Organizational Design (OD), also called Organizational Re-design, refers to the management actions of creating new roles, processes, and structures to ensure that the organization’s goals can be realized. The scale of Organizational Design efforts can vary greatly—from designing the Corporate Organizational Architecture (e.g. decentralized vs. centralized model) to designing business units to designing individual roles.
Research from a major global consulting firm (McKinsey) showed that many organizations today are in a nearly permanent state of organizational flux. Within the past 2 years, almost 60% of the companies interviewed in the study experienced a redesign within the past 2 years—and an additional 25% 3 or more years ago.
This increase in Organizational Design efforts is due to the accelerating pace of strategic change driven by the disruption of industries, from local regulatory changes to global pandemics to emerging, revolutionary technologies.
As a result, companies alter the organization every time it switches direction to deliver the hope for results. Frustratingly, only less than a quarter of the Organizational Design efforts are actually successful. Companies can and should do better—much better.
To increase the odds of a successful Organizational Redesign, organizations should follow the 9 Principles of Organizational Design. Each of the Organizational Design principles can be further broken- down into the following:
• The current practice
• A principle-guided approach to OD
• Case example
• Impact of following the OD principle
By incorporating these principles, we can achieve an effective and successful Organizational Design process. These Organizational Design principles also allow us to take a methodical approach, instead of relying on intuitive decision making. Corporate Organizational Design provides organizations a rare opportunity to identify the stable organizational backbone and set up those elements ripe for dynamic change.
