Success and Failure of Organization Design

1. SUCCESS & FAILURE OF ORGANIZATON
DESIGN
C. Balasubramanian
RA1952001020039
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
• A clear strategy for managing and growing your business

4. 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.

5. • 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.
• 7. Appropriate skills and resources
Successful change often demands new skills that are being created; requiring some level of transition
resources until new skills are fully functional. Lack of the right talent (skills) and resources against an
opportunity is certain failure; yet organizations consistently repeat this shortcoming.

6. • 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.

7. 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.

9. • 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.”

10. 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.

11. 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 finalized 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, whether 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.”