Rather than viewing organizational redesign as a one-time project, HR and business leaders should embrace it as a continuous, strategic effort.
By Riley Smith
The marketplace is shifting faster than ever, with supply chain disruptions, digital transformation, and accelerating AI adoption pushing leaders to rethink how their organizations are structured—and whether they are optimized for performance. HR and business leaders are looking inward and asking tough questions: What KPIs were missed last year, and why? Is the the right strategy, the right talent, and the right technology in place? And is company culture enabling or getting in the way of success?
An organizational redesign is an opportunity to align strategy, processes, and culture to create fluid systems and structures. In reality, though, about 80% of organizational restructures fail to deliver the expected results. Too often, efforts focus on drawing new organizational charts rather than addressing—or simply considering—the underlying factors that drive sustainable change.
For a redesign to be successful, HR leaders need to evaluate all the elements that influence business performance through nine levers of organizational redesign. These levers function like a carefully orchestrated home renovation, where each decision impacts the final result. Nobody would upgrade their kitchen without considering how it connects to the dining room or install new floors without addressing an issue with the foundation. Similarly, in organizational redesign, adjusting one lever without considering its impact on the others can lead to misalignment. And as with a remodel, scale is important when considering what to adjust; the first four levers below really beget a large remodel, whereas the last five are typically part of a smaller-scale update.
Here’s a closer look at the nine levers leaders can adjust to create a fluid organization.
- Build a strategy and drive alignment with existing short- and long-term plans. The value an organization delivers, the products and services it offers, and the market share it goes after can change over time. That’s why it’s important to start any organizational redesign by ensuring that short- and long-term strategies match up the organization’s purpose and mission. This means assessing market conditions, determining competitive advantage, and evaluating bets for the future.
- Design criteria and stay purposive during the design process. Before beginning to put organizational charts together and talking about the new way people are going to work together, HR leaders need to define the five to eight non-negotiables the new organization will be designed around. For example, the organization may lean toward automation, prioritize a cost-neutral reorganization, or prize customer centricity—whatever it may be, the design criteria should serve as guidelines for decision-making and trade-offs during the redesign process.
- Map capabilities and articulate what organizational capabilities are needed to deliver that strategy. Every organization has key capabilities that define its market position. A tech company that relies on data-driven decision-making, for example, may decide to prioritize investments in engineering and data science. What is the company best known for? Whether the organization is driving toward operational excellence in supply chain management, cutting-edge product innovation, or superior customer service, HR and business leaders need to identify the capabilities that are core to the organization’s competitive advantage and ensure that they are properly resourced and supported through the redesign.
- Make decisions about organizational structure that are rooted in strategic objectives. When evaluating the type of structure, resourcing requirements, operating roles and responsibilities, governance, or job architecture, assess whether a new structure would help deliver on the redesign strategy. One major retailer, for example, wanted to shift from a regional structure to a centralized model to improve consistency and efficiency in merchandising—a change that required it to realign decision-making authority and communication flows. As the retailer quickly realized, how leaders organize will involve tradeoffs, so ensure that the company is considering business goals, customer needs, and operational complexity.
- Define the service model and understand the approach for interacting with and serving internal or external customers. HR and business leaders need clarity on how different functions support each other and serve customers. Whether it’s an internal service model for HR and finance or an external one for customer engagement, defining how teams interact ensures smoother operations and a more cohesive experience for employees and clients alike. A software company, for example, might redefine its customer support structure to include proactive account management rather than just reactive troubleshooting. This shift will require changes in staffing, training, and performance measurement to align with the new service approach.
- Design key role attributes to align the right talent to support functional objectives. As HR and business leaders assess the organization, they may find that the strategy is good, the capabilities are on target, and the structure is sound. It might come down to this: Are they asking your people to do the right things? And are they being managed and measured on the right things? Even within the same industry, roles can vary significantly across companies—for example, product managers at Facebook, Apple, and Airbnb may have different day-to-day, week-to-week, and quarter-to-quarter responsibilities, and these roles should reflect the company’s priorities. Define expectations for key positions to ensure that talent is being used effectively. This means detailing responsibilities, decision-making authority, and success metrics so employees can work with clarity and purpose.
- Establish governance and determine how teams, functions, and other units will collaborate to make strategic decisions. A well-designed organization isn’t just about hierarchy; it’s about how decisions get made. Effective decision-making requires not only having the right people in the right room but also sharing information in a way that allows people to make decisions on their own. Governance structures define who has authority, how risks are managed, and how teams collaborate across functions and geographies.
- Define and optimize how technology drives work outputs. As the business grows in complexity, so do its technological needs. Optimizing tech depends on the company’s maturity relative to its peers. But as with the other levers, technology doesn’t exist in a silo. Starbucks is one well-known example. While originally designed as a brick-and-mortar gathering place, the company recognized a shift in consumer behavior and embraced digital innovation, particularly through its mobile ordering app. But the move to mobile ordering wasn’t just about technology. It transformed how Starbucks operated, impacting everything from service models to staffing and store design.
- Engineer, map, or update the core processes that enable leaders to deliver value to customers. Restructuring an organization without reengineering processes is like remodeling a kitchen and reinstalling old cabinetry. HR and business leaders must evaluate workflows, eliminate redundancies, and optimize handoffs between teams. Lean methodologies can help identify inefficiencies and improve overall performance.
Turning Assessment into Action
When it comes to organizational design, perfection is a myth. No Fortune 50 company—or any organization aspiring to be one—remains static. The best-performing organizations continuously adapt, shifting shape like an amoeba to survive and thrive in changing market conditions. This adaptability isn’t an accident; it’s a direct result of leaders actively pulling the right levers at the right time.
Rather than viewing redesign as a one-time project, organizations should treat it as a continuous, strategic effort—one that considers all nine levers to ensure sustainable change. Strategy informs structure, capabilities shape technology decisions, governance clarifies decision-making, and service models define how value is delivered. By regularly assessing and fine-tuning these interconnected—though not necessarily sequential—elements, companies can create an organization that is resilient and positioned for long-term success.
Riley Smith is senior director at Propeller.
