How to design your organisation with a holistic approach.

by Rosie McMahon
in Organisational design, Business restructuring
23 Jun 2016  |  0 Comments

Over the past 20 -30 years, many organisations have restructured their businesses in order to ‘reduce cost and improve productivity’.  This usually involved implementing costly business process reengineering projects and developing a new organisation chart, which was subsequently implemented, only to find that the promised gains were not achieved and in some cases, significant corporate knowledge and skill had left the company.

Those days are over. This outdated approach to organisation design has run its course and has been shown time and time again to primarily benefit the large consulting firms doing the work (and charging exorbitant fees) more so than the organisation that 18 months after the spend, are still trying to justify the ROI to their boards. This mechanistic approach to organisation design doesn’t provide sustainable outcomes because it does not adequately take into account the systemic nature of organisations. Organisations are made up of more than the sum of their parts…

To effectively get sustainable, long term returns on your organisation design project, it must take into account the key drivers of individual and organisational performance, and these drivers are not only processes and systems and structure. An excellent systems organisation design model that statistically identifies the drivers of performance is that developed by Burke and Litwin in 1992.

 Figure 1: A causal model of organisational performance and change. W. Warner Burke & George H. Litwin, Journal of Management, September 1992

What this model demonstrates is that there are many drivers of organisational performance, many of which are directly impacting on other drivers. For instance, it is long known that up to 70% of an organisation’s culture is shaped by its leadership; we also know that the organisation’s strategy significantly drives the structure. When we look at an organisation systemically, that is, we look beyond the traditional process reengineering approach to organisation design we find that a more sustainable approach is to develop a framework that covers a number of elements. By taking a number of connected elements into consideration, we are able to design a more holistic and effective organisation.

People Tactics’ design framework takes a different approach to traditional methods of design and goes beyond the organisation chart (what we call the ‘boxology’ approach to design) to take into account the organic nature of organisations. Organisations are made up of tangible and intangible elements, all of which must be considered. We also know that organisations, particularly now and in the future, must be agile enough to weather the fast and furious changes that are emerging in the world of work. A mechanistic approach in today’s world is slow and laborious. It is expensive and the promise of sustained improvements are shallow.

Today, organisations must learn how to develop in-house organisation design capability to enable its curators to adjust and adapt almost daily.

This requires knowledge and skill. Ten years ago, there was no such thing as an ‘app designer’. Today there are whole companies that hire people do design apps. In the past you would hire a large consulting firm to re-engineer your organisation. Today you build the skill to design your own organisation yourself and you take a holistic and organic approach – knowing that the outcomes are more sustainable and can cater for the ‘future of work’ train coming down the track. 

Is your organisation ready?

Author: Rosie McMahon

Web: /rosie-mcmahon/

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