Organizational Design: Your Guide to an Effective Strategy

Organizational Design: Your Guide to an Effective Strategy

Modern business operations have plenty of responsibilities on their plate. Sometimes, the very act of maintaining the day-to-day can cause select issues and pressing needs to fall by the wayside. When this happens, such as with waning employee retention or low morale, it’s crucial to rectify it with a newly optimized – and modernized – organizational design strategy. 

Of course, not everything will go to plan. It never does. Therefore, any strategy set forth should remain agile, adaptive, and change-ready – all while ensuring your operations, department by department, remain fully compliant. Sounds overwhelming, doesn’t it? Fear not, as not only can we assist with comprehensive and people-considerate organizational designs from an HR perspective, but we’ve also compiled a handy guide to make any essential process refinements easier. In this guide, we’ll properly define organizational design before going over its critical components, tips on how to make yours effective, the most common challenges faced, and more.

Let’s delve deep into the fundamentals together!

What is Organizational Design?

Some of you may not be familiar with what organizational design is, and that’s okay! Our guide is designed with care to help you onboard your own selves into this process. Simply put, organizational design does what it says on the tin: it’s the conceptualization, development, and carefully coordinated implementation of a strategic plan that governs every facet of your operations. This incorporates plenty of administrative resources in order to come to fruition, including those pertaining to HR itself as the plan needs to be built around the needs and capabilities of your team in order to be successful. It’s essentially the process of aligning your company values and goals with how – and whether – your employees can actively contribute towards them.

Five Components of Organizational Design

It’s important to not overwhelm your team with a convoluted approach to organizational design – less really is more here, as it enables the company to remain nimble and flexible, especially as it grows and changes departmental focuses to align with market trends. With that in mind, there are five crucial components of an organizational design that we believe you should focus on. These include the following:

Specialization

Do you enable specially gifted and skilled individuals to deliver their truly best work? If so, how? Is it possible that there are barriers to progress, possibly even innovation, that hold your teams back, effectively dulling the organization’s competitive edge? Process and task bloat, jumping through too many hoops – many of which can invariably shrink and make for a tighter squeeze – and excessive internal red tape are just a few examples of your specialization being inhibited or even devalued by the primary culture overseeing the entire company. 

In addition, beware of overly complicated strategies that further suffocate ideation, creativity, experimentation, and innovation. Don’t fall into the trap of attempting to turn everyone into a Jack-of-all-trades, because your team will wind up becoming the master of none, potentially even blending into the sea of competitors vying for the same market! This also risks the departure of your specialists themselves, which will harm retention.

Coordination

It’s very important to divvy up responsibilities and tasks so that they are organized appropriately. At the same time, you should ensure that no individual employee is treated like a machine – they’re very human, and typically more capable when set up for success rather than bogged down and burned out. Coordination’s role is to oversee not necessarily siloed sub-operations but to group appropriate roles, applications, and processes together. At the same time, coordination is responsible for cross-unit communication, collaboration, and effective teamwork.

Innovation

Tying in with specialization, innovation is the fuel on which trends – and the ever-changing needs of your target demographic – are established. For example, as new entertainment technologies are brought onto the market at a premium entry price due to their new features, low level of adoption and higher production costs, competitors will vie for a piece of this newly created opportunity, contributing their own resources, research, and development. This collective commitment towards innovation will gradually bring the price down and encourage more individuals to make that purchase or upgrade. We see this all the time in everything from smartphone feature sets to electric vehicles. 

This is just one example to consider. Others include restaurants capitalizing on local trends, such as special events. But what do these have to do with your company? Well, regardless of what your application is, you need to be prepared from an organizational standpoint to try new things. Experiment. Expand your horizons. Flex with the ever-changing tide of trends. Your organizational design needs to be optimized from the outset to adapt without placing strain on units, processes, and especially the people doing the work.

