SJC

Diane Slater

What is Organizational Design and what do many think it is?

Over the course of a typical Human Resources career, many HR Professionals go from terrified at their first Organizational Design meeting – perhaps running out to do research on what that even means and finding templates, white papers and research on how to proceed –only to realize over time that this is a skill missing for many executives and Human Resources teams. What is frequently titled Organizational Design on the calendar turns out to be a mash up of Talent Review, Succession Planning and some Org Chart moves that may or may not result in some change to the business.

Good Organizational Design can make or break hitting EBITDA targets, growth in the organization and can prevent mass hiring that leads to mass layoffs, excluding unforeseen world events. Unfortunately, Organizational Design rarely starts with a blank page or an Organization chart with no names to ensure a discussion of what is truly needed versus who can do each job.

How can HR get better at Organizational Design?

Human Resources Professionals must truly understand the business in which they work to be successful. Knowledge of how to structure an organization is not possible without understanding what drives revenue, the biggest impacts on EBITDA, the market, the future direction of the company – growth (organic or acquisition), change of product line, shrinking due to market or losses or any other 1 to 3 year outlook issues – and anything predictable in the economy such as a looming recession. Only then can Organizational Design be successful as only then can Human Resources truly contribute to a discussion on which roles are necessary, how roles might be turned into shared service centres, which roles can be combined or eliminated and which new roles need to exist to drive the revenue required for the future vision.

“Good Organizational Design can make or break hitting EBITDA targets, growth in the organization and can prevent mass hiring that leads to mass layoffs, excluding unforeseen world events”

If Human Resources does not understand all the business drivers, then it is time to start with regular 1 on 1s with key business leaders and the VP of Finance or CFO with some very specific and purposeful questions to get at the heart of these questions. It is also time to start walking the floor, touring the sites and getting to know key talent and understanding the vision of the senior leaders. If your organization refers to “the business” and that does not include Human Resources, you are likely not ready to contribute meaningfully to this discussion in a meaningful way.

Why it matters?

Once Human Resources joins the conversation with insights into the operation, the HR Professional can not only facilitate the planning discussion but can contribute meaningfully as well. Starting from a blank slate or a “name free” slate allows the group to truly delve into the hard questions –
•  are we focusing on the right work
• what have we always done that is not working
• where are we losing money and why
• what work is duplicated even if only in part
•  what teams exist in silos that could work more closely together
•  are there teams who work at cross-purposes
•  what have we seen in other organizations or on other teams that is working that we could replicate or bring together
• which vendors are making a lot of money from us using their services and why
• what is the utilization rate of each function

It is often Human Resources who has answers to these questions as it is the HR Professional who conducts regular 1 on 1 meetings across the organization, not just in one team, allowing an overview of the big picture. This information is critical to business success and the HR lens on these answers is a key component to organization growth and achievement.

Next Steps for Success

Once the HR viewpoint has been heard and credibility established through knowledge of the operation, the Talent and Succession Planning component will be more successful as the HR voice will be heard. With that Organization Design completed, fitting in the talent who can achieve each role is next - some tough decisions on exits, some promotions and some new hires will ensure. The great news is that Human Resources Professionals who have taken the time to truly understand the business will not be blindsided by a list of exits, promotions and new hire requests and will realize that this is what being a strategic HR partner is truly all about.