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Importance of organizational design for growth: thrive beyond chaos
Learn the importance of organizational design in building a high-performing, scalable enterprise and how you can benefit from expert support to achieve it.
Over and over again, we hear a common story: CEOs come to us with frustrations and stress over their organization’s inability to perform at scale as both client and project scopes grow.
Business leaders tell us how their teams set work priorities at the beginning of each quarter with ample time. Despite doing this, their teams still scramble to make progress when their review period arises. Nothing seems to get done in an efficient, organized manner.
CEOs list all the solutions they’ve implemented to solve the problem: weekly check-ins, protocols limiting email traffic, work management applications, and more. More often than not, they come to the conclusion that their organization’s challenges are caused by poor accountability and low capacity.
This is a misdiagnosis of the true problem. They haven’t factored in the importance of organizational design.
Building a high-performing organizational structure for a growing virtual, hybrid, and even in-person work environment is difficult and requires thoughtful expert-led strategy.
To give you a little perspective, more than three businesses are launched every second, which is equivalent to around a million every year. This same source shows that 70% of these businesses go on to fail.
That’s not to say that your business will fail, but it shows the importance of implementing a strong organizational structure. This ensures it doesn't fall victim to inefficient work processes that can hurt both your workforce and work performance.
Three essentials of organizational design
Ineffective organizational design is so common in today’s workplace that this story probably resonates with challenges you’ve experienced in your current or in a prior organization. So how can you stop wasting time on surface-level solutions that fail and build a successful organizational structure?
Let’s cover what organizational structure requires, broken down in its simplest terms.
1. Develop an organizational structure with strong governance & team alignment
When it comes to strategizing your organization’s growing structure, you have many options to choose from:
The most popular, traditional type of organizational structure, functional structures are made up of departments with separate functions. For instance, all marketing professionals are on the same team and report to a senior leader of marketing.
A divisional structure often divides work and employees by output, although a divisional structure could be divided by another variable such as market or region.
For example, a business that sells products through retail, e-commerce and catalog sales could be divided by their selling channel.
A matrix structure combines a functional and divisional company structure. Employees report to two managers who are jointly responsible for the employee's performance. For instance, a marketing associate would report to their senior marketing manager, as well as their product, service, or client manager who they complete work for.
Finally, a horizontal or flat organizational structure is what it sounds like - a company with few levels between upper management and employees. Many start-up businesses rely on this structure before they’re large enough to carve out their different departments. However, some simply like this structure since it encourages less supervision and more involvement from all employees.
And everything in between
Something to keep in mind as you create your organization’s design is that it should be scalable for growth. To achieve this, consider future teams you’ll need, clear onboarding processes, and mentor strategies for new team members, and even who’ll be responsible for each of them.
Overcoming organizational design challenges with a strong foundation
No matter the organizational structure you decide upon, you need to design team management with all the processes to support it. In any fast-paced, modern business, there are competing work priorities.
Take if you follow a matrix organizational design (or some similar alternative) with employees who report to multiple managers. In cases like these, there’s no doubt that employees are balancing priorities and fires with their best judgment.
Minimize managers to two per employee. One manager should be a functional head (like a senior HR manager to an HR specialist), and the other can manage the employee’s work output (for their assigned client, product, or service).
Doing this resolves consistent low organizational performance caused by poor governance and competing priorities. That’s because both managers of an employee can finally make an effort to set aligned priorities that fit into your organization’s larger plan while handling resource conflicts from opportunity costs.
Just like you need to make sure that managers are aligned, you also need to do this across departments and teams. For instance, if the employees of your organization are commonly experiencing work silos that result in process inefficiencies or low client outcomes, ask yourself why this is happening.
This problem is often present but underestimated in many organizations. Think of the cross-functional rivalry between sales and marketing, operations and R&D, and even design and copy. Simply introducing team-building sessions to improve employee collaboration might not be the answer if there’s a persistent divisional conflict present.
So how do you fix this? Firstly, when two teams have to produce a shared result, open up a dialogue so they can examine if each of their desired metrics reinforce each other’s goals. Once they’ve clarified this, they can synchronize their tasks and create joint access to resources they’ll both need to monitor their collaboration efforts.
