some heavy lifting – not just a lick of paint here and there, but potentially some serious changes to the whole edifice.
Before you get out the sledgehammers, though, it is vital that you have a vision in mind both for what you want to achieve and what it will look like when it is finished. So, how do you go about designing an organisational structure that will help to achieve your business objectives? Here are some key principles.
Build from the bottom up
One common reason why businesses conclude they need an organisational structure in the first place is because they realise the way the company is supposed to operate no longer reflects what’s happening in practice. This is the danger of imposing a structure from the top down – the ideal picture the leadership has in mind can be out of sync with operational realities. Especially when problems occur or circumstances change, it traps the entire business in doing things which don’t really help in achieving strategic targets.
One of the first steps in designing an organisational structure is to thoroughly evaluate current operations. Once you have a clear idea of how things actually work, you can start to judge what does and does not fit with your long-term goals, and make adjustments accordingly.
Be smart about your existing talent
You cannot properly consider your organisational structure and how well it operates without including your people in the equation. There are two things to weigh up here which, to a certain extent, conflict with one another. On one hand, it may be that your existing organisational design does not make the best use of the talent you have available – you may conclude that if your teams, leadership responsibility and hierarchies are structured differently you might unlock untapped potential and realise considerable benefits.
On the other hand, you may conclude that to achieve your desired goals, you need to create new roles that you do not currently have the right people for. You may need to explore the external talent market to acquire what you need. Equally, you may have to accept that some roles within the company have become obsolete. There is a difficult balancing act here between restructuring to maximise available talent and recognising the need to create new pivotal roles, without shoe-horning people into them if they are not suitable.
"It's a balancing act between restructuring to maximise available talent and recognising the need to create new pivotal roles, without shoe-horning people into them if they're not suitable."
Trade stability for flexibility
Organisational designs and structures are there for a reason. They provide direction and cohesion across all operations, they maintain systems of hierarchy and accountability, they rationalise how different functions integrate with one another and contribute to the whole. This sort of stability is fundamental to ensuring large corporations, in particular, work towards unified strategic goals.
But equally, too rigid a structure will cause problems. As mentioned already, if circumstances in the market or wider economy change, you have to be able to change tack accordingly. There is a trade-off between structure and control and a culture which encourages innovation and continuous improvement by providing people with an appropriate level of autonomy.
Be clear about responsibilities and accountability
Finally, always bear in mind that your organisational structure should be more than a theoretical piece of high-level planning. It has to be something that works, and a functioning structure depends on the people who work through it every single day. Therefore, you have to be very clear in the planning stage about how people will make it work, including how their responsibilities interlink. This means deciding who makes the decisions and setting out how accountability will function – not just who answers to who, but how performance will be assessed and where responsibility for driving performance lies.