This document summarizes an organization design presentation given to the Dallas Human Resource Management Association. It discusses organization design frameworks, engagement of human potential, and examples of organization design interventions. The document provides an example of an organization that addressed shifts in products/services through workshops identifying common goals, challenges, and initiatives to improve processes, structure, and develop employee capability over multiple years. Key success factors included clear strategy, leadership engagement, and a structured design process.

1. Organization Design: Strategy Driven
and a Whole System Perspective
and a Whole System Perspective
Presented for the
Dallas Human Resource Management Association
OD Professional Emphasis Group
By Rick Walters
Rick Walters © 2010 September 16, 2010
1

2. Topics
• Introduction
• Organization Design Framework
• Examples
• Success Factors
• Overview of Five Design Areas
• References
Rick Walters © 2010 2

3. Organization Design . . .
• Alignment
. . . is guided by business strategy which changes to some
is g ided b b siness strateg hich changes to some
degree from year to year. Org design must be reviewed.
• H li ti
Holistic
. . . is more than the structure. Don’t stop at the
organization chart.
• Engaging
. . . releases or inhibits human potential.
. . . releases or inhibits human potential. Your choice.
Your choice.
• Responsibility
. . . is a responsibility of leaders at all levels.
i ibilit f l d t ll l l Effective
Eff ti
design and change won’t happen by itself.
Rick Walters © 2010 3

4. Engaging . . . Release human potential
• The seed wants to grow, move the rock.
– “Don't Push Growth; Remove the Factors Limiting Growth ”
Don t Push Growth; Remove the Factors Limiting Growth.
Peter Senge, 5th Discipline
• Beliefs about people
– People are naturally active; they set goals and enjoy striving
– People who understand and care about what they are doing can
devise and improve their own methods of doing work
Two of the beliefs listed by
Douglas McGregor, The Human Side of Enterprise
• P i i l of Whole S t
Principle f Wh l System A hit t
Architecture
– Design work systems to customer’s needs and for business
results.
One of twelve principles by
One of twelve principles by
Larry Miller, Whole System Architecture
Rick Walters © 2010 4

5. Organization Effectiveness Frameworks
• People Systems
– Performance Management
– Training & Development
– Recognition and Reward
– Individual and Team Dynamics
• Process Focused
Process Focused
– Business Process Improvement
– Six Sigma
– Reengineering
• Whole Systems
Whole Systems
– Comprehensive Organization Design Models
Rick Walters © 2010 5

6. Organization Design Concepts Progression and
Some Representative Resource Books
Some Representative Resource Books
Process
Improvement
Strategic
Planning
Tavistock Socio- Self- Dynamic
Institute Technical Directed Org.
Research Systems Teams Design
Rethinking and
Reengineering
Effective
Holistic View Teams
of
Performance
Rick Walters © 2010 6

7. Organization Design Framework: Star Model
Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels
2002. Jay Galbraith, Diane Downey, Amy Kates
Rick Walters © 2010 7

8. Organization Design Enablers
Structure People
• Function • Assessment and selection
• Geography
G h • Performance feedback
• Product • Learning and development
• Customer • Culture, norms, habits
• Role definition • Written, unwritten rules
• Interfaces
Strategy
Strateg
• Boundaries
• Vision
• Governance
• Mission
• Priorities
• Strategy Rewards
Processes • Values
• Networks • Metrics
• Goals • Values and Behaviors
• Processes
• Teams • Compensation
• Integrative roles • Rewards and recognition
• Matrix structures
• Lateral capability
8

9. Focus Question
• Is the organization designed to achieve the desired
outcomes (defined by market/customer) and results
(d fi d b k / ) d l
of the business strategy?
– What gaps in results exist now or will exist if no changes to
design or capability are made?
– What capabilities and changes are needed to capture
opportunities or move in a new direction?
Rick Walters © 2010 9

