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Driving top-line growth with effective organisational design

Driving top-line growth with effective organisational design

A poorly designed organisation is like a colander: you can pour your best talent and hours of effort into it, but much of this capacity will leak through the holes or be used up trying to plug the holes. A well-designed organisation, on the other hand, uses its talent effectively and limits the waste that occurs. So, what then, constitutes good organisational design?

Organisational design is the process of aligning the structure of an organisation with its objectives, with the ultimate aim of improving efficiency and effectiveness. Work can be triggered by the need to improve service delivery or specific business processes, or as a result of a new mandate. But organisational design is more than just structure and must be considered in the context of strategy, processes, people and reward systems.

Jay Galbraith, an American academic and consultant, developed the Star Model as an organisational design framework to assist organisations to develop a design that is congruent with their vision, values and objectives.

Galbraith’s Star Model

Organisational design involves:

  • Understanding the imperative for change and the environment
  • Understanding the business processes, workflows, roles and responsibilities, volumes of work, activity analysis and resources
  • Designing and testing new models or structures
  • Planning and managing the transition from the old structure to the new
  • Implementing and monitoring the change

The leadership role of HR

Digital disruption, employee expectations and an evolving workforce are all challenging organisations to rethink their organisational design. A recent global human capital report found that 92% of companies believe that organisational design is either very important or important. Almost half of the respondents surveyed said that they have already restructured their company or are planning to do so.

Decisions on how the organisation is structured fall within the remit of the top management team as these decisions will largely determine how work is undertaken in the organisation. So where does HR fit in? Though well placed to offer organisational analysis and advice, HR’s biggest role is helping to implement design changes. It’s important that decisions on structure are informed by sound expertise and a clear framework, which is usually within HR’s ambit. The HR function therefore needs to make sure that it has a good understanding of the philosophies underpinning organisational design, and then develop a framework which supports the organisation. This framework should be applied at a high level to highlight areas of misalignment between organisational purpose and structure.

Assuming a leadership role in organisation and work design is, however, not a natural extension of the current roles of many HR departments. In fact, most HR functions have been bystanders over the past decades, as new designs have been put in place to address the challenges of the quality revolution, information technology evolution, and unfolding of the global economy. These and other rapid changes have made organisational agility essential, and demanding shareholders have made growth imperative. HR must therefore learn how to view the organisation through the lens of organisational design for growth, and contribute to and proactively influence it.

Building an organisational design structure

The following steps can be very useful when designing a suitable organisational structure:

1. Clearly define objectives

The first step is to lay down the objectives in very clear terms. This will help to determine the type and basic characteristics of the organisation. In fact, organisational activities must be defined in terms of the objectives to be achieved.

2. Determine activities

In order to achieve the objectives of the organisation, certain activities are necessary. The activities will depend on the nature and size of the organisation. For example, a manufacturing concern will have production, marketing and other activities. Each major activity is divided into smaller parts. For instance, production activity may be further divided into raw material procurement, plant layout, quality control, maintenance, production research, etc.

3. Assign duties

The individual groups of activities are then allotted to different individuals according to their ability and aptitude. The responsibility of every individual should be defined clearly to avoid duplication of effort. Each person is given a specific job suited to them, and they are made responsible for its execution.

4. Delegate authority

Every individual is given the authority necessary to perform the assigned activity effectively. Authority refers to the power to take decisions, issue instructions, and guide and supervise subordinates.

Authority delegated to a person should be commensurate with their responsibility. An individual cannot perform a job without the necessary authority or power. Authority flows from top to bottom and responsibility from bottom to top.

5. Coordinate activities

The activities and efforts of different individuals are then synchronised. Such coordination is necessary to ensure effective performance of specialised functions. Interrelationships between different jobs and individuals are clearly defined so that everybody knows from whom to take orders and to whom they report.

6. Provide the right environment

Whereas it is important to have the right people in the right jobs, it is equally important to have the right working environment. This is necessary for the smooth running and the prosperity of the organisation. Changing an entrenched organisational culture, however, is most likely the toughest task you will face as a leader. Read the blog A 9-point plan for leaders to drive cultural change to help you with this effort.

7. Establish structural relationships for overall control

One common problem is adopting a new design without the structures to support it. It is essential to establish well-defined structural relationships among individuals and groups. This will ensure overall control over the workings of all departments and their coordinated direction towards the achievement of predetermined business goals.

An organisation has a better chance of success if it is reflectively designed. If its design is not being improved all the time, the organisation will not be successful. But don’t just change your design for the sake of change either. Think about what you want to achieve, plan accordingly and form a strategy based on your resources. Transforming your organisational design on a whim will rarely end well.

DOWNLOAD the eBook Design it in: Organising for Success throughout the Product Lifecycle for useful insights on how to empower your entire workforce to deliver on your strategic objectives.

 

About TRACC
The TRACC framework helps organisations build standardised and integrated good practice and performance capacity across their Plan, Source, Make and Deliver functions. Simultaneously it accelerates their collaboration and alignment capacity to build world class end-to-end value chains, enabling the organisation itself to become the ultimate source of sustainable competitive advantage.

 

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