What is the difference between strategic and operational org design? Which one does my enterprise need?

Welcome back! This is the second blog in our series about modern organizational design. Last time, we talked about the rise of in-house org design teams. Today, we are exploring the ideal focus areas for in-house organizational design functions, contrasting strategic, large-scale, top-down (“macro”) work with the day-to-day operational adjustments (“micro”) managed by HR business partners (HRBPs) or line managers.

As organizations evolve, the need to differentiate between strategic and operational organizational design becomes increasingly immediate. This distinction is vital for optimizing efficiency and ensuring that teams can effectively respond to both long-term goals and immediate operational needs through delegation and tailored approval processes. It’s key to note that while the principles underlying organizational design always remain the same, their implementation varies significantly depending on the scope of the change (e.g., departmental change vs. an organization-wide change). So, let’s begin by defining what precisely we mean.

Defining strategic and operational org design

What is strategic org design?

Strategic organizational design refers to top-down, large-scale, long-term initiatives that align an organization’s structure with its broader goals and strategic initiatives. This type of design often encompasses significant projects such as departmental reorganizations, cross-functional integrations, the establishment of new business units, restructuring, and the integration of an acquired company. The focus is on ensuring that the organization is structured to support its mission and vision while also being adaptable to changing market conditions.

Strategic org design requires a deep understanding of the organization’s long-term objectives and the external environment in which it operates. This includes analyzing market trends, customer needs, and competitive dynamics to create an organizational structure that fosters agility and innovation. For instance, a company aiming to expand into new markets may need to redesign its entire structure to facilitate cross-departmental collaboration and enhance communication—shifting from a traditional top-town hierarchy to a flat reporting structure. As you may imagine, there is a method that this company should follow —a six-step process, as illustrated immediately below.

The six key steps in strategic organizational design

Here are what the six steps in strategic org design would look like in the context of the hypothetical above:

Step 1 - Determine goal: In the hypothetical, the goal is to facilitate cross-departmental collaboration and communication across regions.
Step 2 - Visualize current org structure and establish baseline: All reporting hierarchies and relationships are fully visualized with real-time accuracy so that the baseline from which the transformation must take place is established. This is done both to understand the full scope of changes that need to be done and to measure changes against following implementation.
Step 3 - Identify talent current state and gaps: A full reckoning of in-house talent and processes, and missing skillsets and policies is conducted.
Step 4 - Model and test scenarios: Creating what-if scenarios with projected impacts and ROIs in order to determine the best path to follow.
Step 5 - Deploy best scenarios: Execute!
Step 6 – Regular and periodic monitoring post-implementation: This is done to assess the progress and determine any adjustments that need to be made.

What is operational org design?

Operational organizational design deals with the day-to-day adjustments necessary to maintain efficient operations. These include minor changes such as reporting line adjustments, clarifying roles, merging similar teams, and other "housekeeping" tasks that ensure departments run smoothly. Operational org design is typically managed by HRBPs or line managers, who are more attuned to the immediate needs of their teams. By managing changes through appropriate approval processes, organizations can ensure that the capacity of in-house org design teams are preserved for more strategic initiatives.

The four steps of operational organizational design

Operational adjustments are essential for maintaining productivity and morale within teams. For example, if a department experiences rapid growth, minor adjustments may be needed to redistribute workloads or clarify roles among team members. While these changes are often less complex than strategic initiatives, they are crucial for enabling teams to operate effectively without disruption. Other use cases include temporary reporting structures when a manager departs or reassigning roles during parental leave. As these examples illustrate, the scope of operational org design is narrower, but its impact on the organization’s functionality is significant.