10. Organizational Development Approaches
• Targeted, narrow focus • Complex interventions • Comprehensive, detailed,
interventions – Governance by key g , g
large scale, design and
– One or small team of sponsors or implementation programs
sponsors leadership team – Governance by hierarchy
– One or a few – Several organization of steering teams
organization design design components – Dedicated design teams
components involved involved – Comprehensive
transition planning and
implementation
Targeted Process
Individual / Manager Improvements
or Work Group Mergers and
M d
Performance Issues Acquisitions
Problem Solving / ERP System
Decision Making Implementations
New Business or
Unit Startup
Rick Walters © 2010 10

11. OD/HR/Consultant Role in Organization
Effectiveness
• Responsibility
. . . is a responsibility of leaders at all levels.
• When Quality Circles, Total Quality Management, Business Process
Reengineering or other business improvement frameworks were emerging,
many organizations had dedicated groups of experts to lead organizations in
application of these complex approaches.
• To a large degree, these dedicated functions no longer exist. However, from
T l d th d di t d f ti l it H f
the momentum of the initial programs and with additions to management
curricula, managers are taking ownership of organization design (whether
they know it or not). Although not necessarily in a methodical or
comprehensive fashion.
p
• The role of the consultant can be to maintain an eye on the principles and
methods available for organization design and to bring just the right amount
of relevant process to leaders and leadership teams when needed.
Rick Walters © 2010 11

12. Examples from division and department level transformations.
ORGANIZATION DESIGN INTERVENTION
EXAMPLES
Rick Walters © 2010 12

13. Case for Action & Accomplishments
2000 Accomplishments
Diminished credibility Credibility up – seat at the table
Decreased customer satisfaction High customer satisfaction
Cost overruns Cost goals being met – predictable outcomes
Ability to deliver strategic and tactical
“Fire-fighting”
solutions
Not taking full advantage of investments in Increasing entitlement and leveraging of IT
IT solutions investments
Poor project execution Projects meeting expectations
Positive impact on morale – higher than
p g
Negative impact on morale
benchmark on industry surveys
Poor global coordination Global coordination & cooperation
Minimal business integration
g Increasing integration across business units
g g
Rick Walters © 2010 13

14. Example – Drivers: Shift in Products and Services
Structure People
Corporate Priorities
Improve Customer Strategy
Relationships
• There is and will be a change in
the make up of projects to
Increase Market Share include more, larger system
integration projects.
i t ti j t
Improve Organization
Processes • Common platforms will need to
Performance support diverse business unit
needs. (e.g. commodity and
Rewards
differentiated, low and high
volume)
Rick Walters © 2010 14

15. Structure
• Initially a Major Program box and manager was added
to the org chart with the implication that:
h h i h h i li i h
– The other functions continue with the ongoing work.
– The Program Manager manages the large program.
Enterprise
Applications
V.P.
Order to Purchase to Application Major
Plan to Start B2B
Cash Booking Support Program
Rick Walters © 2010 15

16. Adding the role to the org chart addresses one
component (partially).
p (p y)
Structure People
• Add Major Programs function and
leader.
Strategy
• There is and will be a change in
the make up of projects to
include more, larger system
integration projects.
i t ti j t
Processes • Common platforms will need to
support diverse business unit
needs. (e.g. commodity and
Rewards
differentiated, low and high
volume)
Rick Walters © 2010 16

17. Challenge
• The leadership team
recognized there were many
g y
implications for how the
organization would operate
going forward. For example,
all managers will have
challenges with priority and
h ll ith i it d
resource limitations with
the addition of the new
large program. The program
was to be 3 4 years in
was to be 3‐4 years in
duration.
• A workshop was held with the leadership team with the following objectives:
– What are the common goals across the functions in the group, including the
new large program?
– How do we work, communicate and support one another to implement our
, pp p
combined priorities (continuing with existing functions and successful
execution of the new large program)?
Rick Walters © 2010 17

