Businesses change for many reasons: growth, acquisition, economic pressures, legislation changes… even ‘Acts of God’.
These changes present opportunities, but also add to the overall complexity of running a business.
If your business is fortunate enough to have growth challenges, this exciting new phase requires a shift in processes as well as thinking.
As you grew, you brought in new staff as and when required. This approach may work well as a small business, but will quickly result in unnecessary complexity and resource constraints.
Imagine you are the owner of an export business providing specialist products to an international market. In the beginning, there is little need for additional full-time staff as demand is steady and contractors can be brought in and trained as needed.
But then the business lands a big contract and needs to triple its capacity in a short space of time. Suddenly, you find yourself needing to hire full-time staff, but who will recruit, train and manage them? How will you set clear expectations, maintain effective communication channels and monitor performance when your staff doubles, or triples?
It’s a daunting proposition. When a business is small, it is relatively straightforward to manage your people. You work with them most days; you know where they are, what they’re doing, and how well they’re doing it.
You can communicate with them easily and informally, keeping them engaged, focused and on task.
But once you get to a significant number of employees, this no longer works so smoothly. You find it takes more and more time and effort to keep your people engaged and performing at their best.
Like it or not, it’s time to bring some structure to your business.
What is organisational design?
Organisational design is the process of bringing structure to chaos, removing complexity, and creating space to grow. Effective organisational design results in a strategic, focused organisation with reduced complexity and cost, while also increasing freedom and autonomy.
It’s the process of aligning the structure of a business with its objectives to improve both efficiency and effectiveness.
But why is it important to bring structure to your business as it grows? Because you are no longer the lone catalyst to your business’s success.
Even if you are clear on what you want to achieve and how to go about doing it, your staff still need the right tools and structure to make it happen.
Otherwise, you’ll find yourself the captain of a sinking ship.
So to keep your ship moving, there are three key aspects of organisational design that are important to get right; in the right order. These are: strategy, structure, and people.
Your business strategy is the key driver of organisational design. Chances are, when you founded the business, you took any work you could find. Growth was organic and largely happened because of referrals and your existing relationships.
No doubt you were working towards an overarching goal; X number of customers, turnover of X, profitability by X date.
Fast forward to today - do you still have an effective strategy? What are you trying to achieve? What is your mission? It’s worth taking the time to review these things and ensure that they are still valid.
How have you progressed? Where is the market going? What do your customers want? Do you need to set new objectives? Or even reset the strategy all-together?
There are many models for creating an effective strategy. Pick one you think will suit your business and your own way of thinking. Or consider engaging with a business advisor to help you identify and refine your strategy.
Organisational Design Process
Once your strategy is set, or reset, organisational design comes into play.
We recommend following a simple four-stage process: discovery, ideation, validation and implementation.
Firstly, you will need to assess your current organisation or get it independently reviewed to ensure it’s best placed to grow and achieve its strategic objectives.
Discovery can take many forms, but its key output is to provide you with the information you need to make decisions about your organisational design.
One way to do this is to perform an analysis of your strengths, weaknesses and opportunities across the key functions of your business. Ensure that you identify any challenges and resource gaps and get your team involved in the process.
Another method is to speak to key customers, suppliers, and other stakeholders to get valuable data about how your business is viewed, and where there might be opportunities for improvement and growth.
It might also be worth getting a culture audit that provides a holistic review of your organisation’s characteristics such as assumptions, norms, philosophy and values.
In addition, you may also have access to business intelligence such as customer, revenue, profit and loss, and payroll data. This information can provide you with a better understanding of what is really driving your business.
Once collected, these insights can be used to assess whether the current business environment hinders or supports your long-term goals and vision.
As a result of this discovery process, you should get a good idea of what’s working well, what could be improved and what resources or opportunities are missing.
Ideation is a fancy word for ‘coming up with something that works. This could be quite a straightforward solution or it may take some time, patience, and analysis to ‘test and refine’ ideas to ensure you have a structure that is suitable for your business.
It’s helpful to have a small team of trusted advisors or confidants, both inside and outside the business to help you through this process. You may need to work through a number of iterations and refinements until you come up with a design that meets your specific needs.
Once you have either a preferred design, or a small selection of potential designs, you will need to validate these ideas. This could involve speaking with key stakeholders in confidence, running scenarios using available data, and costing out the short and long term impact of your design.
The larger and more complex your business, the longer this process will take, Needless to say, it is essential to validate the right design before implementing.
This phase is about taking your people and key stakeholders on the journey from the ‘current state’ to the ‘future state’ of the business. Implementation includes the requisite legal processes for implementing change, but this is only part of the challenge.
As a leader, your role is to create and communicate clarity of purpose and strategy throughout the change process.
To simplify this process, it’s broken up into five key steps:
Propose - outline the changes which will occur if you were to implement your design. This includes describing the impact that this would have on any current positions, any positions which would cease to exist, and any new positions you would create.
Consult - Create opportunities for your people to provide you with feedback. Encourage staff to talk about it and be open about anything important that you might have missed.
Consider - Listen to your people. Carefully review and consider any feedback given, whether it is in writing or via conversation.
Decide - It’s time to make the final decision on your design. Having considered all feedback, is there anything you think you should change? Don’t be afraid to make any last minute updates to the design.
Act - .You are now ready to communicate and act on your final design. This may include starting a recruitment process, and redundancy protocols if required. Perhaps you have staff demonstrating leadership qualities? This might be an opportunity to promote them into management roles so you can free up your time to focus on strategy. Likewise, it’s an opportunity to increase their engagement and investment in the business while better utilising their skills and contributions.
Businesses wanting to scale need to reduce complexity across the organisation and bring order to the chaos. Organisational design achieves this by aligning the businesses with its objectives, improving efficiency and reducing cost.
The organisational design process follows a simple formula: discovery, ideation, validation and implementation.
Discovery is about finding the right information to make decisions, ideation is about using this information to come up with design ideas, and validation involves testing these ideas with both quantitative and qualitative data. Finally, implementation requires outlining the proposed changes, reviewing feedback, deciding on the final solution, communicating and then acting on it.
By following the processes outlined above, undertaking organisational design in your business will hopefully not seem such a daunting initiative.
Regardless of the size of your organisation, the process remains the same. This merely dictates the time and resources required to implement.
Lastly, if you would like to discuss undertaking organisational design in your business, get in touch below.