Introduction
This resource is commissioned by NHS England as part of its commitment to support the development of the NHS people profession. See more on the FutureNHS workspace for the NHS People Profession.
The purpose of this resource is to support those working in organisation development (OD) to design organisations which are aligned to strategy, effective and responsive to changing demands.
Intentional, high-quality organisational design builds stronger healthcare organisations. Indeed, a well-designed organisation ensures clarity of roles, accountabilities and decision making, enabling teams to work efficiently and collaboratively. It also supports the delivery of strategic priorities, improves staff experience and enhances outcomes for patients and service users.
Evidence shows that thoughtful organisation design - underpinned by OD principles - leads to better use of resources and stronger organisational performance. Those working in OD can play a key role in applying these approaches to create organisations that are fit for the future.
First steps in organisational design
Organisational design involves structuring resources and enabling people to create value or deliver a public purpose or commitment. We define it as:
'Arranging how to do the work necessary to efficiently deliver a business purpose or strategy in a way that fosters a positive patient and employee culture.'
The ‘organisation’ being designed may be as small as a local team or as large as an entire system. With the vast organisational change taking place in the NHS at present, its success depends in part on careful planning and design of the changes taking place. It requires specific skills, as emphasised by NHS England's NHS People Profession Map, published in 2023.
Why does this matter? Because good organisational design makes a difference – it builds employee engagement, improves organisational effectiveness and builds better relationships and communication. Staff are more innovative and services (and their people) are more able to adapt to changes. When structure and objectives are aligned, then all can understand their shared purpose and work together towards it.
“When you have the right people in the right roles, and those roles are clearly defined, the company operates more efficiently and effectively.” (Daniel Hall)
There are many ways to undertake an organisational design process, but a simple, effective method involves four steps:
Prepare – clearly agree the project parameters, stakeholders and design principles
Discover – gather crucial data, context and viewpoints, and develop the vision
Design – use your data to collaboratively design in detail
Evaluate – assess your impact and refine accordingly
This resource expands on these four areas, exploring good practice, common theoretical models and practical ways to apply this methodology.
Step 1: Prepare
This stage is undertaken as early as possible, ideally at the outset of the project, and with contracted time just for preparation before any actions are undertaken.
In reality, it may be that OD practitioners are brought in later in the process. However, this preparation stage remains crucial, no matter the time that practitioners are introduced to the project. The key here is contracting what preparation can be done, and providing clear explanations regarding the value of taking time at this stage.
'Context is king' – a key design principle emphasising the importance of understanding the environment in which change is taking place before embarking on seeking to change it. Indeed, the preparation stage is the most important step in the entire process, and taking your time here is essential.
Preparation involves three key elements:
1. Stakeholder engagement
Identify and meet the key stakeholders involved – this might be a working level contact/s at first, but make sure you also have a conversation with a senior colleague who is the decision maker. If the decision maker is too busy to meet you now, they’ll almost certainly be too busy to meet you in the middle or at the end.
The prompts in the table below can help you map your key stakeholders.
| Prompt | Notes | Actions |
|---|---|---|
| Who are my key allies and how can I keep them energised? | ||
| Which influencers can I involve visibly so others follow? | ||
| How can I approach blockers with curiosity, not defensiveness? | ||
| Are there ‘hidden connectors’ who link groups together? | ||
| Does my current network reflect diversity and inclusion? | ||
| Am I overlooking any informal influencers? | ||
| Who should I focus on first to build momentum? |
2. Contracting
Make a contract. In Peter Block’s book Flawless Consulting, he highlights the importance of contracting and of clarifying personal responsibility and accountability. He argues that the consultant needs to ask clearly, “what do you want from me?” and follow up with, “here’s what I want from you.” As a baseline, it should cover:
- goals and outcomes
- roles and responsibilities
- ground rules and boundaries
- logistics and resources.
Additionally, one key aspect of contracting, often overlooked, is negotiating aspects of the relationship between you and key stakeholders, for example, “how will we give each other honest feedback if something isn’t working?”.
Another vital consideration is agreeing endings from the beginning, “what would a good ending to this piece of work look like?”.
Once understood, ensure you have written and agreed your contract – making assumptions about what you’ve heard can lead to challenges later. The Institute of Organization Development has further detail on asking the right questions in the contracting phase.
3. Developing design principles
Develop design principles - write a set of principles which are the basis for your design. Think of the design principles as the guardrails. You’re specifying what good design looks like and it’s crucial to lock this down before you start designing.
