Tool Box - Organization Design & Restructuring

Kumar Gautam, CHRO & Director, Human Resources

Organization Design that are simple, sustainable and deliver business results are the outcome of meticulous planning followed by well managed purposeful action taking. They do not just happen.

Planning organization design work involves following 6 Steps:

A.   STEP 1: Triggers for Organization Design & Business Case.

a.    There are four distinct triggers of organization design, while some triggers are exciting, some are worrying, but all the triggers require a response that likely means some alterations in changing how we are organized, ensuring work is done in the most effective way.

i.    Trigger 1 – External

Example: New Competition (Rival has entered your territory), Changes in Legislation which has impacted your business, COVID -19 (Act of God).

ii.    Trigger 2 - Transition In (Acquired)

Example: Digitalization, New Technology & Acquisition,

iii.    Trigger 3 - Transition Out

Example: Spin -off, Divestment, Closure.

iv.    Trigger 4 – Internal

Example: New Strategy, Goals, Profitability below expectations

b.    Business case for change includes section on five aspects – Fit for purpose, options, achievability of new design with organizations current capability and capacity.

(Figure 1.1: Triggers to Organization Design)

B.   STEP 2: Establish Design Enablers

a.    Leadership Support: A high level of leadership support (Most importantly CEO & Top Team) is essential for any size of organization design work, and it must be obvious and demonstrated. If top team are signed up and understand their role, they will make change vision clear, inspiring & shared; communicate the compelling rationale for change. Endeavour should always be to ensure that each leader do this effectively and skill-fully, but fact of the matter is few leaders will always fail to appreciate the change. Successful change initiatives require strong, committed leadership throughout the entire project-life cycle

 i.    Why bother?

• Strong, committed leadership is critical to accelerating change
• Leadership impacts all other change processes
• Leader must play varied roles

 ii.    What are we after?

• Visible, active, and public commitment & support.
• A willingness to take personal initiatives and challenge the status quo.
• High level of attention to the project through the time, passion and focus given to the project by leaders at all level.

b.    Stakeholders Analysis & Engagement – The goal of stakeholder engagement is to: (Figure 1.3, Stakeholder & Audience Analysis)

• Identify who can influence the design;
• Assess their interest and area of resistance, and how they help hinder progress;
• Agree their roles within the program

C.   STEP 3: Assess

a.    Prepare for new design: While we design the organization in operating context in mind. The context is not static, as it changes its elements become more important or less important. Hence, it’s important to be alert to the future and assess. Businesses must be designed to be adaptable to and accommodating of the constant context changes, which will help give competitive edge, minimize risk and raise performance levels. (Figure 1.2, Structure Decision for Organization Design)

b.   Change Readiness – Change readiness assessment are valuable because they help clarify where a design program might run into a problem and they enable plans to be developed to make people ready for the change. It’s important to identify possible barriers, enablers and risk. Range of assessment tools can be used, including..

•  Interviews by stakeholder, function and level
•  E-survey/Targeted e-survey
•  History assessment etc

D.   STEP 4: Design (Develop & plan the design) - Time invested up-front pays rich rewards “down-stream;” Go slow to go fast later!

a.    Organization Design Program Office/Team or Governance Structure: Choosing the right people is crucial as they must not only be capable but also be seen to be capable, they must have sufficient experience and of course, they must be fully committed champions of the project. Its important to set them up for success by defining various levers, including

• Scope: A well-defined scope of work for the project that all parties understand and are committed to achieving the deliverables.
• Project Plan: An effective project execution structure and process.
• Clear roles, responsibilities and expectations for all parties (Sponsor, Team Leader, Team Members, Others). Basic model for successful team work models is clear understanding of Goal, Role, Processes & Interpersonal. (GRPI)

1.    Goals: Are the mission and goals of the team clear and accepted by all members? Are they in tune with the team's environment?

2.    Roles and Responsibilities: Are the roles and responsibilities clearly described and understood? Do the defined roles support the team goals fully? Do the team members have the right competence and resources to fulfill their responsibilities?

