New organizational design can better equip companies for market changes and long-term success — if companies leave behind outdated operating models and practices that hamper agility, according to a new guide from McLean & Co.
Rather than simply restructuring, though, intentional redesign aligns all aspects of the business, including strategic planning, workflows, people and culture, the firm said.
“It can often seem easier to quickly create new organizational structures instead of participating in a complete organizational redesign process,” Amani Gharib, director of HR research and advisory services at McLean & Co., said in a statement. “However, while restructuring may seem like a faster solution, the opportunity cost of lost efficiency and lack of clarity will lead to greater long-term challenges for the organization, requiring more time, resources and finances to address underlying issues.”
If done well, organizational design can elevate performance, improve workflows, streamline decision-making, reduce costs and boost employee engagement, the firm said. However, ineffective design can lead to inefficient use of time and resources, lower quality of products and services, decreased customer satisfaction and declines in employee engagement.
To help HR leaders, the McLean guide outlines the principles of organizational design, including change management, strategic alignment and governance, as well as steps to conduct a current-state assessment and develop a new model.
Notably, McLean advised HR and other top leaders that change management should be prioritized from the beginning and throughout each stage of the organizational design process. This includes considering the people-related implications, such as the requirements, effects or consequences on talent and talent processes.
Beyond that, Gharib added, effective organizational design hinges on meticulous planning and communications — with a careful sequencing of communications to support sustained change.
Today’s jobs must be redesigned to align with evolving company needs, according to another McLean & Co. report. Jobs that are aligned with organizational goals are associated with improved productivity, decreased turnover and better engagement, the report found.
As part of the change management process, leaders should consider the role of artificial intelligence in the workplace, including certain tasks, upskilling opportunities and communications with employees, according to a George Mason University change management expert. With the right integration and communications plans in place, AI can enhance productivity, performance and agility, she said.
In fact, at companies introducing AI, many leaders say they’re already changing their organizational structure to accommodate it, according to a Pearl Meyer report. A majority of leaders are developing a change management strategy, implementing employee communication plans and planning significant AI investments to make it work.