Traits of an Organizational Structure Designed to Promote Employee Engagement

Why an Organizational Structure Designed to Promote Employee Engagement Matters
Findings from our organizational culture assessment tell us that most employees feel like their companies are in a constant state of organizational flux driven by the accelerating pace of organizational change and never-ending industry disruption.  Sadly, most research points to less than 25 percent of organizational restructurings producing the desired results.  When employees are unclear about their strategic priorities or feel like decision-making is frustrating, their level of employee engagement plummets.

How We Define Organizational Structure and Redesign
Organizational structures outline how specific activities are handled and by whom in order to realize a company’s strategic objectives. Organizational redesign involves changing how work gets done.  Done right, organizational design entails the thoughtful integration of organizational structures, systems, processes, practices, roles, and belief systems to support the desired ways of working. Done wrong, organization structures stifle innovation, collaboration, and strategy execution.

When an organizational design is aligned with a company’s people and business strategies, everyone is primed to execute and deliver them together with higher levels of workplace transparency, cultural collaboration, and organizational accountability.

A Note About Hierarchical Organizations
For a time, hierarchical organizations had a bad rap; they gained a reputation for squelching creativity and silencing differing opinions. More recently, however, studies show that the “right” kind of hierarchy creates the necessary clarity to help teams make better decisions faster.

One study of the National Basketball Association (NBA) found that organizational hierarchy is particularly beneficial for interdependent tasks (e.g., basketball) but can harm team performance for procedurally independent tasks (e.g., baseball). So, if your strategy requires the cross-functional collaboration and expertise, hierarchical clarity and differentiation can lead not only to better performance, but also to improved employee engagement through more cooperative and mutually beneficial relationships.

The Undisputed Value of Engaged Employees
Our employee engagement survey data shows that engaged employees drive 8% greater productivity, 12% higher customer satisfaction, and 51% less voluntary turnover. It is clear that employee engagement has a great impact on business success.  To us, it feels like leadership malpractice to create an organizational structure that negatively impacts the loyalty, discretionary effort, or intent to stay of your top talent.

Key Traits of an Organizational Structure Designed to Promote Employee Engagement
We believe that, if thoughtfully constructed, an aligned organizational structure can absolutely encourage innovation, promote productivity, and support high levels of employee engagement. Just remember that each organization has a unique mix of strategies, cultures, and talent that must be treated accordingly.  There is no silver bullet org structure that will increase employee performance or engagement. 

In fact, Fortune magazine recently reported that other than having what they called a “flexible operating model,” the organizational designs of its Most Admired Companies varied greatly.  With that said, here are three overall key traits of a flexible org structure designed to promote performance and employee engagement:

1. Promote Leaders Based upon Expertise, Not Power Dynamics
   While power dynamics and workplace politics are pervasive in most corporations, they do not correlate to higher levels of performance or employee engagement.  It is easy for employees to become disenfranchised when leaders are selected based on things like dominance or relationships rather than a fair and unbiased leadership selection process.
   
   People should be promoted based on their technical expertise, organizational competence, and ability to lead.  Leading companies use research-backed leadership development simulations that combine proven psychometric tests (personality and learning) with detailed leadership insights against the specific leadership competencies required for longer term success.
   
   How fair and balanced is your leadership succession process in calibrating leadership performance and potential?
   
2. Pay Attention to How Organizational Context Shapes Behavior
   Organizational structures, processes, practices, and attitudes shape a company’s performance culture.  High performance cultures make it easy and beneficial to execute the company’s people and business strategies.  The most powerful cultures combine steady cultural and organizational design elements with agile elements that change in response to evolving market and employee needs.
   
   While each situation is unique, pay attention to the general design elements of autonomy, flexibility, and meaning. 
   
   Autonomy and flexibility at work is the opposite of micromanagement.  Autonomy and flexibility in terms of organizational design means designing structures, processes, practices, and expectations that give employees the freedom to decide how and when their work should be done. There is a direct correlation between the level of autonomy and flexibility that your employees feel and their level of motivation, performance, and fulfillment.
   
   Much has been written about the importance of creating meaning at work.  In a famous study of hospital custodial workers, some defined their job as cleaning the floor while others defined it as creating a safe place for patients.  Smart leaders define organizational contexts that create purpose, self-esteem, and professional satisfaction.
   
   Does your organizational context make it easy for people to find fulfillment, passion, and self-worth?
   
3. Increase Transparency and Clarify Decision Making Rights
   While not all information needs to be shared and some decisions should be made by a small group of executives, organizational designs that promote organizational transparency and decentralized decision making increase the timely flow of information, encourage knowledge sharing, and decrease the time to results. All three are aspects of workplaces with higher levels of employee engagement because they:
   
   – Promote close and trusting relationships with coworkers
   – Make it easier for employees to trust that leaders are setting the right course
   – Build team loyalty and responsiveness
   – Encourage open and honest communication throughout all levels of the organization
   – Inspire people to find new ways of solving problems and improving ways of working
   
   Do you have enough transparency and effective decision making guidelines for people to thrive?

The Bottom Line
How your company is organized has a major impact on what it’s like to work there.  Your organizational structure can directly promote or undermine employee engagement which can directly help or hinder your people and business strategies.

To learn more about how to set your people up for success, download The 3 Levels of Culture that You Must Get Right to Create Higher Performance