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The Conference Board Explains Why Companies Must Keep Reorganizing

Monday, August 20, 2007

Press release from the issuing company

Aug. 14, 2007 -- Companies are now being forced to constantly reorganize in order to stay competitive. A new report from The Conference Board pinpoints the implications of executing a new organization design, and the telltale signs that indicate organization problems. The report is based on discussions from recent Conference Board conferences and workshops, with senior executives from a wide variety of industries.
"Executives in many companies have come to accept a new reality,"says author Robert Kramer, Principal Researcher, The Conference Board. "Since organizations now experience constant change - driven by today's global and hyper-competitive environment — they need to build an internal design capability to reorganize on an almost continuous basis. To play this vital role, managers and HR professionals must develop a more robust, holistic definition of organization design and have access to a new set of tools."
The report identifies key warning signs that suggest problems in corporate organization design:
- A disconnect between the application of the company's resources and the work that is done and business outcomes (misalignment of structure to strategy).
- Significant disagreement regarding the company strategy and how it is executed.
- A steady increase in bureaucracy, cost structure, etc.
- Excessive layers of management.
- Investments in capital are made without corresponding investments in people.
- An excessive focus on internal company issues.
- Absence of employee engagement.
- Organizational inability to change to meet new strategic or operating needs.
- No set process for continuous improvement.
- Key stakeholder requirements are unmet.
Other suggestions to improve organization design capability:
- Become competent in organization design. Since organization design is a constant (requiring perpetual redesign), companies that do it well make it a core competency for their line managers.
- Encourage dialogue regarding organization design among all stakeholders so they understand how the elements of an aligned, flexible design can improve the performance of organizations, teams, and individuals.
- Fix the right problem. Careful diagnosis of issues leads to good design recommendations.
- Select leaders with the skills, attitudes and competencies required to operate effectively within a new organization design.
- Resist the temptation to introduce organizational practices used by others into your company. The alignment of many design choices has greater impact on an organization's success than a handful of "best in class"but misaligned choices. What other companies do informs - not necessarily answers - how management should resolve a design issue.




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