Top 4 Organizational Design Issues That Cause Businesses to Struggle

It’s not unusual for any company to encounter recurring performance challenges. As a business grows, systems and processes can fall behind the new business strategy.

Companies that don’t routinely monitor their business performance will more than likely encounter issues attributed to problems within the company’s setup or organizational design.

Effective organizational design goes beyond surface-level solutions and requires a deeper understanding of the underlying problems.

We’ve found that the four most common issues resulting from ineffective organizational design are competing priorities, unwanted turnover, inaccessible bosses, and cross-functional rivalry.

What Is Organizational Design?

In short, organizational design is simply how a company structures its people, teams, processes, and systems. It’s the discipline of shaping an organization to effectively achieve its objectives by aligning its people and their skills with the work they do.

The aim is to improve efficiency, adaptability, and employee satisfaction and is often triggered by the need to improve service delivery or specific business processes.

However, designing organizations can be difficult when you’re dealing with a moving target. Whatever changes you make will have a knock-on effect on your company’s ability to pursue its strategy.

1. Competing Priorities

The Problem

When departments are led by different bosses and have varying goals and objectives, it can cause tension and distract from the overall mission. Poor governance within complex organization designs can mean that a company’s larger plan is not prioritized within each division.

The Solution

Decision-making systems need to be set up to address common conflicts about priorities and resources. This can be achieved by aligning the various departments and creating shared goals and choices that benefit the company as a whole:

● Create incentives that encourage teams to work together.

● Encourage open communication.

● Provide training that helps employees understand the importance of collaboration.

2. Unwanted Turnover

The Problem

Employers are losing their most talented employees through bad role design. LinkedIn suggests an average turnover of staff across all industries is 10.9%. Look into what is normal for your industry. The reason for staff leaving could be down to a number of factors.

The Solution

Build a strong sense of company culture and values to retain the talent you already have and attract new talent:

● Provide extensive opportunities for personal and professional growth.

● Create an open and supportive work environment.

● Offer competitive compensation and attractive benefits.

3. Inaccessible Bosses

The Problem

While many leaders will say they are ‘hands-on’ and promote a collaborative culture, the reality is that they stay behind closed doors at their desks the majority of the time. When bosses are unavailable and also unapproachable, it can create detachment from staff which breeds mistrust.

The Solution

It is good business to bring bosses and workforces together. Create an open-door policy where employees can approach their superiors with concerns, ideas, and feedback:

● Schedule meetings for the team.

● Encourage direct reports.

● Be visible, available, and on the ‘shop floor’.

Embracing feedback in both directions and showing appreciation for everyone’s contribution can really help to open up the office and promote workplace camaraderie.

4. Cross-Functional Rivalry

The Problem

Rather than cooperating, too many functions end up competing against each other. Employees from different departments often end up working against each other rather than collaborating on projects.

These misaligned incentives or metrics can trigger departmental rivalry, and team-building events alone aren’t enough to reach the cause of the conflict.

The Solution

It is essential to create clear goals and expectations, and set up channels for open discussion:

● Develop shared accountability by providing team members with incentives to work together.

● Encourage inter-departmental relationships by creating an open forum to air concerns and biases and resolve misconceptions.

What Are the Benefits of Data-Driven Organizational Design?

Once you know the gap between supply and demand, you can begin breaking down roles into processes and activities alongside the skills and competencies needed to do that work.

Then, your business can monitor workforce productivity and redirect effort elsewhere when needed. Alongside this, the financial impact of any changes can also be tracked.

This method is far more effective and insightful than simply tracking salary costs across the workforce. Only then can you learn the financial contribution the workforce is making as well as how much it’s costing you. By shifting focus to the work, you can quantify the value that your workforce delivers.

Shape Your Organization to Better Support Its Business Strategy

Organizational design is fast becoming a survival strategy for every business, big and small, wanting to make it through economically uncertain times. Changing consumer behavior means just businesses are under constant pressure to evolve.

It’s no longer enough to rely on opinion and gut instinct to make decisions about the future. Spending six months to plan their workforce every three to five years is too slow to keep up with change. It’s now essential to design based on data and to plan continuously in order for businesses to survive and thrive.

The road to organizational design success is not a simple one, but we can assure you it is well worth the effort.

By letting workforce planning experts, Orgvue, take a deeper look into the issues your organization faces, they can help you create an environment that is more collaborative and better aligned with company goals. They believe that organizational design is about bringing everything back to the macro level, so you can appreciate the direction of travel, what you’ve achieved, and what lessons can be learned.