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SUCCESS & FAILURE OF ORGANIZATION DESIGN

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The document discusses success and failure of organizational design. For success, it identifies clear performance focus, a winning strategy, compelling need for change, specific change criteria, distinguishing decision-driven from behavior changes, structure/system requirements, mobilized groups, and tight integration of initiatives. Failure can result from unclear objectives, structuring for personnel, excessive disruption, side agreements outside the process, skipping assessments, breaking confidentiality, and bypassing change management plans. Overall, the key is having a well-defined process to achieve strategic goals through organizational changes.

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SUCCESS & FAILURE OF ORGANIZATON DESIGN T. AKSHARA RA1952001020033 MBA - " A"

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ORGANIZATIONAL DESIGN: Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. A clear strategy for managing and growing your business. For most companies, the design process leads to a more effective organization design, significantly improved results (profitability, customer service, internal operations), and employees who are empowered and committed to the business. The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that touches all aspects of organizational life, so you can achieve: • Excellent customer service • Increased profitability • Reduced operating costs • Improved efficiency and cycle time • A culture of committed and engaged employees

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SUCCESS OF OD :  1. Clear performance focus Success comes from a tight, clear connection between change expectations and business results. Failures come when an organization is overly focused on activities, skills and culture, or structural changes without creating a tight linkage to business results.  2. A winning strategy Projects & organizations succeed when the strategies play to strengths. Failure happens when there is an overestimation of strength(s) and/or no ability to document concrete ‘wins.’  3. A compelling and urgent case for change Success happens because there is a widely accepted ‘felt’ need for change. Failure occurs when there is no demonstrated commitment to the need for change. There is no clear ‘pain’ for remaining in the status quo.

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 4. Specific change criteria In successful efforts, the underlying performance criteria and change requirements are clear, documented and not negotiable. If the ‘rules’ shift or evolve or can be negotiated, failure follows.  5. Distinction between decision-driven and behavior-dependent change Some change can be ‘decided’ – restructuring, purchases, hires/fires, etc. Other change is ‘behavior-dependent’ – skills development, new processes, implementing new accountabilities, etc. Organizations that over ‘decide’ and underinvest in ‘behavior’ changes fail.  6. Structure and systems requirements Structure and systems (particularly IT) changes may be required for change but are almost always overused as either the answer or the excuse. Overdependence on structure and systems results in confusion and sapped energy, and is a great technique for stalling progress.

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 8. Mobilized and engaged pivotal groups Organizations that succeed tap critical internal influencers to champion the change and actively engage staff in driving the change. Getting beyond basic change rhetoric requires a compelling employee value proposition (“what’s in this for me,”) achievable goals, tools and shared information.  9. Tight integration and alignment of all initiatives Major change inevitably requires dozens of initiatives (strategy projects, re-engineering efforts, training, leadership development, communications, technical redesign, new measurements, etc.). The result is a massive integration challenge. Failure results from locally and globally isolated projects, cross-project conflicts, resource competition, and confusion as to how projects do or don’t relate.  10. Leader ability and willingness to change The ceiling on any attempt to change at the project, department or organization level is set at the leaders’ willingness to embrace and embody the change. Whatever behaviors individual project or leader team members cannot adopt, become effectively impossible for the organization.

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FAILURE OF OD: The design of an organization is often a critical enabler for the achievement of a company’s strategy and goals, ongoing innovation, and streamlined operations. During our years of experience helping clients reorganize their operations, we have identified seven mistakes made by companies.  1. Not knowing what you are trying to achieve Before moving boxes and lines on an organization chart, it is important to know why you are doing the reorganization. Is it a result of a merger, acquisition, or downsizing? Are you trying to reduce costs and improve efficiencies? Are you struggling with performance issues? Are there too many direct reports, which may be impeding both employee development and innovation? Is the reporting structure too complex? Clear guidelines that reflect what the goals of the new organization are will help companies ensure that the redesigned organization will attain those stated goals.  2. Structuring an organization for specific personnel It is not uncommon for key people within an organization to have tremendous influence due to their tenure, expertise, or importance to certain client relationships. As a result, there is a risk that the preferences of the individual will become a priority during organization design rather than the objectives and requirements of the business. It is incredibly important to separate the organization design component from the actual selection of staff.