3.    Process and Procedures: Are there processes and procedures operating in the group (such as problem-solving methods, communication procedures, decision making processes, resource allocations) that are:

a.    understood and acceptable?

b.    supportive to the group goals and roles?

4.    Interpersonal Relationships: Are the relationships among the team members healthy and support of good team work? Is there a healthy level of trust, openness and acceptance in the group?

b.    Setting up for success requires conscious, coordinated effort on the part of the Sponsor & Project Leaders to the extent that…

• Do all parties (Sponsor, Project Leader, Process Stakeholders or Team) understand and agree what is and isn't in the "scope of work" for this project and why this project is critical to do?
• Have the Sponsor, Project Leader "contracted" with one another regarding roles, responsibilities and expectations?
• Are the expectations of the Sponsor regarding milestones, time frames and key deliverables known to all members of the team?
• Has the group of people assigned to complete the project begun to come together as a "team?"

c.    Considering Design Principles

• Changing how your organization is organized, ensuring work is done in the most effective way.
• Changing spans and layers to break through our bureaucracy and increase effective decision-making.
• Simplifying portfolios and processes to focus on what matters most to our business.

• Think differently with the intent to transform – challenge the way you were organized in the past
• Build the organization around the work, not the people
• Streamline functions where services can be “good enough”
• Scrutinize positions across all levels and salary bands
• Look for opportunities to consolidate and create broader roles. 
• Ensure there is no duplication of responsibilities within and across functions
• Increase the number of people that administrative assistants and coordinators support.
• Ensure roles are feasible and attractive to internal and external talent.

d.   Examine organization structure to reduce duplicated efforts & redundant roles

• Org analysis – Spans/Layers, Salary pyramid, etc
• Deeply study roles & Cost Analysis
• Study current productivity norms, Financial performance expectations (In changing scenarios).

e.    Create New Organization (List New Vacancies, Proposed Structure & Freeze Head Count /Productivity Norms)

• Create Proposed Structure
• Freeze total FTE position Cost/Count
• Freeze on new vacancies (for future competencies) & establish timelines for hiring.

f.     Identify redundant roles & Impacted employees

• Identify lowest performers
• Re-allocate & optimize the resources for the roles, Tooth vs Tail ratios etc
• Right Size the Organization to be in line with productivity expectations.

E.   STEP 5: Implement (Transition to the new design)

• Notification Process, Timelines, Communication & Transition Out outline of the key steps and communications involved in the notification process, along with the timing necessary to complete the process.
• Notification Scenarios - Overview of the different employee scenarios resulting from the transformation.
• Expectations from Leaders & HR      Confirmation of the role of leaders and HRBPs in the notification process
• Message from top leaders- Consistent overall messaging for leaders to use in sharing context around the transformation, reinforcing the changes are not new to your organization, and explaining the key actions being taken.

• Discussions, Guidelines & Talking Points - Standard guidelines and talking points specific to each employee notification scenario:

1.    Reduction in force (RIF)/Unsatisfactory Performance.

2.    People manager no longer has direct reports.

3.    People manager has new or additional direct reports.

4.    Employee has a new manager

5.    Employee’s role is changed

• Organization Announcements - Standard template for leaders and HR to leverage and customize for their respective organizational message to include: overall context around your organization transformation, business strategy and rationale for actions taken within the group, and any applicable leadership announcements.
• FAQ’s Answers to questions that employees may ask regarding the transformation

F.   STEP 6: Embed (Stabilize the new design) – Planning and implementing the embedding of a new organization design often takes a back seat to the work that goes in the earlier 5 steps. It is as if all energy has been expended in first 5 steps, so actually living the new design becomes “that we have arrived”, rather than an energetic exploration of what is working well and what not.

It is evident from the description of the organization design process that it is not one of that can be prescribed accurately. Rather it is a sequenced process that emerges from information about a specific organization in its operating context.

Kumar Gautam

Human Resources Professional.

(+91,9871371373); [email protected]

Source Credit: Guide to Organization Design (Naomi Stanford)

This article is written in personal capacity and is for education purpose and not for commercial uses.