How does operational org design work in practice? Consider the following example. Imagine a Product team experiencing significant growth in the usage of its product. This surge requires the addition of more product managers to shepherd the refinement of key features. This, in turn, necessitates the implementation of operational organizational design to ensure the team adapts effectively to its evolving needs. The steps include the following, with the current example’s precise situation appended:

Step 1 - Create proposal: After reviewing their organization structure with modern org chart software, the product owner creates a new role on his team and submits internal candidates for the role.
Step 2 - Share, review, and collaborate proposal: The product owner shares and collaborates with HRBPs and other stakeholders the proposal they made to get feedback and to make adjustments as needed.
Step 3 - Approve proposal: The approval authority approves proposal following tweaks, if any.
Step 4 - Validate and deploy proposal: HR executes team change, and the product owner then monitors the process and the performance of the eventual hire, and determines whether they need to revisit this entire process.

Here’s a summary table of the two types of org design, strategic vs. operational:

Context	Strategic organizational design “Macro”	Operational organizational design “Micro”
Type of organizational challenge	Triggered by a change in strategy or a specific event (e.g., restructuring following a merger, reorganization)	Driven by ad-hoc events or proposals, addressing immediate management changes or minor team adjustments
Timeframe and scope	Large-scale projects lasting at least several months, involving multiple departments and numerous stakeholders	Ad-hoc events, requiring small interventions, completed within a short timeframe, to ensure agile and flexible changes
Level of organizational impact	Impacts the organization, or multiple departments, as a whole	Limited to one or two teams, often affecting only a few roles or positions at a time
Use case complexity	Geared toward complex use cases, such as organizational restructuring requiring multiple scenarios and active collaboration with executives and other stakeholders	Geared toward simple use cases requiring minimal intervention, such as updating reporting lines or addressing immediate workload concerns
Other names	Also known as top-down organizational design or macro organizational design	Also known as bottom-up organizational design or micro organizational design

The differences between strategic organizational design and operational organizational design

Role of the central org design team

The central organizational design team plays a pivotal role in balancing strategic and operational aspects of org design. This team should primarily focus on large-scale, strategic, org design initiatives while remaining agile enough to address operational needs, such as supporting and educating HRBPs, or other HR members, on a necessary basis.

Focus on strategic initiatives

By concentrating on strategic initiatives, the central org design team can work on long-term projects that align with the organization's vision. This might include developing frameworks for cross-functional collaboration or redesigning processes to enhance efficiency across departments. For instance, if a company aims to improve its customer service delivery, the central team may lead efforts to redesign customer-facing roles and integrate technology solutions that streamline communication between departments.

Agility in addressing immediate needs

While the primary focus is on strategic work, it is equally important for the central org design team to remain responsive to immediate operational needs. While our perspective is that operational org design should be primarily delivered by other HR roles, such as HRBPs, there may be occasions where more specialized support is required. Additionally, the central org design team may wish to serve as an approver for any operational changes to ensure consistency in organizational structures and other important aspects, such as job titles. By remaining agile, the central team can provide timely support that prevents disruptions in operations while continuing to drive long-term strategic initiatives.

Operational org design – empowering HRBPs and line managers

Operational org design should be managed at the departmental level, empowering HRBPs and line managers to handle minor adjustments within their teams. This decentralized approach allows those closest to the work to make informed decisions about necessary changes. However, as noted, central org design teams can still play a role as a final approver or collaborator where support is required.

Empowering HRBPs and line managers with operational org design responsibilities offers several benefits for organizations:

Increased responsiveness: Line managers and HRBPs, being closer to the daily operations, can make quicker decisions about role adjustments or reporting structures, enabling faster responses to changing business needs.
Enhanced ownership: Providing managers with authority over operational changes fosters a stronger sense of accountability for team performance, engagement, and morale, driving better outcomes across departments.
Strategic focus for central teams: Delegating operational tasks frees the central org design team to concentrate on strategic initiatives that align with the organization’s long-term goals, ensuring a clear and consistent direction.

For example, during a high-priority initiative like a product launch, empowering line managers to both begin the process and draft meaningful proposals to adjust roles or reallocate tasks without waiting for support from specialized HR functions ensures swifter execution. To be clear, this empowerment does not eliminate the role or importance of HR specialists, but rather removes roadblocks to adaptable and agile responses to skills needs. Overall, this facilitation helps the organization maintain its momentum during critical periods.

