What have been the most significant organizational design trends in the last few years?
Breaking with tradition by embracing the hybrid work model
The COVID-19 pandemic accelerated the adoption of hybrid work, redefining the traditional workplace norms. The 9-to-5 model, established in the 1920s, no longer aligns with modern work realities. Many organizations now embrace remote work and flexible schedules, having reconsidered the need for employees to be physically present in an office. This shift also prompts a reevaluation of physical workspace, prioritizing flexibility to support diverse work styles. Obviously, immense technological advancement played a role as well.
Source: https://www.statista.com/chart/27260/is-9-to-5-working-in-2022/
Shift towards agile and adaptive structures
Organizations are moving away from static, hierarchical models and embracing agile, adaptive structures to respond more quickly to market disruptions. Key components of this shift include:
- Agile pods: Smaller, self-managing teams or pods that can quickly address specific business needs, enabling timely responses.
- Team topologies: New team types, such as enabling, platform, and complicated subsystem teams, are being created to address specific organizational needs. This approach strikes a balance between employee empowerment and leadership guidance.
- Dedicated transformation teams: Teams focused solely on driving transformation enable faster execution of change initiatives.
- Test-and-learn organizations: Parallel structures that foster a culture of continuous learning and innovation by encouraging experimentation at all levels.
A central theme in these agile structures is enhancing organizational efficiency while fostering iterative and adaptive processes. While there may be an initial investment required to implement these systems, they eliminate the recurring setup costs commonly seen in traditional organizational design approaches.
Emphasis on people over process
Another key trend is the increasing emphasis on people over process. Organizations are redesigning roles that allow employees to thrive and contribute, rather than forcing them to adjust to preset roles.
This shift manifests in several ways:
- Employee empowerment: Creating environments where employees feel valued, empowered, and motivated to achieve their full potential.
- Skill-based organizations: Designing roles and structures based on skills and competencies rather than traditional job titles.
- The rise of “learning organizations”: Many organizations now actively encourage and support ongoing skill development, fostering a culture of knowledge enrichment among employees.
What role does technology play in shaping organizational design, and how are companies leveraging tools to facilitate this?
Technology plays a critical role in enabling organizations to become more adaptable and fluid in achieving their strategic goals, with specialized tools enhancing visualization, decision-making, and efficiency.
Visualization and decision-making
Advanced organizational visualization software provides clear representations of organizational structures, people, and skills, enabling organizations to better understand their workforce and make informed decisions. Without these tools, companies would rely on ERP plugins, in-house tools, or non-specialized visualization apps such as Tableau to understand the people and skills in their organization. Adding this additional layer between data and end users necessarily creates inefficiencies.
By contrast, next-gen, specialized org design software offers capabilities essential for:
- Understanding the complexities of organizational structures;
- Making informed decisions about organizational design;
- Identifying areas of inefficiency;
- Highlighting potential risks (e.g., lack of succession planning, extremely wide span of control, etc.); and
- Supporting development of more effective organizational designs.
Emerging role of AI
Artificial intelligence (AI) is becoming a transformative force in organizational design. AI-powered tools analyze vast amounts of data to identify patterns and trends, provide real-time valuable insights, and facilitate skill analysis and planning. While still in its early stages, AI’s potential to revolutionize organizational design is immense, offering practitioners real-time insights and actionable recommendations for skill analyses and organizational planning.
Challenges and considerations
Implementing new organizational designs requires careful planning. Among the considerations that org design professionals must address:
- Balancing empowerment with leadership: Finding the right balance between empowering teams and providing adequate leadership, coaching, and support, while also ensuring proper governance with clear decision rights.
- Addressing competing priorities: Managing competing priorities effectively, especially when introducing dedicated transformation teams.
- Defining clear roles and responsibilities: Establishing clear roles and responsibilities to avoid confusion and conflict, especially in fluid and adaptable structures. This can also mean accounting for responsibility gaps that can fall between teams.
- Data integrity: Ensuring the accuracy and completeness of data for reliable and effective organizational design.
- Technology as a tool: Recognizing that technology is an enabler, not a standalone solution, and using it thoughtfully and strategically to achieve desired outcomes.
- Human-centered approach: Prioritizing how technology can create a workplace that supports and empowers employees.
What will be the next major shift in organizational design over the next five years?
Data, analytics, and AI as game-changers
Data analytics and AI are expected to become even more central to organizational design. On the macro level, organizations that effectively leverage these capabilities will be better positioned to identify workforce strengths and gaps, optimize organizational structures, and swiftly and effectively adapt to both sudden and gradual changes. AI-powered tools are not only expected to enhance practitioners’ efficiency and effectiveness but also likely create new processes and roles within and beyond the organizational design field. For all the changes that AI could bring to organizational design and its practitioners, the panel unanimously agreed that AI will not replace employees. Instead, employees who effectively use AI will replace those who do not. As an example, HR specialists already use AI to streamline tasks such as CV screening – the specialists aren’t replaced, but they become more efficient.
Rise of expert generalists
As organizations adopt more fluid and adaptable models, there will likely be a rise in HR/org design expert generalists. These individuals possess a breadth of knowledge and skills across multiple domains, allowing them to meet a broader range of organizational needs. For example, in addition to being well-versed in organizational design, these individuals would also be proficient in data analysis and interpretation, digital transformation, and/or be able to integrate the latest AI technologies into their work of designing organizations. Critically, experts from other teams (i.e., non-HR departments) would also have to develop similar “side” skillsets that make them more proficient at (or at least able to facilitate) organizational design in addition to their key responsibilities. This shift would blur traditional reporting lines but ultimately benefit the organization as a whole. This wider trend is sometimes described as the need to develop “t-shaped skill profiles”.
Growing need for organizational design expertise
As a recognized profession, organizational design is still relatively new. However, its growing importance is driving demand for org design professionals, as well as advanced technology that facilitates their work. It’s worth noting that this growing demand of org design skills dovetails with the rise of in-house organizational design teams. Increasingly, companies and other organizations are accepting that change is constant and are adopting the approach of having full-time org design teams on the payroll as opposed to hiring external consultants to lead org transformations at irregular intervals or singular moments.
Conclusion
The evolution of organizational design towards more agile, flexible, and technology-driven models is critical for companies to thrive in today's dynamic business landscape. By embracing hybrid work models, agile structures, and leveraging technology effectively, organizations can enhance their adaptability and drive sustained success.
Looking ahead, it's clear that organizational design will continue to evolve, shaped by technological advancements, changing workforce dynamics, and the increasing need for agility. Organizations that effectively navigate the fine line between adopting technological innovation and maintaining human-centered approaches will be best positioned to succeed in the business environment of tomorrow. Their focus should remain on creating org structures that not only drive business outcomes but also foster employee engagement, growth, and fulfillment.
Effective organizational design is a journey, not a destination, and achieving it requires continuous learning, adaptation, and openness to new ideas and technologies.
And with that, Nakisa would like to conclude this blog by thanking Hamish, Ian, Sean, and Audrey for their thought-provoking panel discussion!
In the meantime, if you’d like to learn more about how to do the most effective organizational design possible, contact us today!
