Five Org Design Mistakes
That Companies Should Avoid
Early in my career, I was part of an internal consulting team working on the organizational design in a Fortune 250 company. Fast forward 10 years and I have been part of several restructures since. I’ve seen it both done really well and done really poorly. Here are five things I learned not to do in hopes that you can build your teams thoughtfully.
Putting structure before strategy
In every restructure I’ve been a part of, there was always a temptation to design around a structure that was already in a leader’s head. Before diving into the outcome, what is the the strategy the company is working towards? What capabilities do you need to help you reach your 12 - 18 month business goals? If it means leaning heavy into customer service as as key differentiator, maybe that’s not the department to reduce even though it’s the largest. If it means making decision-making more de-centralized to empower your geographic regions to be more autonomous, then perhaps you want to reduce the layers in reporting. Structure should always follow strategy.
Designing for people instead of positions.
Designing roles around one tricky person never works out. Yes there are always politics and some leaders who will complain loudly and generally make life difficult, but the best org design takes the people out of the boxes first. Start with what you want to achieve as a business, then the skills/capabilities needed to do it, and then the roles and structure to support those goals.
Poor role design
We’re seeing a lot of restructures these days rooted in the need to reduce costs. Sometimes that plays out as a consolidation of multiple roles into one, leading to overloaded, unfocused, and underutilized employees. The highly-skilled and strategic finance person you hired might not end up using the skills they were hired for, because they are caught up doing the admin to keep the ship running. Your marketing person might be stretched beyond what they are capable of without the right support. The risk of turnover is high, but especially high for your top performers. Roles should be designed around the outcomes you want to see, and then the competencies need to deliver it.
Taking benchmarking too seriously
Looking externally to see what others are doing is a great place to start, but each company is unique and will require a critical thinking lens to create a sustainable organization. I’ve seen companies look at HRBP to employee ratios and assume that their structure needed to reflect the average benchmark without taking into consideration geographic complexity, company stage, or industry. It’s a great benefit to have comparative points of data, but use it thoughtfully.
Announcing an updated culture without updating your systems
One of the biggest foundational principles that drives what I do is that everything that touches HR and people is interconnected. Our behaviors are shaped by the systems, people, and structures around us. If you want to see more of a “innovators mindset”, how have you integrated it into your performance system? Are you updating your interview questions to reflect that competency in who you hire? Have you looked at how your company makes decisions and if it allows people to actually bring their innovative ideas to life? “Culture” isn’t something that flips with a switch, it has to be integrated into your processes, systems, and leadership in order to make a change that lasts.
These are just a few mistakes I’ve seen that hopefully you can avoid for your companies as you think about your organizational design. If you take these mistakes and flip them, these are great principles for designing sustainable organizations.
Structure follows strategy
Design for positions before people
Intentional role design
Use benchmarking thoughtfully
Integrate your culture into your people systems
Good luck designing! Need some extra help? Feel free to connect with me to learn more.
