The Impact of Ineffective Organizational Design

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Former Major League Baseball player and manager Yogi Berra once said, “If you don't know where you are going, you'll end up someplace else.”

We often think about Berra’s quote when we are leading a strategic planning process, but perhaps it applies even more to organizational design.

Strategic planning gives you a vision, road map, direction. Organizational design gives you the pathway to get there. The strategy outlines the organization's goals, priorities, and the approach to achieving its mission, while the organizational design encompasses its structure, processes, and culture. When these aspects align, the organization operates seamlessly towards its objectives, with each component reinforcing the other. When they don’t align, it can lead to a myriad of challenges that hinder effectiveness and long-term success.

All too often, organizations create strategic plans, but neglect to analyze whether they have the organizational design—the talent, systems, and culture to achieve the plan.

In many ways the organizational design analysis is harder—it involves people. We are not talking about ideas and goals—we are talking about the people who have formed habits in executing their work. Those habits (processes, culture, systems) may actually be good, but they may not be what we need to realize our new plan. Requiring humans to change is difficult, so often we don’t.

We allow our organizations to keep operating like we always have, and this can be a fatal mistake.

Recently, I have watched two nonprofits take divergent paths in organizational design. The first essentially ignored it. I share their story as a cautionary tale:

Nonprofit A

The pandemic caused an increase in demand and also brought an increase in funding. An influx of government dollars allowed them to hire new program leaders and they worked hard to provide the new and expanded services their growing client base needed. As they chased the demand, they did not change their systems for intake, tracking outcomes, or their fundraising. They were working too hard and too fast to notice the impact of growth on their culture.

While their program mushroomed, their organizational design was status quo. Fast forward from 2020 to 2024, they are on the brink of closing their doors.

Although budget forecasts showed that they could not sustain the program growth without the government funding, they made no adjustments to their organizational design to achieve revenue diversification. Their board was thrilled with the program expansion, but largely disengaged from the budget conversation (which could be an entirely separate blog). From 2020-24 their growth created silos across the organization. Their collaborative culture dissolved. They were too disconnected to see the impact. The financial state caught most of the staff by surprise. It surely caught their clients by surprise as programs are coming to an end.

Now, they a looking for a partner, an opportunity to merge with a healthier organization. Their prospects are slim. They have little to offer and no leverage at all. It is not pretty and unfortunately could be a story we see repeated as pandemic funding ends and donations are flat or perhaps declining.

Nonprofit B

To end on a happier note, I will share another organization’s story.

Their new strategic plan required a shift from a traditional model to a community-centered model. Instead of having a team of folks in the office, they realized their plan required their team to be in the community, convening conversations in the evenings and on weekends in community centers and gyms. They no longer needed a big office.

Their plan required a change to their structure, job descriptions, and employee policies to support their new community focus. The organization-first culture would be replaced with a community-first culture. Not everyone in the organization embraced it and not everyone had a natural place in the new structure. It wasn’t easy, but they did it anyway.

They worked hard to match their organizational design to their strategic plan. Their vision is not yet fully realized, but they have a clear path to get there.

What will 2024 be like for your organization? Will your current organizational design lead you to the vision you have cast? Is it time to align your organizational design to your strategic plan? Our team of design experts can help. Let’s unlock the potential of your organization, together.

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Shannon Williams is the Managing Director of Armstrong McGuire and leads the team of Senior Advisors who help our clients with organizational development, leadership development, and fundraising.

Want to learn more about how organizational design has been implemented? Read about Children’s Home Society’s approach in aligning their organizational design to their bold strategic plan.