Organisational design: a UK employer’s guide 

It’s a mistake to start thinking about organisational design for a business when trouble is brewing, such as cost cutting, merging teams, or restructuring. It’s too late by then. Organisational design should be addressed before headcount decisions are made. Instead of starting with how many people a business can afford, ask what the organisation needs to achieve, what work needs to be carried out, and how responsibilities should be arranged to deliver it.

Organisational design is the process by which an organisation decides on its structure so it can deliver its strategy. So this is all about understanding what an organisation needs, identifying the gap between its current and desired state, and designing practices to fill that gap.

Organisational design answers questions such as:

• What work belongs where?
• Which functions and teams do we need?
• Who’s accountable for each area?
• Who reports to whom?
• Where are decisions made?
• How many management layers do we need?
• What should individual roles be responsible for?
• Which capabilities and skills will be required?
• Are any responsibilities duplicated or missing?

This is why organisational design differs from reducing headcount. A headcount exercise starts with numbers, whereas organisational design starts with the work and the structure required to deliver it.

When organisations are under financial pressure, it can be tempting to begin with a target such as reducing the workforce by 15%, removing some management roles, or cutting from the salary total.

While this will produce a numerical answer, it doesn’t produce a workable organisation.

If the structure isn’t examined at the outset, employers can make errors by removing critical roles, leaving managers with ridiculously large swathes of responsibility, creating duplicated work, or making accountability less clear.

Instead, the sequence should be:

Strategy → structure → roles → capabilities → workforce requirements → headcount decisions

This is important because organisational design and workforce planning are closely related, but aren’t the same thing. Strategic workforce planning asks what people and capabilities the organisation will need to meet its future objectives, while organisational design determines how that work and those capabilities should be organised. 

While there isn’t one single organisational design model that works for every company, a practical employer-led process can be built around these 5 stages:

1. Begin with a business strategy

First off, be clear about what the organisation is actually trying to achieve. For example, a business planning rapid national growth may need stronger regional leadership and market expertise. A business investing in automation may need fewer administrative activities but a greater capability in technology, data, and change. The organisational design should specifically respond to each requirement, not reproduce an existing structure.

Ask:

• What are the organisation’s priorities over the next three to five years?
• Which services, products, or markets are forecast to grow?
• In which areas does the organisation need to be more efficient?
• Which capabilities will become increasingly important?
• Which activities are no longer value-added?
• What decisions need to happen faster?

2. Diagnose the current situation

The next step is to understand how the organisation operates at the moment.

Take a look at:

• Current organisational charts.
• Reporting relationships.
• The structure of the management.
• The different sizes of teams.
• Critical roles and role profiles.
• Decision-making responsibilities.
• Duplicated activities.
• Vacant positions.
• Outsourced activities.
• Employee and manager feedback.
• Performance and productivity data.

The gap between the formal structure and the way work actually happens can reveal a lot about decision-making, for example. While a decision officially sits with a senior manager, it is often escalated several levels because nobody is confident about who actually has the authority. Or maybe two departments appear separate but employ people doing pretty much the same type of work. 

Structured management practices matter, as the ONS Management and Expectations Survey reveals, with 89% of surveyed UK firms with 10 or more employees saying they’d taken action to improve management quality in 2023. Of those, 64% had consulted employees about areas for improvement, while 43% had provided formal training online and 42% training in person.

It’s clear that using evidence, rather than assumptions, is the way to go.

3. Design the structure before designing roles

Once the current state of the business is clear, move from diagnosis to design by deciding how the major parts of the organisation should fit together. This will involve decisions on functional, divisional, and geographic structures, product / customer-based structures, matrix arrangements, shared services, and centralised versus decentralised functions. It comes down to which structure best supports the organisation’s strategy and champions accountability.

For example, centralising a specialist function may create consistency and economies of scale. Decentralising it may make the function more responsive to customers or individual business units. It’s all about weighing up the pros and cons. Establish the major organisational units and their responsibilities before dealing with individual jobs.

A useful test is to ask: “if everybody’s name was removed from the organisation chart, would responsibilities of each area of the organisation still be clear?” If the answer is no, the design needs more work.

4. Review reporting lines and management layers

Reporting lines are where organisational design becomes tangible for employees and managers. While a structure can look logical on paper, it can create practical problems if there are too many layers, unclear accountability, or inappropriate spans of control.