Knowledge and Competency

Nothing is worse for an employee than seeing oodles of to-dos with task descriptions that don’t apply to the skillset and knowledge you hired them for. Organizational design depends, therefore, on the application of said knowledge, making full use of each employee’s specific role and capabilities, to inform allocation based on competency. For example, higher-ups don’t normally need to be constantly notified or brought in to assist with basic functional duties assigned to junior hires with limited experience – those are tasks that they should be expected to handle after proper onboarding and training is complete. 

At the same time, it’s always possible that an employee can and is willing to do more, learn, and further their growth. While you shouldn’t be moving people between departments to satisfy changing needs that could be accommodated for by others (again, specialization is very important), you may be able to bring some higher-level tasks relevant to their skillsets and expertise down to them. This is a great way to challenge them without asking to reinvent the wheel, so to speak.

Control, Morale, and Company Commitment

This is a bit of a tricky one. On one hand, it’s essential to maintain a firm grasp of the helm and chart a course towards success, chasing realistically attainable goals that only require enough wind in the sails – in the form of your teams, processes, and capabilities – to get there. On the other hand, is the crew committed towards these ambitions, and are they enabled to play their part? Alternatively, is management reigning down an iron fist and micromanaging every minor request, or even losing emotional control when things don’t go as planned? 

The key when it comes to control and company commitment is to strike the balance. While there’s a clear and present danger of a lax, loosely structured workplace by letting the reins slip, overbearing processes and operational standards can have the opposite effect and choke progress while demoralizing team members. You want to give them less to worry about, not more, if you need them to prioritize specific responsibilities. Apply enough control to maintain smooth sailing, but not so much that it hurts morale and risks a mutiny in the form of a mass exodus.  

How to Create an Effective Organizational Design

Now that we’ve gone over the core fundamentals, let’s help you chart your own organizational design journey. There are several steps of equal importance that you and your team should follow. This helps to ensure the best possible implementation – and lasting success. Let’s now explore the most essential steps associated with creating such a design.

Step 1: Leverage Data in Strategy and Conceptualization

Formulating a successful and effective organizational design doesn’t happen by guessing blindly – doing so will introduce even more headaches and hiccups along the way! Instead, leverage your data. Lean into it and harness it. Sense the needs of your customer base as well as your internal employees and see if there is a conflict of interest. Any roadblocks to success may stem from processes that inhibit innovation, bloat tasks, and/or prevent employees from fully utilizing their specialities. 

Aligning with the needs of your target demographic helps to inform internal operational standards, best practices, guidelines, and more, enabling the company in question to remain adaptive to trends and ever-changing needs – including those of your own team members. By thoughtfully considering all available data – and by not overlooking any departmental operations, no matter how hyper-niche they may be – your organizational design can be built on a realistic, sensible, and very much worthwhile strategy. Whether you need to reduce operating costs, improve employee morale or otherwise, the concept you finetune should be able to address key pain points and help you achieve rational results that aren’t too out of reach.

Step 2: Take the Temperature of Your Workplace, then Optimize the Approach

Of course, now that you have a strategy, how do you implement it? Planning is all well and good, but if you can’t connect with and relate to the teams in every department, it’s likely that the changes you propose will meet resistance and/or complicate things further. For instance, if you’re keen on making tweaks to maintain compliance, are they realistic in terms of materials sourcing, available resources and time for training? Or, are your culture and morale already stressed due to cross-departmental conflicts that have yet to be resolved, which could worsen if certain processes or standards are changed? 

These examples are important to bear in mind because it’s the issues at hand that should dictate the direction taken with your organizational design, not the other way around. The key is to ensure a calm, stable, mutually supportive and adaptive environment that is healthy for all employees, regardless of their seniority or specific role. The phrase “read the room” comes to mind – don’t underestimate the importance of taking the temperature, so to speak, as this will help inform any optimizations that need to be made to your strategy.

Step 3: Ask for Help if You Need it!

Not one person can know everything, and that’s why it’s a privilege to be able to lean on the insights of others. This reason alone is why our own clients at True North HR Consulting turn to us for people-first human resources solutions that leave nothing to chance! Our HR process consulting services are a great example of this, offering sound advice and gentle guidance to leadership and those they manage.

