In larger organization design projects, we recommend that you make a concerted effort to explicitly determine the benefits and the costs involved.
In smaller, routine change-the-organization (CtO) work, like fixing a business process or amending the governance structure, the benefits of the effort are usually immediate and the costs are limited. Such changes to the management structure are more like housekeeping, less like a renovation.
This calculation is different when the transformation is more profound. The overall goal may still be quite tangible, e.g. to restructure the sales function in order to increase upselling and cross-selling. But in order to realistically understand the benefits, they must be detailed and operationalized. What’s more, you must also have a robust understanding of the cost involved in making the transformation happen. In short, you have to show cost-benefit, or ROI, of your org design work. This will help you focus your efforts, align stakeholders, and, in turn, introduce yardsticks for success.
In order to support this discussion, we have come up with an initial worksheet to determine OD ROI. We admit that the ROI semantics may be a bit far fetched, given that important arguments and cost/benefit items are not easily quantifiable in a robust way. Still, working along this sheet can facilitate a better informed conversation about the costs and benefits of a prospective OD effort. You can download the worksheet below.
ROI of OD
We would love to hear from you about whether you find this framework useful and how you would suggest we could amend it. Feel free to schedule a meeting during our Management Kits office hours to discuss it.