Where Does Organization Design Capability Sit in Your Organization?
In today’s fast-paced environment, organizations are refining their strategies and pivoting to new markets or products more frequently than ever. At the same time, customers are becoming more demanding and less loyal, armed with better information. To execute these strategic changes effectively, organization design (OD) becomes essential. Yet, few organizations have this capability in-house.
While consultants can help with organization design, relying solely on them presents several challenges:
Leadership must first recognize the need for external help.
Switching from one consultant to another can be costly and disruptive.
The constant need for external expertise can make the consulting firm feel like a permanent outsourced partner.
No matter how collaborative the consultant, employees might perceive a “them and us” divide, hindering long-term success.
Even if your organization has OD capability, there are times when hiring external consultants can provide valuable fresh perspectives. However, considering the critical role OD plays in strategy execution, building in-house capability is a more sustainable, cost-effective solution. Here’s why:
Why In-House Organization Design Capability Matters:
Strategic Alignment: An internal OD team can assess whether the current organization structure aligns with the strategy and run diagnostic tests to build a strong case for change.
Preventing Organization Drift: Even when strategy remains stable, organizations can drift from their design. Small adjustments, like clarifying decision rights, can prevent costly mistakes and keep the design aligned
Cost-Effective Execution: Having an internal OD team allows the organization to manage its own design projects, with the option of selectively engaging external consultants when needed.
Continuous Design: There will always be micro changes needed, for example making changes to a team or accommodating new thinking from new team members in how work gets done
Scenario planning: Using the internal OD team to be part of or even take the lead in some scenario planning. This can include for example new skills needed for future competitiveness or how can we be using more autonomous tools do work in say warehouses, will reflect organization changes that may be needed, well in advance
Capability Building: An internal OD team can champion organization design knowledge and provide training across the organization, ensuring broader alignment and understanding.
Where Should Organization Design Capability Sit?
Given its importance to strategy execution, OD could logically belong under the CEO’s office. However, this is rare. Instead, OD often resides within HR, due to the misconception that it’s primarily about people rather than structure and strategy.
While this isn’t an ideal placement for OD, many modern HR functions are evolving to include strategic elements, and the promotion of the Chief HR Officer to leadership positions is helping bridge this gap. What’s crucial is that organizations invest in understanding the fundamentals of OD across teams and create career paths to build this essential in-house capability
Want to learn more about how organization design can unlock your strategy? Curious if your organization's design is misaligned? Please get in touch