Organizational leaders are getting organizational structure wrong. Not only are they failing to start with the right focus point, they aren't applying these eight steps along the way.
When organizations set out to do an organizational structure redesign -- whether to increase organizational effectiveness, respond to economic or market shifts, streamline operational efficiencies or better align departments -- the conversation almost always starts in the wrong place.
Why Most Organizational Structure Redesigns Miss the Mark
Executives and leaders often miss the mark with decisions around organizational structure. They lead with discussions around structure. They spend time (and money) evaluating whether they need a matrix, functional, process, network, customer-centric or divisional organizational structure -- as if choosing the right model is the primary question. It's not.
They miss the mark because organizational structure is not the starting point. Organizational alignment is.
The real question isn't which organizational structure to choose. It's whether the structure you design actually aligns with your organization's size, strategy, systems and mission -- within the context of its environment, technologies, culture, and people.
What Leaders Should Evaluate Before Changing Organizational Structure
Before making any organizational structural changes, leaders need to diagnose and analyze their current state to determine if the existing structure (or an alternative one) helps them achieve alignment.
The first question isn't about structure. It's about alignment. To do this, start with questions like these:
The organizations that get this right don't jump to solutions. They engage in strategic thinking and ask better questions first. And, they ensure their questions (and process) are grounded in how work actually gets done.
A thoughtful organizational structure redesign is less about selecting a model and more about understanding how work flows -- how inputs are transformed into outputs and outcomes, how decisions are made, how information moves and where friction exists.
The following eight considerations help leaders anchor organizational structure decisions in both strategy and within the context of their current operational realities.
8 Things Leaders Evaluate When Considering Organizational Structure
- Where are communication breakdowns limiting performance within the organizational structure?
Organizational effectiveness is achieved when leaders promote dialogue and collaboration across units, departments and divisions. This creates real understanding of how value is produced and where operational, service and financial inefficiencies exist.
A full-scale alignment assessment that spans structure, systems, processes, culture, situational dynamics, vulnerabilities and risks often reveals that the issue is not the structure itself, but how people operate within it.
Before simply assuming that a structural change is indeed necessary, it's important that executives objectively identify the true catalyst(s) driving the desire to redesign the organizational structure. If after conducting a proper alignment assessment you find that a organizational structure redesign is necessary, then so be it. But resist the temptation to modify the organizational structure without first conducting assessments for alignment. - What is advancing -- or impeding -- your competitive advantage?
Not all structural changes create value. The goal is to strengthen the organization's ability to transform inputs into outputs and outputs into value-added outcomes that stakeholders actually want.
This requires identifying, understanding and integrating core competencies and resources.
Where are the constraints?
What is slowing execution?
* What is limiting differentiation?
Organizations that align their structure to support how value is created are better positioned to sustain a competitive (and differentiated) advantage and deliver meaningful results. - What type of system best supports how your organization operates?
Organizations typically operate along a spectrum between mechanistic and organic systems. Mechanistic structures emphasize control, hierarchy and consistency. Organic systems prioritize flexibility, adaptability and collaboration.
The question isn't which is better -- it's which best supports your organization's culture, information sharing, workflow, social interactions and application of core competencies.
A mismatch between system type and operational realities creates friction regardless of how well the structure appears on paper or on an organizational chart. - How do interdependencies function -- and what do they cost?
No structure exists in isolation. Every design creates interdependencies that must be intentionally managed.
Leaders need to evaluate linking mechanisms, interdependencies and transaction costs across teams and functions. These relationships may be symbiotic -- where collaboration creates value -- or competitive, where misalignment creates friction and inefficiency.
Understanding these dynamics allows organizations to allocate resources appropriately, reduce unnecessary complexity and ensure that coordination supports performance rather than constrains it. - Are processes, systems and technologies aligned with performance?
Structure alone does not drive performance -- systems do.
Organizational leaders need to evaluate business processes, workflows and technologies against strategic priorities, performance objectives, time demands and financial and operational capacity. If performance metrics have not been established, they should be defined prior to any large-scale reorganization.
If metrics already exist, they need to be integrated and aligned to the systems, strategic priorities and predefined outcomes of the organizational structure redesign effort to ensure alignment between structure and performance measurement. - Where does duplication exist -- and where are the gaps?
Over time, organizations accumulate inefficiencies across roles, responsibilities and workflows.
A thorough gap analysis -- reconciling staffing workloads, competencies, tasks and activities against services, technologies, and organizational needs -- reveals if and where there exists any duplication of effort, misalignment and capability gaps.
This process clarifies where functions should operate versus where they currently operate, enabling leaders to streamline services and better align people, processes and systems. - How should decision-making be structured?
Structure shapes decision-making, but it should be designed intentionally -- not assumed.
Leaders should establish clear decision protocols and, where appropriate, develop decision-priority matrices aligned with strategic priorities, communication boundaries and service delivery expectations.
Key considerations include whether decision-making should be centralized or decentralized and whether it should follow a more mechanistic or organic model. Whichever approach is chosen, the structure must support and reinforce the desired decision-making culture. - Are spans of control and talent placement optimized?
Even the most well-designed structure will underperform if talent is not properly aligned.
Leaders should evaluate spans of control in relation to task complexity, functional demands and managerial capacity. Overextending supervisors or assigning misaligned responsibilities can undermine effectiveness and team performance.
Thoughtful workforce planning ensures that roles, responsibilities and reporting structures support strategy, systems, processes and leadership effectiveness.
Organizational Structure Is a Reflection of Alignment
Redesigning organizational structure is not primarily about structure -- it is about aligning strategy, systems, people, and environment in a way that enables performance.
When organizations move too quickly to restructure without fully understanding how work flows, how decisions are made, how interdependencies function and how value is created, they risk solving for the wrong problem.
But when leaders take a disciplined, analytical approach -- grounded in both strategic intent and operational realities -- structure becomes an enabler rather than a constraint.
The goal is not to modify an organization structure simply for the sake of change. It is to build a structure that supports how the organization actually operates, adapts to dynamic environments and technologies and sustains long-term performance.
Because the organizations that succeed are not the ones with the most complex or sophisticated structures -- they are the ones whose structures, systems, and people are aligned to work effectively together.