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SUCCESS & FAILURE OF ORGANIZATION DESIGN

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• Strategy should drive organization design, and organization design determines the type of people who should be selected. If you design an organization based on the people, the organization will not be set up most effectively to support the overall end objectives. Skill sets may not match future needs and labor costs can be misaligned. And while placing a single individual in a position that is not well- matched may appease guilt or maintain a prior relationship, the larger organization will suffer, putting revenue and efficiency at risk. 3.Causing more disruption than needed • ScottMadden sometimes encounters clients who view reorganization as an opportunity to “clean house.” Although it is true that the need for change usually provides a good opportunity to also address other inefficiencies or problem areas, leaders should be cautious about causing more disruption than necessary. Drastic staffing cuts or process changes can result in reduced employee morale, the loss of valuable talent, stagnated innovation, and an overall distraction from the mission of the organization. 4. Making decisions and/or having sidebar agreements outside of the agreed-upon process • A sidebar or supplemental agreement that compromises the documented, agreed-upon, communicated process threatens project success. These actions can open the door to additional exceptions to the organization design process and can result in an overall lack of trust in the organization’s leadership going forward. For example, management has set forth a process of evaluating and selecting for all reorganized positions. Two managers have a sidebar discussion in the hall that they really want “someone like Kim” in one of the positions. Both managers agree and decide to put Kim in the position and determine who will backfill her in her current position, despite already communicating that the two positions will be posted and interviews will be conducted for final selection. • While it may seem harmless at the time to make minor adjustments to the agreed-upon process, the act of doing so threatens the project by creating the justification for making larger exceptions later on in the process, as well as demonstrating to the end population that the process is not “fair.”

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5. Skipping current state assessment Many organizations desire to jump directly to the organization design stage before conducting a detailed current state assessment (CSA) that includes current costs, volumes, and service levels of the organization. It is imperative that a comprehensive CSA is completed prior to the design, as the design is dependent upon many of the metrics and standards that are established within the CSA. Gauging improvements in efficiency and/or performance from the redesign often depends on an organization’s ability to analyze and compare layers, spans, and cost-to-manage to standards.  6. Breaking the circle of confidentiality It is incredibly important for participants involved in the redesign to keep project information inside the circle of confidentiality. Revealing too much too soon to those outside the “Circle of Trust” can threaten an organization’s level of engagement and overall productivity. The design of a new organization structure brings with it new roles, responsibilities, and reporting relationships. These changes can encourage or discourage personnel, and therefore have the potential to threaten the effectiveness of the new structure. The performance of individuals or entire departments can be compromised if people think they will not have a job in the future organization, and this has a network effect on the rest of the organization. In addition, organizations may lose their most talented individuals who feel uncertain about their future within the new organization, while being highly sought after in the marketplace.

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7. Bypassing a formal change management and communications plan • It is essential that a formal plan is developed to support the communication of the right information at the right point in the process. Details about the new organization, along with details of the selection process, should be communicated as they are to all levels of the organization. This will help avoid surprise or confusion about the responsibilities and expectations during the change. If rumors conflict with formal communication during the process, the legitimacy of the organization will be jeopardized. • Reorganizations can be highly successful ventures. However, by understanding what your main drivers are on the front end, you are promoting growth, cutting costs, changing culture, or changing overall operations, you can ensure you achieve your goal of better performance. Avoiding ScottMadden’s seven reasons for failure will help ensure your organization redesign is “done right.”

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SUCCESS & FAILURE OF ORGANIZATION DESIGN