With that in mind, before diving in too deep (especially if this is all new to you), don’t be afraid to ask for help. The more unbiased support you have with sorting out priorities, establishing a clear direction, and consulting data points, the more meaningful your organizational design can be. It’s an excellent way to ask all the important questions – there are no wrong ones – and make life better for you and your fellow team members while minimizing frustration.

Step 4: Feasibility Study and Verifying Compliance

Naturally, every employer wants to be supportive and ensure the best possible experience for their teams. However, you also have responsibilities to contend with, which is why we take striking the right balance for businesses very seriously in the HR industry. All the quality of life improvements and cost savings in the world won’t mean a thing in the long run if you lose crucial funding, and violate local laws or regulations that govern your operations. 

That’s why, prior to implementing your organizational design strategy, it’s best to perform a feasibility study of sorts. This helps to ensure that you cross everything when making improvements that improve the culture and capabilities of your workforce. Upon verification that your retooled processes, policies, and other essential elements are fully compliant while still worth changing in the first place, you’re ready to dig in.

Step 5: Gradual Rollout and Pulse Checks

If you instantly change large swaths of your operations overnight, you’ll create undue stress and complexity, which can scare employees away and overwhelm them. Instead, prioritize the most urgent design elements, perform a gradual rollout, and don’t forget to properly inform and educate affected team members prior to doing so. Perform regular pulse checks to ensure everyone is at ease and comfortable, and be certain to embrace even the feedback you may not want to hear; it may help you make the best possible choices for your workforce and culture.

What are the Biggest Challenges in Organizational Design?

Organizational design and business requirements (such as profits to ensure, employees to retain, and compliance needs) can sometimes bunt heads. That’s why careful and calculated planning is so important. The challenges that may present themselves will vary depending on a variety of factors, not least of which include the application type your business falls under, the technologies and tools you use, your established strategies and their governing rules, and much more. Generally speaking, however, here are some of the most significant challenges faced in organizational design:

  • Unrealistic goals fuelled by opinion or wants rather than the facts
  • The ability to collaborate with other team members to inform the direction
  • Data to inform planning (specifically, whether it’s outdated, inaccurate, and/or disorganized)
  • Ensuring full compliance while ensuring meaningful, impactful changes can still be made
  • Financial pressures, such as having a tight budget due to heavy losses, that hinder scope
  • Balancing ideation with integration, realism, and ease of management
  • Timeframes that make sense for not only higher-ups and their goals, but the actual workforce
  • Knowing what to change and what not to
  • Avoiding “too many cooks in the kitchen” in terms of conflicts of opinion, etc. (again, working with an external body specializing in HR services can mitigate this risk)

Where Do I Start?

Organizational design and change go hand in hand. This means that such an improvement relies heavily on forward-thinking, and therefore, the key takeaway worth considering is to put your employees first. They’re on the frontlines, so to speak, and will know better than anyone what the real pain points are. Collect data associated with specific departments, processes, tasks and permissions, and other aspects of your operations to better understand what needs to be changed and what doesn’t. This can mean the more effective allocation of funds and resources towards setting everyone up for success. Of course, if you’re stuck or overwhelmed, you don’t need to make these changes on your own.

Organizational Design Consulting Tailored for You

Are you interested in developing an organizational design that is future-facing and conducive towards a healthy, happy, cost-effective workplace that will remain fully compliant? We’re here to help. At True North HR Consulting, our approach is to focus on your specific operational parameters and needs – and that means not implementing a cookie-cutter approach. Instead, we custom-tailor organizational designs based on discussions with those within the organization itself rather than going by the book, helping teams maximize their potential and stand out from competitors. A great example of this in action is our human capital consulting services, offering best-in-class support and plenty of resources, assistance in guiding team members, technical expertise, and more – all in a manner that’s approachable and considerate.

We hope that this guide has proved helpful and inspired you to enact meaningful change. Regardless of your organizational design needs, we’re prepared to put your people first. Contact us today, and let’s discuss your pain points together. We’re happy to assist!