Example of operational org design in action

There are examples aplenty of how strategic organizational design works in action, so instead, we’ll focus on how operational org design works in practice through a common use case. Hilda, who as an HRBP at a large tech company, is assigned to work with several departments so that, among other benefits, the HR department and other planning functions can have better insights into the organization’s workforce health and functioning at a more granular level. Over the course of her work, which includes regular touchpoints with heads of teams, Hilda both concluded and was made aware of a challenge in one of the teams she works with. Alston, one of the quality assurance managers, was struggling with an overly large span of control-managing 19 direct reports. Hilda had many indications already this was a potential problem, and upon investigation and discussion with Alston, she confirmed that there was indeed an issue that needed addressing. As you can see from the first org chart below, Alston's direct reports are so numerous, they can't even be visualized fully without zooming out.

Meanwhile, another manager in an adjacent department, Alexander, had a much smaller team. From her interactions with Alexander and other associated staff, Hilda knew Alexander was adaptable and had many successful collaborations with Alston on challenging projects. 

Hilda is in the position of having both knowledge of a staffing problem along with a potential way to address the challenge. And so, using Nakisa's interface, Hilda created a change proposal to redistribute some of Alston’s direct reports to Alexander's team.

Hilda used the tool to create a hypothetical org chart that visualized the proposed changes, making it easier to evaluate the impact on both teams. 

She then shared this proposal with the relevant stakeholders, including Alston, Alexander, and their department head thanks to the collaborative chat features available directly from Nakisa’s Operational Org Design UI. Approvers were able to review the proposal in real-time, provide feedback, and ultimately approve the changes.

Once approved, the new structure was seamlessly implemented into the company's HR systems, thanks to Nakisa's native bidirectional integration with their ERP/HRIS. The entire process—from identifying the issue to implementing the solution—was completed in under a week, significantly improving team efficiency and manager effectiveness.

Let’s summarize Hilda’s work in terms of the operational organization design steps highlighted above:

Step 1 - Create proposal: Hilda reviewed the org charts to both validate and confirm information on a challenge, in this case, a span of control problem. She then created a proposal.
Step 2 - Share, review, and collaborate: Hilda shared the proposal to Alston, Alexander, and their boss for feedback.
Step 3 - Approve proposal: After all feedback and adjustments are made, Alston and Alexander’s superior approved the proposal.
Step 4 - Validate and deploy proposal: Hilda then executes the team change in close collaboration with Alston and Alexander. She then monitors the process and the performance of the new team makeup, and determines whether they need to revisit this entire process.

Before adopting Nakisa’s Workforce Planning Portfolio software, such a process would’ve required hours of investment, whereby Hilda would’ve needed to create the proposal in PowerPoint, organize meetings to present the changes, and spend additional time updating the HRIS using various Excel templates. By using a single operational organizational design tool like the Nakisa Org Design Suite. Hilda would reduce the total time to deployment by more than 50% (based on expert estimates of time savings).

Conclusion

Finding the right balance between strategic and operational organizational design is essential for building a robust and agile organizational structure that can both achieve long-term goals and meet smaller-scale immediate challenges. By clearly defining roles, the central org design team can focus on high-level strategy, while empowering HRBPs and line managers to handle day-to-day operations—leading to enhanced efficiency and alignment across all levels.

This balance not only improves performance but also fosters an environment where employees feel empowered and engaged in their work. As organizations continue to navigate complexities of today’s business landscape, establishing clear distinctions between strategic and operational responsibilities will be key to sustaining growth and adaptability.

Ultimately, organizations that adopt this dual approach will be better positioned to respond effectively to both immediate challenges and long-term opportunities in an ever-evolving marketplace. If you’re interested in learning more about strategic and operational org design or exploring organizational design software that enables you to implement both, feel free to reach out to us!