4 organizational design errors C-suite executives have let slip through the cracks

Employees’ informal arrangements, structural failures and autonomy and accountability gaps can be every C-suite’s Achilles Heel. Here’s how to find and address them.

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Though businesses depend on innovative ideas and solid customer outreach strategies, these are far from the only factors that determine if your company will be successful or profitable.

In fact, one of the biggest indicators of whether you’ll be able to achieve your desired outcomes is how you handle an often-overlooked principle: organizational design.

Your organizational design will have a direct impact on your team’s efficiency and productivity. With the right business structure, you’ll be able to get the best results from each member of your company—including other c-suite executives.

Let organizational design errors slip in, however, and even the best product or service in the world will struggle to generate a profit. If any of the following errors have entered your company, it is essential that you act quickly to bring about necessary change.

1. Strategic changes don’t lead to structural shifts

The adoption of new technologies or the introduction of a new service can dramatically change your company’s overall strategy. All too often, however, brands will enact large strategic changes, but then fail to adapt their overall structure to better implement these changes.

This often occurs due to a fear of change—after all, structural reorganization can greatly alter the tasks performed by individual employees. While this can prove disruptive in the short-term, without these changes, your team will struggle to fully realize the company’s new strategy.

When structural changes are made to align with new strategic goals, your company can achieve far greater results. Take Anthony Armendariz, partner and head of design at Funsize, for example.

As a direct consequence of altering their sales program, Armendariz’s team “redesigned our team structure to align with the work we’re seeking and set us up to do the best work we can. This included creating larger team pods, new design positions, career growth opportunities, optimizing for collaboration, continuous learning on the team and new internal design processes.”

During a later conversation with Armendariz, he added, “Redesigning our team structure is something that’s never truly done. We have to take a proactive approach to meet the ever-changing needs of the economy to ensure we remain relevant and use a sales program that works for our customers.”

2. Spread-out accountability

Who is responsible for finalizing a marketing plan? For responding to a customer complaint?

Many c-suite executives think they’re doing their employees a favor by spreading out responsibilities among multiple individuals or departments.

All too often, however, this creates an environment where nobody takes complete responsibility for these tasks—they instead assume that someone else will take care of it. This results in a leadership vacuum that ultimately negates your chances for long-term success.

As one thought leader puts it, “When an issue arises, there has to be only one pair of eyes we all look into! We must hold accountable one person for each functional area of the business. This includes both successes and failures…Accountability ‘by committee’ never works. Teamwork and collaboration? By all means, yes! Yet there is only one person who must call the shots.”

3. Neglecting ‘informal’ design elements

Organizational design often tends to focus almost exclusively on formal structural aspects—things like department hierarchies and reporting processes, key performance metrics or the career models and compensation methods used to compel top performance.

While these elements are undeniably essential, many c-suite executives neglect the informal aspects that also have influence company outcomes.

This includes things like the “unwritten expectations” a company has for its employees, or the assumptions and biases that influence how someone performs in their work. When these elements are neglected, your team will struggle to achieve the desired results, even with the right formal structure in place.

Even informal relationships will affect company performance and formal structure.

As Mastering Strategic Management notes, an episode of The Simpsons surprisingly provides a perfect example of this: “Homer gains power and influence with the plant’s owner, Montgomery Burns, which far exceeds Homer’s meager position in the organization chart, because Mr. Burns desperately wants to be a member of the bowling team that Homer captains. Homer tries to use his newfound influence for his own personal gain and naturally the organization as a whole suffers. Informal linkages such as this one do not appear in organizational charts, but they nevertheless can have (and often do have) a significant influence on how firms operate.”

4. Sacrificing autonomy

An organization’s structure is often viewed as a way for c-suite executives to maintain control over their company’s results. While a clear organizational design is invaluable for guiding the efforts of your team, it shouldn’t enforce policies so stringent that your employees feel like they don’t have any autonomy whatsoever.

Indeed, as research from the University of Birmingham discovered, “Employees with higher levels of autonomy in their work reported positive effects on their overall well-being and higher levels of job satisfaction.”

So where does organizational structure go wrong?

Too often, c-suite executives use their structure as an excuse to micromanage individual tasks, resulting in an oppressive, emotionally-draining work environment.

Instead, management should use structure to provide benchmarks and strategic direction, while still giving employees the autonomy to determine how they will achieve these goals.

The right design, the right results

Organizational design may not be as flashy as a big-budget marketing campaign or as talked about as emotional intelligence, but there is no denying that it can be just as important for the long-term prosperity of a business.

As you come to recognize flaws in your current structure and take steps to address these issues, you’ll be better equipped to lead in an agile, forward-thinking manner.

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