Change can signal a perfect time for a new organizational structure.
Some organizations are accustomed to updating their organizational structure on a frequent basis. Technology companies are infamous for frequently needing to shift reporting relationships, roles and responsibilities as they seek to keep up with changes in the industry. Other types of organizations, academia, or government for example, are not as keen towards making these adjustments. Cultures rooted in tradition make it difficult to alter the design of how work gets done.
One thing remains true – all organizational structures have a shelf life. As internal and external conditions evolve, smart leaders routinely analyze and adjust their structure to meet their current and future business needs.
Restructuring is not the same as reducing your workforce. Although a restructure can often accompany a reduction in force, a more ideal way to define organizational redesign is organizing your processes, resources and structures to ensure optimal performance. It’s more than just changing the boxes and lines on an org. chart. It requires that leaders assess and integrate the organization’s various functions in a way that defines key processes, how resources are arranged, what span of control looks like and how various functions are either centralized or decentralized.
In our current environment, with so many individuals seeking new jobs and shifting their employment, organizations are wise to consider how to take advantage of these changes and adjust their structure to better facilitate a changing business.
Here are several questions to pose as you consider a redesign?
- What goals are we not achieving to the level we desire? Or, What new strategies do we need to pursue?
Maybe its financial or quality; customer satisfaction or culture goals. The first step to a successful redesign is understanding, at a strategic level, what needs to be different? If you are experiencing growth in one segment of your business, you might need to shift resources (and hence structure) to beef up that area. Maybe your culture is suffering, and you want to increase your emphasis in that arena. One organization we partnered with saw opportunities to leverage their workforce across the organization and wanted to break down silo’s. They determined the best way to do that was to change reporting relationships to encourage cross collaboration. Another organization was struggling with conflict between groups and discovered a misalignment in how resources were arranged. Yet another found their employee engagement was suffering. When assessing the structure, they made adjustments to their leadership competencies and span of control.
- How can we use natural attrition to reassess our strategy?
Many organizations are experiencing higher than average levels of turnover right now. Additionally, organizations are adding employees after making cuts the last two years in response to early stages of the pandemic. As a result, organizations have a natural opportunity to assess their business needs and resources and restructure units, divisions, and resources to better support new organizational needs. Challenge yourself to not fill positions in the same way they were. This environment offers you a chance to reexamine how you might do things differently and better.
Conducting a restructure when you are already experiencing turnover minimizes the people impact and allows you to consider the situation from a more objective perspective. Some of the psychological barriers that prevent us from making the right changes are removed and we can step into more creative thinking about what is needed in an organizational structure to best meet the business’s needs.
- Can we leverage our supplier relationships differently?
The headlines and your personal experiences speak loudly. Companies are experiencing supply challenges right now. This significant market variable in our current situations offers an urgent opportunity to consider how we structure our resources in more innovative ways. For example, what role does automation play in our structure and processes? Do we need to structure around areas of the country where labor is more available for certain services? Can we structure in a way to shorten delivery times for our product or service?
A restructure can reap a number of positive rewards, such as improved financial performance, the ability to more effectively leverage supplier relationships, easier recruitment of talent to meet changing needs, an enhanced culture or a better utilization of resources.
Here are six tell-tale signs it’s time to consider a new organizational structure:
- Your market or sales are experiencing significant growth or shrinkage.
- You want to make a culture change.
- You want to make a strategic shift.
- You’re having difficulty coordinating people and processes or are seeing conflict between groups.
- You’re experiencing a lot of operational challenges.
- Performance is suffering in one or multiple areas of the organization.
The world is unpredictable, and companies that survive and thrive long into the future must learn to shift with the times. By proactively considering whether a restructure is needed, companies can achieve greater efficiencies and healthier cultures while staying abreast of changing market needs and trends.
For more information, see our article, “6 Reasons to Consider a New Organizational Design” in CEO World.