Companies are ever changing. They launch, evolve, diversify, merge, re-org, re-launch, and change again. For any number of reasons, over time every company must consider the need to shift their organizational structure from its current state. It’s what keeps them fresh and innovative. The best way to approach organizational redesign is to take a 360 view of all of the key considerations before getting started.
Research shows that only 16% of restructuring initiatives succeed in reducing costs, only 19% yield increased revenues, and less than 40% improve an organization’s ability to deliver products or services or expand into a new market (CEB). But at Blue Beyond, we know there is a better path to brighter outcomes.
We’ve had the opportunity to collaborate with organizations as they transitioned their organizational or team structures to better enable business success. The first step is taking time to examine all the elements and factors critical to the project’s success before embarking on the journey. If you find yourself leading a restructuring initiative, here are some best practices to lead you on the right path.
Key Questions to Ask Before Planning an Organizational Redesign
1. What is the business issue your organization is trying to solve?
Any number of external issues come up during the lifespan of a company that may require a re-prioritization of roles and functions within the organization. Changing the structure of the organization ensures that silos are dismantled, routine is broken up, and complacency doesn’t become the norm. When considering the business rationale, closely consider the various factors that serve as important inputs to your decision-making and how they serve to support the overall business strategy. Whether it is a changing customer focus, a shifting competitive landscape, technology or scientific disruptors, economic changes, or other market forces; all of these need to be assessed to determine the level of impact and influence in your business rationale at the outset of your planned organizational change. Know that there may be more than one of these factors that will reinforce your business strategy and bolster the messaging to the larger organization.
2. Are your leaders equipped to support the organizational redesign and subsequent change?
Leaders have an irreplaceable role. They are at the center of any organizational redesign – connecting and balancing purpose and strategy, governance and structure, people capabilities and a multitude of other elements imperative to organizational success. Leaders have the responsibility for both delivering the message about the changes and making the new organizational design operational. Ask yourself:
- Do senior leaders have the right capabilities to support the future business strategy?
- Are they skilled at communicating change and inspiring teams to action?
- To what extent do they show they are serious and committed to “walk their talk”?
Remember leaders are your most valuable asset with your redesign efforts. Make sure you are arming them with the capabilities, skills, and tools to help them get buy-in from their employees.
3. What implications does this have to the people side of the business?
Once you’ve clarified the business reason for the change and leadership requirements to enable the change, it’s time to execute the redesign. There are multiple ways to approach the redesign and various models to use in facilitating the conversations and meetings with key stakeholders involved. However, getting to a final state organizational structure is far from the final stage your change team needs to deliver. Consider the following and be certain they are addressed and agreed to by the change team:
- How and when do we communicate the organizational changes across all internal and external stakeholder groups?
- What does this change require in terms of new or refined skills and capabilities of your team?
- Is your total rewards and recognition program framed to effectively support the business based on the change?
- Do business processes, systems, or technology need to be updated or modified to be more successful within the new structure?
4. How much time should we commit to a restructuring?
As you embark on your organizational redesign effort, don’t underestimate the time it will take to not only design an organization, cultivate understanding, engagement, and support from the team, allow for new training and hiring as required, but also create the foundation of commitment to the change. These efforts almost always take longer than originally anticipated or desired. Effectively assessing, designing, implementing, and refining all elements important to the organizational redesign process requires laser focus of the change leaders and commitment to communicate prolifically to those who are impacted by the change.
For more on managing organizational change, see Managing Change: 3 Ways to Win Hearts and Change Minds. Need assistance with an organizational redesign? Contact us today to start a conversation!
Sources: Corporate Executive Board; The DNA of Organizational Excellence, J. Allan McCarthy & Affiliates