18. Areas to address identified in the workshop,
mapped to the organization design framework.
mapped to the organization design framework
Structure People
• Internal Customer interfaces and • SME’s on business processes
relationship management • Cross-training
Cross training for fle ibilit
flexibility
• Restructure customer teams • Need appropriate knowledge per
• Internal and external suppliers system
interfaces and relationships
management
Strategy
• Business Internal Customer
priorities, short and long-term.
Processes
• Scope management (assistance
from internal customers)
• People resources allocation Reinforcement
• Requirements gathering and • Alignment within the organization,
priority setting with customers across functional groups and
• Contracting and on-boarding of individuals
supplemental labor (short lead
time, expertise requirements)
• Simplified work design to make it
easier to bring in contractors
Rick Walters © 2010 18

19. Four initiatives defined with leadership team
members assigned to each.
members assigned to each
• Communication Across Functions
– Action: Project Coordination Team.
• Communicate with Customers
C i i hC
– Action: Stakeholder communications and planning.
– Action: Restructure business unit stakeholder teams.
• Resource Management
esou ce a age e t
– Action: Develop plan / approach.
• Internal / External Supplier Management / Relationships
– Action: Continue with existing efforts and mechanisms.
• In addition a process was developed and implemented to manage the
life cycle of the initiatives so that organization capability was improved
year over year.
Initiative Life-cycle
Definition and Identification of Planning to Final Report,
Consensus on Org Change Institutionalize Celebration and
Scope Implications the Changes Next Steps
January December
Rick Walters © 2010 19

20. Structure & Lateral Functions
• Viewing the additional structure and lateral
mechanisms overlaid with the functional organization
h i l id i h h f i l i i
chart.
Restructure business stakeholder
decision making teams.
Enterprise Resource Management &
Proactive relationship Applications
management. V.P. External Supplier Relationships
Order to Purchase to Application Major
Plan to Start B2B
Cash Booking Support Program
Cross-functional Projects Team: Review projects, staffing, forecasts and interdependencies.
Rick Walters © 2010 20

21. Other Implications
• A shift in the organization characteristics from highly
technical emphasis to a business analyst role and skill
h i l h i b i l l d kill
set.
• Reconfiguring the organization to a functional model:
Reconfiguring the organization to a functional model:
PMO structure, Level 2 Support Function and
Technical Applications support.
• Developing and using tools for resource allocation and
l d l f ll d
management.
• Development of career maps for business analysts and
Development of career maps for business analysts and
project managers.
Rick Walters © 2010 21

22. Success Factors for Sustainable Change
• Clear understanding of business drivers and strategy.
• Engagement of leadership team in process to identify
– Common goals / vision
– Challenges and gaps
Challenges and gaps
– Implications for organization culture / mindset
– Initiatives to develop organization capability
• Structured process to implement organization design
changes: Awareness Adoption, Institutionalization
– Typically, the organization design changes that are needed to
execute strategy are new and often do not fit in to the current
execute strategy are new and often do not fit in to the current
charter of any existing functional area.
– To create new capability, the leadership team must define a
charter for the initiatives, take the lead and make time to
develop and implement them in parallel with existing
develop and implement them in parallel with existing
operations.
Rick Walters © 2010 22

23. OVERVIEW OF FIVE ORGANIZATION
DESIGN AREAS
23

24. Organization Design Enablers
Structure People
• Function • Assessment and selection
• Geography
G h • Performance feedback
• Product • Learning and development
• Customer • Culture, norms, habits
• Role definition • Written, unwritten rules
• Interfaces
Strategy
Strateg
• Boundaries
• Vision
• Governance
• Mission
• Priorities
• Strategy Rewards
Processes • Values
• Networks • Metrics
• Goals • Values and Behaviors
• Processes
• Teams • Compensation
• Integrative roles • Rewards and recognition
• Matrix structures
• Lateral capability
Created from concepts in : Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane
Downey, Amy Kates. (New York: AMACOM, 2002). 24

