From candidate preferences to rapid adoption of new age technologies, organizations today are operating amid multiple internal and external factors. There is an urgent need for business processes to respond and to be restructured. Although transformative shifts are not new, the current period of tech-driven disruption that many companies are currently undergoing requires a radically different approach.
The Fourth Industrial Revolution—the collective impact of technologies like AI, automation, digitalization, and robotics which are reshaping future of work—today requires companies to rethink existing business models and strategies to ensure profitability and labor productivity.
By driving a thorough organizational review and redesign, company leaders can change the trajectory of their business.
In a survey conducted by The Boston Consulting Group, almost 80 percent of respondent companies reported undergoing a recent reorganization exercise—in about half of those cases, a large-scale, enterprise-wide reorganization initiative. But their success still remains far from complete.
According to McKinsey’s research less than a quarter of organizational-redesign efforts succeed. Forty-four percent of the respondents said their redesign efforts run out of steam after getting underway, while a third fail to meet objectives or improve performance after implementation.
Here’s what Prof. Prashant Kale, Associate Professor of Strategic Management at the Jessie H. Jones School of Business, Rice University and Faculty at FLAME Centre for Executive Education (FCEE) had to say about bridging the gap during organizational redesign:
- Align the organizational structure to the formulated strategy to achieve effective implementation
Organizational structures today are comparatively far more open to restructuring – thanks to the use of technology and data. The search for a new and effective organizational structure is heavily dependent upon the external and internal factors.
Business leaders need to re-design their own organizational structures – from “networks of team s” to “career lattices ,” there are many emerging models that organizations need to seriously consider, if they want to improve execution and align it closely to business strategy.
Structure defines organizational boundaries for where and how value is managed today. As a result it's one of the key levers that senior leaders to bring in intended change within the company. Although one might successfully align such structures to support strategies, people still remain a crucial part of the equation.
- Align people for execution
The HR function today has a pivotal role in enabling companies to undertake business changes. They do this by enabling their company’s workforce aligned with business strategies. Aligning people for execution forms a key part of how successfully can a company undertake organizational redesign to support its changing business priorities This alignment has to reflect in its end to end talent management models. Key functions like TA, L&D, and rewards can be restructured to create the necessary incentives and understanding to adopt newer ways of working which are aligned to business strategies.
- A company needs to have the 'right' culture for its chosen strategy
Beyond working to enable their company’s workforce to contribute towards the new business strategy, HR professionals also have to ensure that such changes can sustain itself in the long run. Studies have noted that many organizational redesigning endeavours have failed because they eventually run out of steam. And to do this effectively, HR professionals have to pay close attention to their company’s culture.
Culture plays a vital role in the execution of strategy. A company needs a contextually 'right' culture to ensure its chosen business strategy. By setting the right culture—components of which permeate through all major business processes, HR professionals enable their companies to chart a successful journey.
With the need to adapt to more tech-driven age of industrial era, it’s important for companies to reform business strategies. But to ensure such strategies are successful, business and HR leaders need to pay close attention to how their organizational structure, workforce, and company culture are optimized to drive the desired results.
This article is based on a course offered by FLAME University. For more information about the course, click here.