Organization Design and HR Analytics

Organization design is a fundamental part of what makes an organization successful, and a strategic business activity that I find exciting and interesting. As a freelance organizational effectiveness consultant, my work with client organizations tends to be principles-led, evidence-based and outcomes-driven. I enjoy working with organizations that are consciously driven by their principles, for example, an organization that seeks to put ethics at the forefront of their decision-making, or perhaps deliver a service based on a set of values, or high-performance, or seeks to transform itself into an efficient and effective operation.

There is a sense of purpose and meaning in a principles-led organization which I find incredibly appealing. This type of organization can bring out the best in their people by articulating a clear mission, strategy, and objective. I also find such organizations bring out the best ‘consultant’ in me, ‘principles-led, evidence-based, and outcomes-driven’ in my approach. For me there is a clear correlation of strong performance between organizational purpose and individual performance. Whilst I use my professional expertise to advise my clients, I also give equal weight to accurate and reliable data inform organizational decision-making, and to delivering outcomes for my client.

Organization design is a great opportunity to influence the shape and direction of an organization, perhaps towards one that is principles-led. I like to be involved from the start when a need for organizational design is established through to the transition of the organization from the current to a future state. Organizational design appeals to my sense of accomplishment and a desire to make a difference in individual livelihoods in the workplace and help my clients to achieve organizational success through the creation of a new organization or the adjustment of an existing organization.

An effective approach to organizational design requires an in-depth understanding of the current organization, i.e., its people, structure, processes, ways of working, technologies, and culture. One of the best ways to get a good grasp of an organization is to gain insights about the organization from data. An organization is nothing more than a living embodiment of a strategy. That means its ‘organisational hardware’ (i.e. people, structures, processes, technologies and governance) and its organisational software (values, norms, culture, leadership and employee skills and aspirations) must be designed exclusively in the service of a specific strategy (Ron Carucci and Jarrod Shappell, Design Your Organization to Match Your Strategy, Harvard Business Review, 6 June 2022).

Organization design is a business practice that focuses on organizational hardware and software with the aim of infusing an organization with a sense of purpose and meaning and developing the right organizational structure to achieve its purpose.

Organization Design is a systematic and holistic approach for aligning and fitting together all parts of an organization to achieve its defined strategic intents (Jeroen van Bree. Organization Design: Frameworks, Principles, and Approaches. p.26). ‘Alignment’ in the context of organization design is not just about communicating priorities and cascading goals from top to bottom through intense communication campaigns, performance management, and shaping budgets to support priorities. The problem is that such practices leave alignment to individuals and ignore the systematic organizational factors needed to make strategy work (Ron Carucci and Jarrod Shappell, Design Your Organization to Match Your Strategy, Harvard Business Review, 6 June 2022). When it comes to executing strategy, alignment means configuring all of the organization’s assets towards your strategy and making sure there is no confusion about what each part of the organization does to bring its purpose and meaning to life.

• reviewing what an organization wants and needs (stakeholder needs)
• analysing the gap between where it is (current state) and where it wants to be (future state)
• designing organisational practices that bridge that gap (organizational hardware and software)

It often requires a review of the entire organisation and its internal and external context to decide what does and doesn’t work. Organizational design is often referred to as organizational redesign. In most cases there will be an existing organization, the design of which we aim to improve, and in some cases, there will be no organization, the design of which we aim to build.

The conditions are also referred to as the internal attributes of the organization itself. These are typical triggers for reviewing the design of an organization and making the necessary changes to eliminate dysfunctional behaviors or to avoid them altogether.

Organization design is usually a business-led activity; however, it is also entirely possible for the practice to be led by HR to drive business performance. The value of HR taking the lead is that the practice is more likely to include organisational culture, capabilities, values and relationships. It takes a systems approach to understand these elements and how they influence behavior and performance. HR’s role in facilitating change in organizations through a holistic and humanistic approach puts people at the heart of the process (van Bree, Jeroen. Organization Design: Frameworks, Principles, and Approaches, p.26).

Ultimately, the aim of organizational design is to match the way the organization is organized with its mission, strategy, and principles and to create an organization in which its people can thrive and make a difference.

Workforce data is typically gathered from an organization’s systems such an ERP or HR system and from other multiple sources such excel, PowerPoint and active directories. The best approach is to gather the data through an automated process which eliminates the need for manual effort. Then the next step is to visualize and analyze the data in such a way that it provides immediate insights into the data. All of this is of course easily said than done. Many HR departments do not have access to modern data analytics and visualization technology, a major pitfall in the role of HR in organizational design. Too often HR is constrained by laborious workflows which present workforce data in static excel sheets and diagrams. Clearly, a lot of effort goes into collecting the data but it also limits HR’s potential as a trusted and credible partner. Data has greater value when it provides analysis and insights.

Visualization of data is a great starting point to encourage insights-driven decision-making within an organization. It can be based on hard numbers (positions, spans of control, hierarchical levels) but it can also include soft elements (skills, staff satisfaction levels, culture indicators). This helps decision makers identify the existence or scale of a need or problem, possible causes and potential solutions.

The visualization and analysis of data in organization design typically involves:

• Visualization of real-time Organization Charts
• Visualization of workforce data: Positions, Headcount/FTE, Grades, Hierarchical levels, Spans of control, total staffing costs at an organizational, functional, departmental, team or individual level, staffing numbers at an organizational, functional, departmental, team.

The ability to drill down from an organizational to individual level enables decision makers to see the scale or nature of a problem from multiple perspectives. Taking an insights-driven approach can provide decision makers with organizational factors or objective indicators to reveal how well the organization is doing and track improvements and also quantify the scale of a problem. This can be used to justify the need for a bigger picture organization design exercise.

HR Analytics also ensures that organizational decision-making is based on fact rather than outdated insights, short-term fads, natural bias, outdated wisdom or superficial quick fixes. It creates a core set of accurate and reliable knowledge and as a result, a more trusted HR profession.

It gives more gravitas to HR, leads to increased influence on decision makers and has a positive impact in work, specifically:

As you already know, this type of impact aligns to my own sense of accomplishment. It may surprise you to hear that HR Analytics can play such a purposeful and meaningful role for organizations and their people.

The biggest challenge is to translate organizational design principles into target criteria. My approach during the early stages of organization design is to listen carefully to what my client is seeking to achieve. I try to spot the explicit and implicit assumptions that will shape the new organization, and then create or configure an HR Analytics dashboard to visualize and analyse those assumptions. I often include the client in the configuration of the dashboard. This helps to engage the decision maker in the output of the dashboard and in turn influence their decision making.

Three things come to mind when I reflect on what works well in my approach to organization design and brings out the best in me as ‘principles-led, evidence-based, and outcomes-driven’ organizational effectiveness practitioner:

Ingentis org.manager combines People Analytics and Org Design to uncover the full potential inherent in people and organizations. With a foundation in org-charting, Ingentis off full data-driven evaluation and forecasting methods to optimize HR practices and organizational development.