An effective organization design is an invaluable tool a leader has to ensure that the organization is set up for success. The organization design shapes the overall look and feel of an organization and defines the formal and informal ways in which work gets done. Unfortunately, however, many leaders are simply unaware of or ill equipped to use this tool and, as a result, many organization designs tend to wind up more like the Winchester Mystery House.

The Winchester Mystery House in California is very similar to many organizational structures in corporate America. Once the personal residence of Sarah Winchester (the daughter of gun magnate William Wirt Winchester), the mansion is known for its size and total lack of any master building plan. Architectural oddities include some stairways that descend seven steps and rise eleven, and other stairways that lead nowhere. Just like the Winchester house, many organizations are devoid of master plans, meaning they include departments that don’t fit the structure and positions that don’t deliver meaningful results. You should redesign your organization when you have a good reason to… when the payoff of the intended change will deliver improved business results, customer satisfaction and employee effectiveness.

Good reasons to redesign your organization

The following are five good reasons to redesign your organization.

1. Strategic Shifts. When you make dramatic changes to your business strategy such as changing your core products or the ways in which you differentiate yourself in the marketplace, you need to take another look at your organization design. Your strategic shifts may be the result of changes in environmental conditions, such as competition, regulations, new technology, etc.; or perhaps the organization is in a growth and innovation stage. Either way, the strengths you need to bring to bear to deliver on your strategy have shifted, thus performance expectations have also shifted. As a result, you need to adjust the formal organization in order to support the new work requirements.
2. Redefinition of Work. New strategies and technologies redefine how work gets done. So does the cost, quality and availability of resources. When your work flow and processes shift, your formal organization must also shift to support the new work flow.
3. Culture/political change. Culture is the informal norms for “how work gets done in an organization” and how people interact with one another. Changing an organizational culture is one of the most difficult tasks a leader can take on. Oftentimes, you can execute a desired change in the informal organization by changing and realigning the formal organization. These intentional changes to an organization design are called artificial architectures, and are used to force desired behavior change until it becomes the new norm.
4. Staffing/Resource Changes. When the organization has a need to do more with fewer people or needs more people due to growth, it forces a change in work flow and balance of workloads. All changes in staff (head count or talent), particularly in key positions, often require a rethinking of the organization design.
5. Current Organization Design is Not Working. In other words, when it is broken, fix it. There are two types of indicators that will determine the need for redesign. These are:
   External indictors:
   Challenges in meeting customer/client need
   Lack of ability to respond effectively to changes in the marketplace
   Lack of expertise required to compete in the marketplace
   Internal indictors:
   Lack of coordination: handoffs are not seamless at the employee or department level
   Excessive conflict: tension between units at the employee or departmental level
   Unclear roles: it’s everyone’s ball or no one’s ball; individuals are uncertain or expectations and functions overlap and work “falls between the cracks”
   Misused resources: there is a duplication of efforts/ resources don’t get to those who need them
   Poor work flow: processes are inefficient or ineffective; disruptive and cumbersome processes prohibit effective work flow
   Reduced responsiveness: organization has challenges in responding to and meeting customer needs; organization cannot respond quickly enough or appropriately to changes
   Proliferation of extra-organizational units: extreme reliance on task forces, committees, special projects and/or shadow organizations
   Work is “dropping through the cracks”

Not good reasons to redesign your organization

If the organization is broken, fix it. If it is not broken, don’t fix it. The following are four common situations in which a leader may undergo an organization redesign effort on an organization that is not broken:

1. New Leader…Personal Stamp. If you are new to an organization, it is tempting to want to put your own unique stamp on the organization and make it your own. Similar to moving into a new house, whether you rent or own, you want to move in your own stuff and create the environment that feels the most comfortable. Tempting as this might be, it is crucial to balance the potential benefits to yourself as the leader and the costs to the organization. Implementing a reorganization effort is challenging to most employees and is usually disruptive. You need to ensure that there is a significant payoff in terms of employee, customer and business results for undergoing this type of change.
2. Dealing with Poor Performers. There are few leaders who relish firing an employee. No doubt it is difficult to give that type of hard news, especially when it is because of poor performance. Double whammy on the self-esteem! There are many ways to handle a poor performer and redesigning your organization is not it. Reducing scope, containing the influence or creating what I refer to as “invent-a-job” (roles that have no real purpose) only serves to move the problem rather than dealing with it. As a result, poor performers never get better. Furthermore, there are other consequences to using organization redesign as performance management. These include: Leader loses credibility because these decisions are usually obvious to the rest of the team; Productivity is encumbered by having the rest of the organization deal with an “invent-a-job”; Structure loses logical coherence; and Customers/Clients become confused
3. Retaining a Top Performer. Talent is hard to find, so when you get it you want to keep it. That is good business. However, retaining an employee via the use of inflated titles or increasing scope by combining multiple organizations that don’t logically go together isn’t the best way to accomplish that goal. The benefits of keeping that talent aren’t outweighed by the potential costs. The impact of these decisions can include: Executive teams lose natural balance of power (e.g., have VPs and directors on same team with a Sr. VP); Forced synergy between unrelated areas that actually reduces productivity and or wastes time; Leader who is groomed doesn’t learn what it is to have an expanded span of control, so he or she wears two hats or more vs. having to deal with more complex problems that come with a legitimately broader span of control.

If you do want to groom a potential future leader by expanding scope and influence, your objective can be best served by ensuring that the ways in which you combine organizations have a natural synergy to minimize potential negative consequences.

The bottom line

A hammer is made to hit nails and a wrench is made to tighten bolts. You can use a wrench to hit nails, but it won’t work as well as a hammer. Similarly, you can use organization design for performance management and it might work, but it won’t work as well as when you use it for the purposes for which it exists.

Are you ready to take your organizational effectiveness to the next level? Check out the other resources available online at www.acceleraconsultinggroup.com, or give us a call at 407.376.8522, for a free consultation. We accelerate results by igniting leadership and organizational potential!