25. Strategy
• Strategy guides decisions in the face of infinite
possibilities for organization design choices.
possibilities for organization design choices
• Clarity on drivers for change, vision and direction is
key for creating a foundation for consensus building
k f ti f d ti f b ildi
across leadership teams and key stakeholders.
• Key steps:
– “Identifying Success Indicators: What business results must
the design achieve?
– Understanding the Value Proposition: What are the
organizational implications of our strategic focus?
– Determining the Design Criteria: What are the organizational
capabilities that the design must help our organization
biliti th t th d i th l i ti
build?“*
*Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New
York: AMACOM, 2002).
Rick Walters © 2010 25

26. Structure
Two of five steps from Designing Dynamic Organizations.
• “Step 1. Selecting a • “Step 2. Defining the new
structure that is most likely
h i lik l organizational roles in the
i i l l i h
to support development of structure and clarifying the
required organizational points of interface among
capabilities*
capabilities*” them.*
them *”
– A new organization structure – A cross‐functional resource
was implemented: From management team was
Product to Function focus. established.
– Roles were defined for
Enterprise relationship managers for key
Applications business functions.
V.P.
Resource planning
User Technical Major
PMO and management team.
Support Support Programs
* Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New
York: AMACOM, 2002).
Rick Walters © 2010 26

27. Processes
Key Concepts
• Organization Structure provides a starting point for
organization design. There is not a perfect or ‘right’
structure that accommodates all needs.
• Lateral organization components can fill the gaps or
Lateral organization components can fill the gaps or
‘white spaces’ in the organization structure.
• Designing Dynamic Organizations emphasizes and
provides more information about lateral capability.
There are many other references for basic process
design, improvement or reengineering.
Rick Walters © 2010 27

28. Five Types of Lateral Capability
• Matrix Structures: Dual reporting relationships in
order to manage the conflicting needs of
functional, customer, product or geographic
forces.
Elective
• Integrative Roles: Managerial, coordinator or
Integrative Roles: Managerial coordinator or
boundary‐spanning positions charged with
Managem
orchestrating work across units.
• Teams: Cross‐business structures that bring
Complexity
ment Time and Energy
people together to work independently and
share collective responsibility for outcomes.
Can • Lateral Processes: Move decisions and
information through the organization in a
information through the organization in a
y
d
Occur
O
formalized flow.
Naturally
• Networks: The interpersonal relationships and
communities of practice that underlie all other
types of lateral capability and serve to
coordinate work informally.
Rick Walters © 2010 28

29. Examples of Lateral Capabilities Augmenting
Organization Structure Design
Organization Structure Design
Cross-functional Cross-functional Cross-functional
Networks Processes Teams
• Project • Cross-business • IT Leadership Team
Management
M t Funding Model
F di M d l • Regional P t
R i l Partners
• Business Analyst • Business Readiness • Global Initiatives
• Architects • Standards Board • Cross-functional
• Diversity
es y • Job Rotations
oa o s Projects
ojec s
• Others… • Others… • Others…
Rick Walters © 2010 29

30. Example of Integrative Role for the CTO to facilitate communications
and sharing across technical roles in the organization.
Prior to 2000 2001 2006 2007 +
Customer Enterprise
Centralized
Facing
g View
Function
Focus Perspective
IT
Architecture
Centralized decision Separate customer Separate customer
making and governance focused technical focused functions with
for architecture. functions. CTO in integrative role.
Rick Walters © 2010 30

31. Excerpt from Chapter Five:
Defining and Rewarding Success
Defining and Rewarding Success*
Reward systems define expected behaviors and influence the
p p
likelihood that people will demonstrate those behaviors. They y
ensure that everyone is pulling in the same direction. An aligned
reward system reduces internal competition and the frustration
and diffusion of energy that comes when people are given
p gg
competing goals.
• Reward systems have four components:
1. Metrics: The systems that identify measures and targets for enterprise,
business unit, team, and individual performance
business unit team and individual performance
2. Desired Values and Behaviors: The actions that are most likely both to
produce desired business results and to reflect the organizational
values
3. Compensation: The monetary means intended to recognize a person s
Compensation: The monetary means intended to recognize a person’s
past contribution as well as motivate continued or improved
performance
4. Reward and Recognition: The nonmonetary components that
complement compensation systems to let people know that they are
valued
l d
* Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New
York: AMACOM, 2002).
31

