The Intentional Organisation - Issue #33 - There's nothing Definitive in Organisation Design

Mar 18, 2022

1. There is nothing Definitive in Organisation Design

This week Josh Bersin releases a report titled The Definitive Guide to Organizational Design: The Journey to Agile. My first reaction was, "great if even Josh Bersin acknowledges the importance of Organisation Design today, then we will see traction towards the needed focus".

Some exciting data accompany the report. According to Bersin's research,

approximately 58 per cent of companies are using haphazard organisational structures or heavily relying on role-based organisational design principles. Only 11 per cent are using organisational design approaches that are agile, have clear accountability for work, are continuously modified as needed for business change, and encourage employee growth in addition to business growth.

This derives from an Organisation Design Maturity Model that Bersin is proposing,

Bersin's Organisation Design Maturity Model

Although I share Jon Ingham's view that maturity models "rarely make sense", my consulting experience taught me that these models could serve a particular purpose in pushing organisations to act. Not many business executives like their company to be on the "immature" side of the spectrum.

I think the issue in the above model is about the term "Agile" used on Level 4. What do we mean by agile? We all know that this term is being used in many different directions. However, reading Bersin's report, it becomes clear we are not talking about applying full-scale Agile software development models, but rather thinking of Organisation Design as something that needs to change often and adapt.

Bersin links an essential dimension in his reasoning that Organisation Design is strictly related to Work Design. HOWEVER, what I found less than satisfactory is the details of this link. Although most ingredients are there, there's a lacking of true innovation, and a few of the aspects revert to very traditional HR processes or tools.

Bersin's Suggested Process

First of all, let's see the process that Bersin suggests.

Organization design is not a process of “spans and layers.” It’s far more. This is a process of bottom-up “work design” and building jobs that cluster work tasks in the optimum human way.

The below image shows the flow that Bersin suggests (and through it, we also start mapping the different components of the model itself).

Bersin's Organisation Design Process (source)

The type of questions that the flow shows are correctly asked. Above all, the model rightly mentions that it is absolutely vital to reason in terms of the Operating Model first, as this is the genuinely critical component to infer the design of the organisation.

The flow also has another very relevant advantage, correctly pointed out by Jon Ingham:

Too many companies do start organisation design by looking at structure, rather than the work, and then focus on functional design and then hierarchy and delayering.

Following this flow, you create, instead, a binding process that looks at work first.

There is, however, another foundational layer that is missing: the Organisation Model. True, Work Design and Job Design are essential components, but an Organisation Model cannot be limited to simply designing the organisational structure. Otherwise, we risk falling into the same problem that Berins' work tries to avoid: the company focuses too much time on drawing organisational charts instead of pondering the model they want to implement.

Reasoning in terms of the Organisation Model is critical because it is there that many Intentional Choices are made and the basis for full organisational consistency is built.

Let's not forget that I have personally researched about 60 different models. And organisational models define not just work but also how decisions are taken and how communication flows. Unfortunately, too many organisations resort to traditional hierarchies because they don't spend time intentionally reasoning on how alternative models could better serve their business.

Bersin's Organisational Design Framework

The model comprises 7 major elements and 20 dimensions and is described this way:

merely focusing on organizational structure and hierarchy, spans and layers, and management models is not enough. Companies need to start with the business itself (identifying strategy, culture, and leadership), then define the operating model (identifying the customers and what roles, governance, and metrics are needed), describe what work needs to be done to drive success (work composition, accountability and rewards, and skills and experiences), and only then define job structures and organizational models.

Looking at the model, I echo most of Jon Ingham's observations and have a few more aspects to focus on.

The process cannot just be left to right (or top-down as in the flow above) because many of your decisions on Work influence the above aspects.
Purpose, Leadership, Culture are much more complex components than simple elements of Business Model Design, and they should be considered separately and with the needed focus. For example, think about the debate about Purpose-led decisions into the current Ukraine war, making many companies pull from the Russian market (and others willingly stay). How much does this impact Org Design?
The Operating Model design misses one critical element: technology. Something weird considering Bersin's attention to tech topics in HR: this is particularly relevant today as we discuss automation, AI and Machine Learning. At the operating model level, you decide what role these elements will play in supporting your business.
The other element that is completely missing here is the concept of the Ecosystem. Organisations don't live in a vacuum. They never did, but today this is even more true. Bersin's research focuses on quite some external market trends (for example, looking at demographics). But then, there's not much of an Organisation Design perspective into this element.
An example is Remote Work. Companies cannot take decisions fully in isolation without considering the Ecosystem of services. And Work itself as a critical place today, as the "Great Resignation" demonstrates.
Bersin correctly emphasizes Employee Experience as a value-adding connecting element between people and their organisation. But experience is only one of the components.
Last but not least, most of the dimensions are expressed in a pretty traditional way in terms of Job and Work design, completely missing the change of Discourse of Work that is happening (and accelerating) these days. Therefore, job Crafting is the only alternative way to accommodate the new generation of workers that thinks of Work in terms of Personal Realisation.

Conclusion

Bersin's report has the enormous added value of bringing organisation design to the centre of the current management transformation. Topics such as Hybrid Work or The Great Resignation cannot be addressed by simply focusing on compensation, a few policies and some philosophical adaptations. They are all about the fabric of how Work gets done and ultimately affect the way business goals are achieved as an organisation.

All in all, I see this as a highly positive step forward.

The most damaging aspect, though, is the idea that you can encompass a "definitive" approach to Organisation Design into a report. Doing so exacerbates the approach that there is only good organisation design. Which we know is not valid.

The true lesson is that there's is not a definite organisation design, but only an evolutionary pattern of continuous improvement, made by intentional choices of the entire organisation.

Sergio

2. A Call for Action

In the past few weeks I have been focusing a lot of attention on the HR For Ukraine initiative. Here a few links on the most relevant pages of the project. Feel free to share, and also simply respond to thisn newsletter with feedbacks and suggestions.

A collaborative resource collecting links and tools for the HR Community on the crisis unfolding in Ukraine, including FAQs.

A list of Frequentky Asked Questions and resources for the HR on the effects on Russian employees of sanctions and companies pulling out of the area.

A Database of the companies suspending Operations in Russia and Belarus, and their impact on Employees and actions currently in place.