Organisational design blog imaage

Organisational design: what is it, what makes it fun and what lessons can you learn from it?

We asked one of our Senior Consultants (also an OD specialist) to give us the ins and outs of what Organisation Design is and how it fits into our HR transformation space at LACE. Vicky Leahy has a broad range of skills including recruitment, benefits, employee life cycles, onboarding and staffing, amongst others.

What is 'organisational design' and where does it fit in the wider HR  transformation world at LACE?

‘Organisational design’ (OD) doesn’t have one definitive meaning, but it’s essentially about shaping or designing an organisation by its people and processes, in a way that helps it to successfully deliver the overall business strategy and goals. A business typically should always have a plan or strategy in place, whether its three years, five years or longer term. OD looks at the way the business is organised and set up structurally, and how that aligns to delivering business goals.

In terms of where it fits in the wider HR transformation space, it is closely aligned to when we assess a client’s HR target operating model. This involves looking at how the HR function is structured and designed to achieve and deliver the people strategy specifically. We typically, as part of our work, do a full assessment of their current state operating model; their people, capabilities, processes, and the technologies they are using. This allows us to understand what the issues and pain points are, working out what is inhibiting the function from fully being able to deliver and achieve it’s strategy in the most effective way. We then work closely with the organisation to develop their future target operating model that serves to combat these pain points and improve the elements that are seen as ‘broken’ or not working as effectively as they should be.

In HR Transformation (target operating model projects) you typically look just at the HR function - but broadly speaking OD can cross several functions or even the entire business, hence the word ‘organisation.’ In same way as in the HR landscape, we might look at restructuring the function by capability or specialism, upskilling capability, improving processes and workflow, or clarifying accountabilities - we would do this across functions/organisation in OD. Both look at the way the function or functions operate as a whole and propose changes to improve efficiency and deliver maximum value in line with the strategy.

What are the most common issues you come across in OD work?

To name just a few…

  • Lack of accountability and clarity in roles - Meaning who is accountable for delivering what. Often this can be blurred and unclear, particularly in a large, matrix organisations where hard and soft reporting lines exist which can cause conflict in direction and purpose.
  • Duplication of efforts - Many companies struggle with duplication of effort or resources - this means having lack of control and streamlining over your resources and lots of people effectively doing the same jobs all over the business. This not a cost effective or productive way of working and utilising your talent - and causes great inefficiencies.
  • Poor oversight of risk- In all organisations but large organisations particularly, due to the scale, it isn’t always easy for senior management to have risk management oversight. Trying to understand exactly what is going on without the right controls in place is difficult and unnerving. This causes potential exposure to risk and could cause severe damage to a business.  Having the right governance mechanisms, and collaborative ways of working helps. Often you see businesses that work in siloes have greater issues with risk as information doesn’t flow to the right people and issues are not dealt with appropriately.
  • Lack of standardisation of processes - Having lack of standardised processes is a very common issue both in large and small scale businesses - as units/areas, divisions, functions, countries (however the operating model is set up) are given free reign to operate independently and given authority to make their own decisions. This can be a great thing but can also, often mean developing and following their own due processes when it comes to day-to-day operations. Having some alignment or set of standard processes helps to ensure consistency (particularly from a ‘one’ branding/culture point of view) and also means the employee and/or customer experience and journey is the same wherever they interact with the organisation across the globe. There is a lot to be said for consistent ways of working. Understandably, this may at times be driven by specific legal regulations (if country or region specific), however where possible driving standardisation can open up a window of positive benefits. 

What makes OD fun?

OD is fascinating as you get the opportunity to learn how a broad range of organisations across different sectors operate from a strategic and business perspective. I personally find it both challenging and stimulating to assess how high-level business plans are translated into a ‘way of operating’ and what that actually means in practice.  It reinforces my viewpoint that people are the key to the success of an organisation, so the way in which they are organised and set up to deliver is absolutely critical to enable success. It is always fun helping a client to identify quick wins/solutions to begin their journey towards their future target operating model, and even more rewarding long term when they implement their new way of operating and reap in the benefits. 

What are the most difficult lessons you've learnt?

People often tend to be resistant to change. When you are looking at an operating model and there are potential people implications in changing the way you operate and ways of working, it isn’t always the easiest journey. You have to be able to engage with a range of stakeholders, speak their language and bring them on the journey with you. Change management and changing mindsets is key to successful embedding - people need to understand why the change, what the change is and feel that they are ‘part’ of that journey.

If you could give one piece of advice to a team working on their OD, what would it be? (other than calling LACE partners)

There is no ‘one size fits all’ approach to OD. Each organisation presents its own opportunities and challenges however big or small, so although you might have a standard OD framework, methodology and approach up your sleeve - these need to be evolutionary, as you will need to be able to adapt and tailor them to any organisation you work with. Always be flexible and pragmatic in your approach to suit the needs of the client but do have an opinion and reinforce this with examples based on experience of what has and hasn’t worked well before.

If you'd like to talk about organisational design with Vicky, or any member of the LACE Partners Team, get in contact today on 020 8065 0310 or email us at info@lacepartners.co.uk