32. Leadership Team Process –
Defining a Recognition Program to Drive Desired
Behaviors and Values
B h i dV l
• Definition ‐ Defining the program helps Alignment
build consensus among the leadership • Consider how the department level
y
team members and clarify what values recognition program fits with other
recognition program fits with other
and behaviors are needed to meet programs.
business and organizational culture
goals • To get the most from each, in what
ways do the recognition programs align
• Process – The winner selection to reinforce behaviors.
f b h
process has value in asking the – Consistency of message (what is
questions on a recurring basis, serving valued, desired)
as a reminder of what is important, – Emphasis – what is needed to succeed
driving discussion about what it looks
d i i di i b t h t it l k in the current business environment or
in the current business environment or
achieve this year’s priorities
like in action and providing feedback
– Different levels or perspectives –
and reinforcement.
ensure programs are aligned but not
redundant
• Results – T ibl
Tangible and intangible
d i t ibl End f Y
E d of Year Reflection
R fl i
results should be positively impacted • Are we getting maximum benefits from
by the change in behaviors driven by the program?
the program. This includes business – Effectively communicating expected
g
goals as well as the quality of the
q y values and behaviors
values and behaviors
working environment and – Demonstrating and observing people
relationships. exhibiting, behaving
– Reinforcing other programs
Rick Walters © 2010 32

33. People Practices*
• Staffing the New Organization presents principles and tools to
guide the process of placing people into new roles and positions.
guide the process of placing people into new roles and positions
• Assessing for Learning Aptitude presents a way to select for
learning‐agile candidates.
l i il did t
• Performance Feedback reviews the ways in which multidirectional
feed‐back can support building lateral capability.
• From Training to Learning provides a checklist of the best
practices that many organizations are utilizing to create a
learning organization.
Source: Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New
York: AMACOM, 2002).
33

34. Next Steps / Topics
Rick Walters © 2010 34

35. What level of capability would you like to achieve?
Capability Levels
Mentor
Teach
T h
Practicing
act c g
Learning
Lead
L d
Reading Do
Speak
Rick Walters © 2010 35

36. Rick Walters © 2010 36

37. References
• The Social Engagement of Social Science: A Tavistock Anthology : The Socio‐Ecological
Perspective. Eric L. Trist, Fred E. Emery, Hugh Murray, Beulah Trist (1997)
• Designing Effective Organizations: The Sociotechnical Systems Perspective
William A. Pasmore (Apr 1988)
• Whole System Architecture: Beyond Reengineering : Designing the High Performance
Organization
Lawrence M. Miller (1994)
Lawrence M. Miller (1994)
• Designing Dynamic Organizations: A Hands‐On Guide for Leaders at All Levels.
Jay Galbraith, Diane Downey, Amy Kates. (2002).
• Applied Strategic Planning, An Introduction
Timothy N. Nolan, eonard . Goodstein, and Pfeiffer ( 008)
Timothy N. Nolan, Leonard D. Goodstein, and Pfeiffer (2008)
• Business Process Improvement: The Breakthrough Strategy for Total Quality,
Productivity, and Competitiveness
H. J. Harrington (1991)
• Reengineering the Corporation: A Manifesto for Business Revolution
g g p
Michael Hammer, James Champy. (1993)
• Work Teams That Work: Skills for Managing Across the Organization
Anthony R. Montebello (1994)
• Analyzing Performance Problems: Or, You Really Oughta Wanna‐‐How to Figure out
Why People Aren't Doing What They Should Be, and What to do About It
Robert Frank Mager (1997)
Rick Walters © 2010 37

38. Organization Design Worksheet
38

39. Organization Design Framework
Created from concepts in : Designing Dynamic Organizations: A Hands-On Guide for Leaders at All Levels. Jay Galbraith, Diane Downey, Amy Kates. (New York: AMACOM, 2002). 39