One overarching framework to use is the British Design Council’s Double Diamond. In this, the designer starts narrow, expanding their thinking as they gather data, narrowing as they define the problem, before expanding it as they explore multiple solutions, then narrowing again as they settle on the solution and deliver it.
The British Design Council also outline a set of core design principles:
- put people first
- communicate visually and inclusively
- collaborate and co-create
- iterate, iterate, iterate.
Yours may vary depending on the project, organisation and your skills and focus – the key thing is to make them explicit and agreed by stakeholders. They are also most likely to be effective and accepted when developed collaboratively.
Design principles refinement
A useful way of clarifying the design principle and what it means is by articulating what the design should do, the rationale for that and what it means in practice. The example exercise below shows how you might approach this.
| The design should… | Rationale | In practice this means… |
|---|---|---|
*Example: | To improve team cohesion and reduce mistakes | Building meeting spaces, build communication |
Step 2: Discover
Once you have ‘prepared’, this step is about understanding the design your organisation is currently operating with. Start with what the work is and explore what currently works and what doesn’t. Your aim will be to alleviate any pain points but keep the aspects that are working well in your new design.
There are lots of ways you might capture this data; the knowledge mobilisation toolkit from NHS England has multiple different methodologies, including appreciative inquiry. There are several key activities in this stage:
1. Gather your data
Gather both qualitative and quantitative data - you really do need both to understand the organisation from a numerical point of view (number of people, costs, where the data suggests the problems are, etc) and qualitatively understand what’s really going on by involving people through interviews and focus groups.
There are a myriad ways of gathering data. The Leadership Academy’s ‘Developing Together’ outlines several methods including questionnaires, focus groups, and organisational capacity assessments. Integrating both ‘hard’ elements (e.g. structures) and ‘soft’ (e.g. culture) builds a strong data foundation.
Organisational capacity assessment
Capacity assessments evaluate an organisation's capability to perform core functions, solve problems and achieve their strategic objectives. It should be an ongoing assessment of an organisation’s ability to assess and react to future needs to maintain relevance and effectiveness over time. A capacity assessment is aligned with the McKinsey 7S model and tends to look at the following areas:
Aspirations - The organisation’s vision, mission and goals, what it wants to achieve.
Strategies - The strategy and performance targets, it is the ‘how’, how the organisation will achieve its goals.
Organisational skills - Includes the composition of staffing structures. For example, competence levels, skill mix, and the skills composition of senior teams.
Human resources - The collective capabilities and experiences of its people, it includes how talent is managed and retained.
Systems and infrastructure - Includes the systems the organisation has in place which aid decision-making and planning, such as technology, finances systems, HR systems.
Organisational structure - Refers to the levels of hierarchy within the organisation, levels of responsibility and accountability, the effectiveness of inter-team working.
Organisational culture - For example, shared beliefs and values, how these are ‘lived’ in the organisation.
2. Analyse the data
Find a way of making sense of the data you’ve gathered and the story it’s telling you and the organisation. You could use SWOT analysis for an easy way to identify the Strengths, Weaknesses, Opportunities and Threats. Or you could use a more specific organisation design tool like the Galbraith Star or the McKinsey 7S. Either way, ensure that you are analysing against your initial questions and purpose – maintaining the same model or framework throughout your gathering and analysis.
3. Develop a vision (and possibly a purpose/mission)
Write down the organisation’s vision for the future. There might already be one or you might need to articulate a vision statement for the first time. Depending on the context, a purpose statement or mission statement might be useful too; we don’t find you need all three every time.
One common challenge experienced by OD professionals seeking to undertake organisational design is that of influence; they may find themselves involved in the process late on, or not at all. The resource building the case for organisational development outlines some mechanisms to develop influence.
Step 3: Design
In this step, you’ll want to take what you’ve learned and create several design options, perhaps using an organising logics design tool to help. Remember this is about how best to organise to deliver, so you may want to consider governance arrangements, key processes, boundaries and interfaces, leadership and culture, as well as (or instead of) structures.
It’s also important to take the people out of the design at the start, you’ll get to that in the second half of the design phase. The key activities at this phase are:
1. Future thinking
Start by looking at mega trends in society and how they might affect the future around your work. This should build on your earlier data-gathering and can include a broad range of data sources, e.g. speaking with peers, and looking at long-term strategy and trends. It helps to break people out of focusing on the way things currently work and can open up new possibilities and insights.
You could use a PESTLE analysis to support your thinking.
2. Analyse activities
Capture the future activities your organisation will need to deliver. Start with the highest level ‘value stream’ of your organisation (the five to eight fundamental steps of activities through which you'll deliver value) then break these down into sets of activities beneath each step. Test these against current activities to check if you’ve missed anything and the key points of change you’ll need to pay attention to.