It’s worth reviewing:

• How many management layers sit between employees and the executive team?
• Are decisions escalated unnecessarily?
• Do managers have enough authority to match their responsibilities?
• Are some managers responsible for substantially more people or complexity than others?
• Are there roles where the main purpose is passing information between the layers?
• Are there multiple people accountable for the same outcome?

There’s no ideal span of control, as every manager is different and has a different leadership style. A manager overseeing experienced specialists may be more adept at managing a larger team than someone overseeing inexperienced employees, complex operational work, or geographically dispersed teams.

Having said that, removing a management layer doesn’t necessarily make things better. A useful way of testing a potential structure is to use a real decision. Take something relatively important and pose questions around who identifies the issue, who recommends the response, who has the authority to make a decision, who implements it, and who is accountable for the outcome.

If the test leads to unnecessary escalation, or crosses several unclear boundaries, the structure will need looking at again to make it a smoother process.

5. Design roles around outcomes and accountability

Once the structure and reporting lines are clear, then individual roles can be redesigned. This is particularly important when organisations are creating new roles or combining existing ones. But avoid merging job descriptions then just giving the new position a different title, as this can create roles that are too broad to be realistic. Instead, start with the outcomes the organisation needs and work backwards to determine what the job description needs to cover.

This is the place where establishing career frameworks and job architecture can be useful. Clarity around role definitions makes it easier to distinguish between levels of responsibility while making way for clear progression routes.

A well-designed role should make five things clear:

• Purpose – why the role exists.
• Accountability – what each person is responsible for delivering.
• Decision rights – what can be decided without escalation.
• Relationships – which teams and stakeholders they need to work with.
• Capabilities – the skills and knowledge required to perform the role.

The design process doesn’t end with the organisation chart. Once the structure, reporting lines, and roles have been agreed, the next step is to manage the transition from the current organisation to the new one. This means assessing the impact, planning implementation, involving affected people, and monitoring results.

Before implementing an organisational design, test the potential structure by examining four areas.

• Strategic fit: Does the structure support stated priorities? For example, if growth is the priority, then does the structure give sufficient ownership to activities that are critical to growth?
• Operational fit: Can work move through the organisation without unnecessary hand-offs? Look for bottlenecks, duplicated activities, and unclear ownership.
• Leadership fit: Do managers have realistic levels of responsibility? Consider team size, geography, decision-making authority, and the day-to-day experience of people being managed.
• Capability fit: Does the organisation have the required skills for the proposed structure? If not, identify whether the gap should be addressed through development, internal mobility, recruitment, or partnership. 

While there isn’t a standalone CIPD qualification called “Organisational Design” at the moment, the subject is included within relevant CIPD qualifications such as the Advanced Diploma in Strategic Learning and Development, and a short organisation design course.

For those employers who operate across multiple markets on the global stage, organisational design adds another layer of complexity. While the core structure is global, reporting arrangements, roles, and decision rights need to accommodate local operating requirements.

Careerminds provides workforce and career solutions across 100+ countries. Global organisations need to consider how consistent role architecture and organisational structures interact with local requirements, defining what needs to be consistent globally, then identifying where local flexibility is required. 

The organisational design of a business comes down to a leadership decision, but HR shouldn’t assume that senior leaders have the whole picture. It’s the managers who know where work gets stuck, which decisions are escalated, and where responsibilities overlap. They can also point out practical consequences that aren’t obvious from an executive-level organisation chart. But this involvement does have to have structure to it, so ask managers to provide evidence that backs up their views.

CMI research found that 82% of managers step into leadership positions without receiving any formal training. This matters during organisational design, because managers are expected to translate a new structure into the machinations of day-to-day work. If the organisational design changes a variety of things, managers need the clarity and the support to operate within this new model.

Useful questions to consider are:

• Where does work currently slow down?
• Which decisions require too much escalation?
• Which responsibilities overlap?
• Which activities have no clear owner?
• Which roles are carrying too much or too little responsibility?
• What would customers notice if this team disappeared?
• What capability would be hardest to replace?

While the terms “organisational design” and “organisational development” are often used interchangeably, they describe different activities. The CIPD treats organisation development and design as distinct areas of practice. The distinction matters, because changing the organisation chart won’t necessarily change how people behave. 

• Organisational design is concerned with the structure, roles, responsibilities, and relationships at work.
• Organisational development is broader, with the focus on how an organisation functions and develops, including areas such as culture, capability, leadership, and effectiveness.

Before deciding who stays, who moves, or who gets hired, ask what the organisation will actually look like if it’s going to deliver the strategy it’s committed to.