Sergio Caredda
What is Organisation Design? A fundamental skill for HR and managers. Now disrupted by models that show that Culture is more impactful then Hierarchies.
Organisation Design is a foundational skill for all HR professionals as well as managers. Yet from my experience, it is relegated to very few specialists, who often don’t even make it to the high ranks of the HR profession. I’ve already mentioned in a previous post how essential is the setting up of Operating Governance as a critical component for Agile Transformation. I have also discussed previously the fact that drawing an Organisation Chart is not the main aim of Organisation Design. I’ve also recently reviewed the Guide on Organisation Design by Naomi Stanford, a great book to start understanding what Organisation Design is at a very practical level.
With this post I want to bring us one step further: as we redefine the role of HR to become The Architects of Work, something that Dave Ulrich again suggested at the recent HR Congress in Nice, we need to make sure we master the ins and outs of Organisation Design, which is why I’ve decided to concentrate on this topic, amongst others, on this blog.
And what’s best than starting with a good definition of what Organisation Design is?
Dec. 19th, 2021 – Alignment with series.
Defining Organisation Design
Defining Organisation Design seems easy at a start. But it implies much reflection on many aspects of the Organisation itself. It is a question that gest many Organisation Design experts to think and rethink.
The Center for Organizational Design defines it as a step-by-step methodology which identifies dysfunctional aspects of workflow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes. The process focuses on improving both the technical and people side of the business.
McKinsey defines it as going beyond lines and boxes to define decision rights, accountabilities, internal governance, and linkages.
Wikipedia delivers a new definition of Organisational Architecture (is this the target of what organisational Design is about?): It provides the framework through which an organisation aims to realise its core qualities as specified in its vision statement. It provides the infrastructure into which business processes are deployed and ensures that the Organisation’s core qualities are realised across the business processes implemented within the Organisation.
Of all these definitions, notes Naomi Stanford, It’s striking that (…) they are about the ‘hard’ aspects of the Organisation – coming from the roots of systems theory. They are not about the ‘soft’ aspects that come from the roots of social and behavioural science and form the basis of organisation development.
And here lies the biggest problem with modern Organisation Design theory. We tend to forget the fact that Organisations are Living organisms, that need to be considered holistically. This is the fundamental principles that Systems Thinking adds to the perspective of Organisational Design, and we should consider this. Reasoning only in terms of process and role design, means treating the Organisation at a lower level of complexity than it is. A challenging element for us to consider.
Building a Working Definition
In the pursuit of establishing a good working definition of what Organisation Design is, I will start with the concept covered by Nicolay Worren on his blog. His first point is that Organisation Design is not a simple “boxology” for Org Chart design.
The field of organization design sits at the intersection of strategy, operations, law and HR.Nicolai Worren
He describes Organisation Design with an easy image, looking primarily at the crossing of four elements: Strategy of the Organization (but we can probably also think of the Purpose of the Organisation), its Operations (the how the company achieve its purposes and executes), its People and the “Law“, which summarises the regulatory framework the company operates within.
- An important driver for organisation design is the Organisation’s strategy – but the Design of the Organisation may also, to a great extent determine which strategies we may be able to form in the first place.
- We should, in general, attempt to align the Organisation with the work processes – so there is a close link between operations and organisation design.
- The Design of the Organisation is also influenced by laws, regulations, and governance principles adopted by the industry sector.
- Last but not least, organisation design is fundamentally about people. People inhabit the roles that are defined in the organisation design process. People participate in design processes and also influence plans in many direct and indirect ways.
Is the above sufficient? I think not. Even if Worren adds the People dimension in his picture, it’s still defined narrowly, with a focus on how they inhabit designed roles, or how they participate in the design process.
Adding Culture
One of the significant trends in modern Management Literature is to analyse in-depth the Cultural Dimension of organisations. Simplifying, this is the behavioural aspect of Organisational Development, that we need to consider in the way we design. Without considering this complexity, we will end doing a dangerous job.
Interestingly enough, most recent organisation design models show a clear impact of these ‘soft’ dimensions. Whether we use the concept of Agile applied to organisations, we talk of Teal, Self-Managed Teams, Deliberately Developmental Organisations, Mission-Based Teams, and so on (an excellent article to have an overview of recent definitions is maintained by Oday Kamal on Medium), the focus is on cultural and behavioural aspects, able to keep the Organisation and link the individual contribution to the organisational purpose in a more dynamic way.
An excellent example of a more holistic approach comes from the new framework introduced by Dave Ulrich in his last book, and that he presented at the HR Congress in Nice. The steps he includes are very similar to the steps suggested by Naomi Stanford in her book.
Two aspects are, however, innovative. The first is on the role of HR in the various steps. The blue boxes in Fig. 2, illustrate what is expected from HR at each stage of the process. The second is that Organisation Design is broken into two steps Morphology, where the Platform concept is built, and Governance, where the detailed Organisation Design happens. Note how Ulrich puts Collaboration and Culture as two of the key components to be built. In between, there is a step to build Capability, which is how the Organisation will deliver value. The last step is Leadership, although what needs to be built is a collective leadership model.
Now it starts making sense. As Organisation Design Specialists, we need to build the framework in which the Organisation can prosper. The challenge in the new VUCA world is that this means starting by architecting the place of our Organisation within the ecosystem, then planning the required capabilities, then building the org based on culture and collaboration.
The tools of Organisation Design
This does not mean that Organisation Design “just happens”. We still need to be intentionally designing organisations, and many tools are useful for this purpose. I’ve already covered, for example, the importance of thinking of Operational Governance as a basis for having well-functioning organisations. We can experiment with the manager-less organisational model, but a framework of accountability is still required. This is the grand lesson traceable in Yes to the Mess by Frank J. Barrett. As he illustrates the parallel between Jazz Improvisation and how teams work, he defines the idea of improvising within a framework very accurately.
I will dedicate more time in the coming future on precisely this: building a toolkit of practical, replicable elements that we can use to achieve good Design. The toolkit is starting to take form. Design Thinking will be the critical skill that we need to adopt, which also means using the interaction with all our stakeholders as the basis of the process.
This article is part of a series where I examine the different components of Organization Design, analyse models and theories and propose a specific approach of Intentional Design.
Key Content Articles
- The Organization Evolution Framework
- Business Models: The Theory and the Practice
- Strategy. Frameworks: The Theory and the Practice
- Operating Models: The Theory and the Practice
- Organization Models: a Reasoned List between Old and New
- Leadership Models: The Theory and The Practice
- Purpose: The Theory and the Practice
- Corporate Culture: The Theory and the Practice
- Organization Ecosystem: The Theory and the Practice
- Building the Intentional Organization
- What is Organization Design?
- Consistency and Intentional Design: Building the Organization of the Future
Are we done with the definition?
To answer what Organisation Design is, we probably need to enquire further, along at least three lines of thought:
- What does Organisation design work mean in a more philosophical sense for organisational stakeholders, and how can our work have a positive outcome and meaning for them?
- What do we mean by the process of doing organisation design – what’s in the ‘package’ of it, and what is the methodology we use?
- What do we understand by the words ‘ organisation design’ in order to arrive at a (systems) definition of it that does not blur the Design with development?
I think that the quest is not going to be an easy solve, as all these questions will require different adaptations and different investigation paths.
But now it’s time to give what I think is a good working definition for Organisation Design, taking into consideration what we mentioned so far.
The Organisation Design Definition
Do you agree with the definition above?
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Footnotes
[1] Thanks a lot to Jon Ingham for the suggestion to add “Creating Value” to this definition.
Cover Photo by Aleksandar Cvetanovic on Unsplash
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