It is having the right products and services or the right type of people working for a company that dictates a company’s success, right? If it were as simple as that, then we would not have seen companies struggling to survive and adapt in recent years – there is just a flow of continuous external economic factors. The landscape has been changing across many industries and sectors for some time, but more so than ever during the Covid-19 pandemic. While for some, this has been detrimental (retail, aviation, and the travel industry have been particularly hard hit), we have seen a great deal of good news stories too, with new start-ups seizing the opportunities presented to them, and businesses completely reinventing themselves and quickly making the necessary adjustments to their business model in order to not only survive, but thrive.
This is where Organisational Design (OD) comes in. OD is essentially a methodology which identifies misalignment of workflow, procedures, structures, people, and systems and calibrates them to meet the requirements of the business strategy. What flows from that is a detailed action plan and set of steps that need to be considered and executed effectively.
Having the right organisational structure is arguably more important than ever, and anyone embarking on reviewing their OD framework needs to come at it with a different mindset. Unlike many years ago, where once established it may be around for a decade or more, only requiring occasional tweaks, now they need to be developed with agility and sustainability, but with the mindset that any future scenario needs to be planned for or at least anticipated. To have this level of flexibility within the OD framework, it should be anchored to culture, as this will determine the way in which innovation happens and the way in which decisions are made and the way it impacts on the organisation’s performance.
Most companies do not realise it, but if they have job evaluation tools, pay benchmarking tools, competency frameworks, and talent tools, then they have some of the tools to enable organisational design to happen. But before those tools are put into action, the most important aspect is to get underneath of why organisational reframing is needed.
Many leaders are already strategically reviewing the current business results, financial health, environmental demands, customer demands, and employee demands, and this insight is critical for HR to proactively plan for and make the changes needed to support the new business direction of travel. Being proactive, helping leaders navigate through this, and showcasing how HR are equipped to respond and plan can really aid the pace and success of change.
OD comes in different levels of complexity and sophistication, and can be feared as a cumbersome and onerous exercise, but it can be extremely engaging and rewarding. Which is why the traditional ‘5 rights’ of workforce planning, (the right shape, the right skills, the right size, the right cost, the right location) are great design principles, but don’t exactly inspire creativity. So, let us think about it a little differently. Here are seven steps to get you started:
- Start with the business strategy, gain clarity around the external factors that are influencing the need for change, and identify the operational mode. Consider different scenarios, by exploring possible futures and identify risks.
- Carry out a value chain analysis and/or map out workflows to align with the business strategy. For example, the primary and secondary activities that will add value to your business strategy and ensure competitiveness
- Identify the current state, in terms of current structure, roles, capabilities, capacity and overlay with the value chain analysis
- Identify the future state and identify the aspirational organisational shape. Against the aspirational organisational shape, map out aspirational roles/hours (FTE) of capacity in the role, the level of capability, performance, skills, and locations of the current incumbent within the roles
- Develop skills and capability gap analysis. Overlay the current with the aspirational to highlight roles, capacity and capability that remains relevant to the aspirational structure, roles that fall out of the new structure and new roles that are required
- Assess the roles that that fall out: can they be redeployed, upskilled, reframed to fulfil the new role requirements?
- Ensure that salary benchmarking is up to date as it will be important insight to draw on to carry out the cost analysis of required skills and understand the level of investment needed to recruit talent
For me, it comes back to ‘why’ do we need to do it and how best can we create the right OD framework to drive the right level of performance and productivity via the right culture and setting. Innecto calls this the OD Way. For us, this OD philosophy reinforces that importance that OD needs to be right for the organisation and must have agility to respond to the unexpected, which will differ organisation to organisation.
The importance of agile and sustainable Organisational Design is something we really champion at Innecto, and we would be more than happy to speak with you about this in more detail. If you would like to discuss your OD challenges, please email me (sarah.lardner@innecto.com) or call us (+44 (0)20 3457 0894).