  • 1. SUCCESS & FAILURE OF ORGANIZATON DESIGN T. AKSHARA RA1952001020033 MBA - " A"
  • 2. ORGANIZATIONAL DESIGN: Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. A clear strategy for managing and growing your business. For most companies, the design process leads to a more effective organization design, significantly improved results (profitability, customer service, internal operations), and employees who are empowered and committed to the business. The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that touches all aspects of organizational life, so you can achieve: • Excellent customer service • Increased profitability • Reduced operating costs • Improved efficiency and cycle time • A culture of committed and engaged employees
  • 3. SUCCESS OF OD :  1. Clear performance focus Success comes from a tight, clear connection between change expectations and business results. Failures come when an organization is overly focused on activities, skills and culture, or structural changes without creating a tight linkage to business results.  2. A winning strategy Projects & organizations succeed when the strategies play to strengths. Failure happens when there is an overestimation of strength(s) and/or no ability to document concrete ‘wins.’  3. A compelling and urgent case for change Success happens because there is a widely accepted ‘felt’ need for change. Failure occurs when there is no demonstrated commitment to the need for change. There is no clear ‘pain’ for remaining in the status quo.
  • 4.  4. Specific change criteria In successful efforts, the underlying performance criteria and change requirements are clear, documented and not negotiable. If the ‘rules’ shift or evolve or can be negotiated, failure follows.  5. Distinction between decision-driven and behavior-dependent change Some change can be ‘decided’ – restructuring, purchases, hires/fires, etc. Other change is ‘behavior-dependent’ – skills development, new processes, implementing new accountabilities, etc. Organizations that over ‘decide’ and underinvest in ‘behavior’ changes fail.  6. Structure and systems requirements Structure and systems (particularly IT) changes may be required for change but are almost always overused as either the answer or the excuse. Overdependence on structure and systems results in confusion and sapped energy, and is a great technique for stalling progress.
  • 5.  8. Mobilized and engaged pivotal groups Organizations that succeed tap critical internal influencers to champion the change and actively engage staff in driving the change. Getting beyond basic change rhetoric requires a compelling employee value proposition (“what’s in this for me,”) achievable goals, tools and shared information.  9. Tight integration and alignment of all initiatives Major change inevitably requires dozens of initiatives (strategy projects, re-engineering efforts, training, leadership development, communications, technical redesign, new measurements, etc.). The result is a massive integration challenge. Failure results from locally and globally isolated projects, cross-project conflicts, resource competition, and confusion as to how projects do or don’t relate.  10. Leader ability and willingness to change The ceiling on any attempt to change at the project, department or organization level is set at the leaders’ willingness to embrace and embody the change. Whatever behaviors individual project or leader team members cannot adopt, become effectively impossible for the organization.
  • 6. FAILURE OF OD: The design of an organization is often a critical enabler for the achievement of a company’s strategy and goals, ongoing innovation, and streamlined operations. During our years of experience helping clients reorganize their operations, we have identified seven mistakes made by companies.  1. Not knowing what you are trying to achieve Before moving boxes and lines on an organization chart, it is important to know why you are doing the reorganization. Is it a result of a merger, acquisition, or downsizing? Are you trying to reduce costs and improve efficiencies? Are you struggling with performance issues? Are there too many direct reports, which may be impeding both employee development and innovation? Is the reporting structure too complex? Clear guidelines that reflect what the goals of the new organization are will help companies ensure that the redesigned organization will attain those stated goals.  2. Structuring an organization for specific personnel It is not uncommon for key people within an organization to have tremendous influence due to their tenure, expertise, or importance to certain client relationships. As a result, there is a risk that the preferences of the individual will become a priority during organization design rather than the objectives and requirements of the business. It is incredibly important to separate the organization design component from the actual selection of staff.
  • 8. • Strategy should drive organization design, and organization design determines the type of people who should be selected. If you design an organization based on the people, the organization will not be set up most effectively to support the overall end objectives. Skill sets may not match future needs and labor costs can be misaligned. And while placing a single individual in a position that is not well- matched may appease guilt or maintain a prior relationship, the larger organization will suffer, putting revenue and efficiency at risk. 3.Causing more disruption than needed • ScottMadden sometimes encounters clients who view reorganization as an opportunity to “clean house.” Although it is true that the need for change usually provides a good opportunity to also address other inefficiencies or problem areas, leaders should be cautious about causing more disruption than necessary. Drastic staffing cuts or process changes can result in reduced employee morale, the loss of valuable talent, stagnated innovation, and an overall distraction from the mission of the organization. 4. Making decisions and/or having sidebar agreements outside of the agreed-upon process • A sidebar or supplemental agreement that compromises the documented, agreed-upon, communicated process threatens project success. These actions can open the door to additional exceptions to the organization design process and can result in an overall lack of trust in the organization’s leadership going forward. For example, management has set forth a process of evaluating and selecting for all reorganized positions. Two managers have a sidebar discussion in the hall that they really want “someone like Kim” in one of the positions. Both managers agree and decide to put Kim in the position and determine who will backfill her in her current position, despite already communicating that the two positions will be posted and interviews will be conducted for final selection. • While it may seem harmless at the time to make minor adjustments to the agreed-upon process, the act of doing so threatens the project by creating the justification for making larger exceptions later on in the process, as well as demonstrating to the end population that the process is not “fair.”
  • 9. 5. Skipping current state assessment Many organizations desire to jump directly to the organization design stage before conducting a detailed current state assessment (CSA) that includes current costs, volumes, and service levels of the organization. It is imperative that a comprehensive CSA is completed prior to the design, as the design is dependent upon many of the metrics and standards that are established within the CSA. Gauging improvements in efficiency and/or performance from the redesign often depends on an organization’s ability to analyze and compare layers, spans, and cost-to-manage to standards.  6. Breaking the circle of confidentiality It is incredibly important for participants involved in the redesign to keep project information inside the circle of confidentiality. Revealing too much too soon to those outside the “Circle of Trust” can threaten an organization’s level of engagement and overall productivity. The design of a new organization structure brings with it new roles, responsibilities, and reporting relationships. These changes can encourage or discourage personnel, and therefore have the potential to threaten the effectiveness of the new structure. The performance of individuals or entire departments can be compromised if people think they will not have a job in the future organization, and this has a network effect on the rest of the organization. In addition, organizations may lose their most talented individuals who feel uncertain about their future within the new organization, while being highly sought after in the marketplace.
  • 10. 7. Bypassing a formal change management and communications plan • It is essential that a formal plan is developed to support the communication of the right information at the right point in the process. Details about the new organization, along with details of the selection process, should be communicated as they are to all levels of the organization. This will help avoid surprise or confusion about the responsibilities and expectations during the change. If rumors conflict with formal communication during the process, the legitimacy of the organization will be jeopardized. • Reorganizations can be highly successful ventures. However, by understanding what your main drivers are on the front end, you are promoting growth, cutting costs, changing culture, or changing overall operations, you can ensure you achieve your goal of better performance. Avoiding ScottMadden’s seven reasons for failure will help ensure your organization redesign is “done right.”