Just remember: organizational problems aren’t random; they’re created by design and its hidden pitfalls. So when you experience a trending challenge despite trying multiple solutions, take a step back to see what factors could be aggravating the problem. With this high-level clarity, you’ll find just the organizational design solution you’re looking for.
2. Define work management processes
A secondary part of organizational design is creating an effective work management process.
All your organization’s work assignments should be documented, visible, assigned to one owner, and traceable. This promotes accountability and full ownership, so the individual managing a task is aware of its status at all times.
To achieve this, most organizations leverage digital work management tools to structure these work processes (more on this later). Of course, they also set the foundation of their work management process by creating all the roles that make up their organization, which must be done carefully to avoid bad role design and unwanted turnover.
Let us paint the picture for you. In any large enterprise struggling with employee retention, HR leaders are relied upon to incentivize employees to stay. They strategize everything from stock options and bonuses, to working with leadership to fabricate new titles, giving the appearance of promotions.
Once again, despite best intentions, these are surface-level solutions that will likely not stop turnover from rising in a poor reorganization. Poor role design is the real source of the problem.
But how does poor role design occur? It can actually become a consistent trend during organizational design where leadership is consolidating jobs to cut costs. The specific jobs they create in marketing, finance, HR, accounting and more become too broad with an overwhelming range of responsibilities.
Meanwhile, other roles may become so narrow that employees aren't used to their full potential. Instead, they’re completing mundane tasks and forced to rely on others to do their job adequately.
The final result is a workforce with an undispersed workload, and employees who feel either unsupported or held back in their role. For many, quitting and looking for work elsewhere becomes their best bet.
3. Build your tech stack for scalability
Now onto an essential resource for every enterprise: its tech stack.
Creating an effective tech stack is difficult and every organization can benefit from an expert leading them in their digital transformation. It requires balancing the need for long-term company growth with the need to make an impact as quickly as possible, so your organization can still achieve your short-term objectives.
Digital transformation services that can be invaluable for strong organizational design are:
- Tool deployments that minimize disruption and maximize early-life value
- System integrations that reduce redundant work and optimize processes
- Extensive, individualized training plans
- Assessments of digital tool performance
- A long-term strategy to build a high-performing virtual or hybrid workforce
By moving forward with a consultant to guide your tech stack services, you can have peace of mind in knowing that every single process is verified for its effectiveness before an advancement is made.
Not only do these experts have endless experience (WNDYR’s team has facilitated over 4,000 enterprises’ digital transformations), but they also have standards in place for continuous review and improvement of your strategy. You’ll work with your consultant to give relevant teams ownership of important processes so they remain updated. This means you can continue optimizing work and your tech stack’s design long after your consultants have completed their services for your organization.
Lastly, new workflow productivity solutions on the market can help you see cross-platform patterns across email, calendar, tasks, video conferencing, and workflow management. By getting access to metrics that would be nearly impossible to calculate on your own, you’re able to spot workflow strains caused by organizational design or its tech stack structure.
You gain the data to effectively plan every quarter, manage every team, and optimize all client outcomes as you scale your organization. Meanwhile your teams learn how to get more mileage out of their tools—and improve their own work processes and habits.
Achieve a strong organizational design
By now you’ll know the importance of organizational design and how it can be an unsuspected cause of many workplace conflicts. You likely have multiple “pain points” you can think of off the top of your head as you consider your plans to scale your organization and alter its organizational design.
Know that you don’t have to perfect your organization’s structure to scale, but rather think of how you can continuously remove points of friction. Look at your organization holistically, identify these “pain points”, and work with your consultant or within your organization to create seamless work processes.
And don’t be too hard on yourself or on your teams, the more speed and size you put into an organization, the more friction will inevitably arise. The best thing you can do is solve and monitor these challenges as a team, and continue asking “Will this still work as we get even bigger?”
Want to learn more about planning your workplace in a time when hybrid models are crucial? Click here to check out our recent blog.