5 questions to ask before redesigning your brokerage

David Brown of Deloitte Consulting explains when and when not to redesign your brokerage

David Brown is the Human Capital lead partner at Deloitte Consulting and explains why it is vital to be clear on the reasons for undertaking a redesign.

The majority of organisation design initiatives start out with the best of intentions, but few live up to expectations. What they do provide is disruption, as people and positions shuffle for very little gain in real value. Restructuring efforts like that can undermine faith in the wisdom of an organisation’s leadership, which actually erodes value and team coherence.

The following questions are designed to help you ascertain whether a redesign is the right path to follow, and how to go about it.
 
1. Have you really unpacked the intent behind redesigning your organisation?
A variety of internal and external influences can trigger organisation design initiatives. An executive may just have the intuition that something is amiss. Or the market or regulatory environment can deliver an unmistakable imperative for change. It is essential to identify and express the true purpose and intent of the change in the context of the organisation’s wider strategy. Only this perspective can position the design change in a way that supports broader business goals. Is organisation design the root cause of the symptoms you wish to address? Or might alternative interventions achieve a similar result with less cost or risk? For example, if the goal is to reduce cost, other actions such as asset optimisation, a facility relocation, or renegotiation of agreements with third party suppliers might be an easier, faster and less disruptive course.
 
2. Do you understand where value is created and how to enhance it within your organisation?
This question contains many others. Which part of the organisation contributes most to the realisation of our strategy? Which processes are critical? Where are our critical talents? Too often, people see organisation design as the way to fix many business problems. But the complexity of the remedy may be larger than they imagine, and the value it unlocks may be smaller. So be realistic about goals – and unintended consequences. For example, cutting costs in back office areas may increase the administrative burden on front office staff and downgrade the customer experience, which ultimately destroys value.
 
3. Do you have a clearly articulated strategy and business model?
Too many strategies try to accommodate everyone. That leads to vague statements and rosy promises. An organisation design that works needs a clear strategy that helps guide specific decisions. Leaders must be clear on the business model they desire, so organisation design can align processes, structures and roles with their strategy. Qualitative or intuitive justifications for change can feel powerful, but they aren’t enough. A fact-based approach will illustrate any misalignment between the current and desired organisational state and lends substance to the case for change. It’s also vital not to focus so much on long-term strategic ambitions that you risk making near-term implementation more difficult. It is often easier to focus on interim states that are easier to understand and achieve – and, where possible, to build a degree of flexibility that helps the organisation deal with uncertainty. This is particularly important in organisation with a high likelihood of divestment or M&A activity.

4. How ambitious do you want to be, and how far are you prepared to go, with organisation design?
Once an organisation’s leaders define the strategic imperatives that underpin their decision to pursue reorganisation, they should consider the amount of change they are comfortable introducing. That depends in part on the documented core capabilities that support the change strategy. How ambitious can the future vision be? Which areas need immediate intervention, and what changes can be deferred? In the end, design change is about managed disruption – driving for ambitious change in areas that promise disproportional returns, while saving energy in other areas that can benefit from more time and deliberation. Every organisation answers these questions differently. One company might begin with radical shifts to new service delivery models in back-office functions. Another might start at the source with core operational or ‘business’ functions. New organisational forms are being introduced on a regular basis, but that doesn’t mean the newest and shiniest thing is the right one for you. Whether these new organisational models or more traditional frameworks are appropriate for your business boils down to your strategy and how ambitious you are in your goals.

5. Are you clear on the scope, approach, tools and the pace of the project?
Organisational design is about more than structure charts. Getting from the status quo to the desired end state requires a deliberate, carefully sequenced design plan, and that starts with crystal clarity on scope. The senior leadership team should have open discussions about the breadth (some functions or all functions?) and depth (how far down to design?). For example, some organisations prefer analytics, benchmarking and peer practices, while others want an inside-out view that builds from internal consultation and consensus. Similarly some organisations prefer a highly automated design experience with interactive visualisation tools, while others look for simple one-on-one advice. Regardless of the methods and approaches selected, a carefully designed plan that integrates milestones, dependencies and broader transformation objectives is essential. Finally, the speed of the project creates a trade-off: Going too fast can mean too little engagement and consequent downstream challenges. Going too slow risks too much disruption.
 
David Brown is the Human Capital lead partner at Deloitte Consulting.  He has over 30 years’ experience in the Human Capital space in both corporate HR and advisory roles.

This article originally appeared in MPA's June Business Strategy supplement but has been shortened to make it suitbale for web publishing.