Value stream | Proposed activities | Current activities | Points of change | Required actions |
Example: Access and triage | Receive referrals, triage, prioritise, signpost | Multiple entry points, inconsistent triage, delayed responsiveness | Move to single access point, standardise triage | Introduce central referral process, agreed triage criteria, staff training, role clarity |
3. Draw out design options
Look at the ways you might logically group the activities you’ve identified. There will be multiple ways you could bring them together to deliberately create three or four options rather than just settling on one approach. Use boxes and arrows to explain how the different activity groupings will relate to each other (you could use an exercise like What I Need from You to help). You will also be starting to think about developing a target operating model.
Target operating models
A Target Operating Model (TOM) is a description of how an organisation intends to operate in order to deliver its strategy. It defines the future state: what the organisation needs to do, how it needs to be structured and resourced to do it, and how the different components relate to each other.
A TOM typically covers some combination of the following: the activities and processes that need to be carried out, how those activities are grouped and structured, the capabilities and skills required, the governance and decision-making arrangements, the technology and systems needed to support the work, and the culture and behaviours that need to underpin it all.
A TOM is not an organisational chart, though an organisational chart may be one output of a TOM design process. It is not a strategy, though it should be in service of one. And it is not a fixed blueprint. A well-designed TOM is a living model that is revisited and adapted as the organisation and its context evolve.
4. Develop role requirements and structure charts
Congratulations, you’ve made it to the exciting stage! This step marks the culmination of all the engagement, data-gathering and considering of your options. You can now use all the above to map out the roles you need to deliver the activities in your operating model and the structures which would best accompany those. Keep people focused on the roles, not people who are in current roles that sound like they might be similar (we know from experience this is easy to say and hard to do).
5. Identify governance and responsibilities
How are the decisions going to be made in your future operating model and who has responsibility and accountability for what is delivered? Use RACI alongside your operating model to make sure these areas are worked through and identify the boards, committees and meetings you might need.
ABC – Always Be Contracting
Throughout the design stage, a good consultant will collaborate, check-in and adjust, and this should be built into your design principles - remember ‘iterate, iterate, iterate’ and ‘collaborate and co-create’? Ensure that you revisit your progress with your stakeholders, both in terms of your agreed goals and where they are leading you in the design process.
Step 4: Evaluate
The evaluation of your organisation design options can be scaled depending on how much time you have to deliver a new design and on how radical you've needed to be. The simplest evaluation tool is your set of design principles – how well do your design options meet the ‘must have’ principles you agreed earlier in the process? Ideally, you should have already designed your evaluation at the start. Within evaluation, the key activities include:
1. Assess the change impact
Assess your design options for the changes compared to your as is model and how well they meet your design principles.
You could use a framework such as the nine tests of organisation design (Goold and Campbell). These include both ‘fit tests’ (how well does the design fit the organisation) and good design tests (what is the quality of the design).
2. Identify KPIs
Identify the key performance indicators you can use to measure progress and organisational performance. As noted above, these should have been agreed at the beginning, so this stage is about clear measurement and assessment against them.
There are many types of KPIs to consider, including:
- Structural efficiency – the cost, speed, and span of your design’s structure
- Examples: time to sign-off of tasks; effectiveness of communication between departments
- Operational effectiveness - how well work flows through your designed departments
- Examples: Patient flow; the number of times a task goes between teams before completion
- Strategic alignment – how departments contribute to overarching organisational objectives
- Examples: How well personal or team goals are aligned to strategic objectives; how effectively cross-departmental objectives are met
- Talent and cultural health – how the design impacts on the workforce
- Examples: turnover rate; staff survey scores
3. Stress-test your design
Use real-world scenarios of unexpected events and work through how the organisation could respond - what happens if there is a big rise in demand in one part of the organisation, or something as significant as a global pandemic? Would your organisation still be able to function? The nine tests are also a helpful part of stress testing your design.
In summary
Ultimately, good organisation design is about using holistic/systems thinking to ask the right questions. It is always intimately entwined with organisational development as it involves your organisation's people and how they interact. We’ve focused here on the design elements but see design and development as different sides of the same coin, both play a crucial role in delivering organisational change at scale.
Further reading and resources
- Flawless consulting (Peter Block)
- Organisation design (CIPD)
- Practitioner toolkit (ODF)
- Guide and toolkit on organisational design (DPSA)
- Organisational design: an ideas sourcebook for the Victorian public sector (VPSC)
- Organisational design toolkit (Kellysears Consulting Group)
- Collective action toolkit (Frog)
