Implement a New IT Organizational Structure

Prioritize quick wins and critical services during IT org changes.

This blueprint is part 3/3 in Info-Tech’s organizational design program and focuses on implementing a new structure

Monitor and Sustain Stakeholder Engagement →

The sections highlighted in green are in scope for this blueprint. Click here for more information on designing or on structuring a new organization.

Our understanding of the problem

This Research is Designed For:

• CIOs

This Research Will Help You:

• Effectively implement a new organizational structure.
• Develop effective communications to minimize turnover and lost productivity during transition.
• Identify a detailed transition strategy to move to your new structure with minimal interruptions to service quality.
• Train managers to lead through change and measure ongoing employee engagement.

This Research Will Also Assist:

• IT Leaders

This Research Will Help Them:

• Effectively lead through the organizational change.
• Manage difficult conversations with staff and mitigate staff concerns and turnover.
• Build clear transition plans for their teams.

Executive summary

Situation

• Organizational Design (OD) projects are typically undertaken in order to enable organizational priorities, improve IT performance, or to reduce IT costs. However, due to the highly disruptive nature of the change, only 25% of changes achieve their objectives over the long term. (2013 Towers Watson Change and Communication ROI Survey)

Complication

• OD implementations can be highly disruptive for IT staff and business partners. Without a structured approach, IT leaders may experience high turnover, decreased productivity, and resistance to the change.
• CIOs walk a tightrope as they manage the operational and emotional turbulence while aiming to improve business satisfaction within IT. Failure to achieve balance could result in irreparable failure.

Resolution

• Leverage Info-Tech’s organizational design implementation process and deliverables to build and implement a detailed transition strategy and to prepare managers to lead through change. Follow Info-Tech’s 5-step process to:
  1. Effect change and sustain productivity through real-time employee engagement monitoring.
  2. Kick off the organizational design implementation with effective communication.
  3. Build an integrated departmental transition strategy.
  4. Train managers to effectively lead through change.
  5. Develop personalized transition plans.

Info-Tech Insight

1. Mismanagement will hurt you. The majority of IT organizations do not manage OD implementations effectively, resulting in decreased satisfaction, productivity loss, and increased IT costs.
2. Preventing mismanagement is within your control. 72% of change management issues can be directly improved by managers. (Abilla, 2009) IT leaders have a tendency to focus their efforts on operational changes rather than on people. This is a recipe for failure.

Organizational Design Implementation

Managing organizational design (OD) changes effectively is critical to maintaining IT service levels and retaining top talent throughout a restructure. Nevertheless, many organizations fail to invest appropriate consideration and resources into effective OD change planning and execution.

THREE REASONS WHY CIOS NEED TO EFFECTIVELY MANAGE CHANGE:

1. Failure is the norm; not the exception. According to a study by Towers Watson, only 55% of organizations experience the initial value of a change. Even fewer organizations, a mere 25%, are actually able to sustain change over time to experience the full expected benefits. (2013 Towers Watson Change and Communication ROI Survey)
2. People are the biggest cause of failure. Organizational design changes are one of the most difficult types of changes to manage as staff are often highly resistant. This leads to decreased productivity and poor results. The most significant people challenge is the loss of momentum through the change process which needs to be actively managed.
3. Failure costs money. Poor IT OD implementations can result in increased turnover, lost productivity, and decreased satisfaction from the business. Managing the implementation has a clear ROI as the cost of voluntary turnover is estimated to be 150% of an employee’s annual salary. (Inc)

86% of IT leaders believe organization and leadership processes are critical, yet the majority struggle to be effective

PERCENTAGE OF IT LEADERS WHO BELIEVE THEIR ORGANIZATION AND LEADERSHIP PROCESSES ARE HIGHLY IMPORTANT AND HIGHLY EFFECTIVE

GAP BETWEEN IMPORTANCE AND EFFECTIVENESS

Human Resources Management - 61%

Leadership, Culture, Values - 48%

Organizational Change Management - 55%

Organizational Design - 45%

Note: Importance and effectiveness were determined by identifying the percentage of individuals who responded with 8-10/10 to the questions…

• “How important is this process to the organization’s ability to achieve business and IT goals?” and…
• “How effective is this process at helping the organization to achieve business and IT goals?”

Source: Info-Tech Research Group, Management and Governance Diagnostic. N=22,800 IT Professionals

Follow a structured approach to your OD implementation to improve stakeholder satisfaction with IT and minimize risk

• IT reorganizations are typically undertaken to enable strategic goals, improve efficiency and performance, or because of significant changes to the IT budget. Without a structured approach to manage the organizational change, IT might get the implementation done, but fail to achieve the intended benefits, i.e. the operation succeeds, but the patient has died on the table.
• When implementing your new organizational design, it’s critical to follow a structured approach to ensure that you can maintain IT service levels and performance and achieve the intended benefits.
• The impact of organizational structure changes can be emotional and stressful for staff. As such, in order to limit voluntary turnover, and to maintain productivity and performance, IT leaders need to be strategic about how they communicate and respond to resistance to change.

TOP 3 BENEFITS OF FOLLOWING A STRUCTURED APPROACH TO IMPLEMENTING ORGANIZATIONAL DESIGN

1. Improved stakeholder satisfaction with IT. A detailed change strategy will allow you to successfully transition staff into new roles with limited service interruptions and with improved stakeholder satisfaction.
2. Experience minimal voluntary turnover throughout the change. Know how to actively engage and minimize resistance of stakeholders throughout the change.
3. Execute implementation on time and on budget. Effectively managed implementations are 65–80% more likely to meet initial objectives than those with poor organizational change management. (Boxley Group, LLC)

Optimize your organizational design implementation results by actively preparing managers to lead through change

IT leaders have a tendency to make change even more difficult by focusing on operations rather than on people. This is a recipe for failure. People pose the greatest risk to effective implementation and as such, IT managers need to be prepared and trained on how to lead their staff through the change. This includes knowing how to identify and manage resistance, communicating the change, and maintaining positive momentum with staff.

Staff resistance and momentum are the most challenging part of leading through change (McLean & Company, N=196)

Reasons why change fails: 72% of failures can be directly improved by the manager (shmula)

Leverage organizational change management (OCM) best practices for increased OD implementation success

Effective change management correlates with project success

Source: Prosci. From Prosci’s 2012 Best Practices in Change Management benchmarking report.

95% of projects with excellent change management met or EXCEEDED OBJECTIVES, vs. 15% of those with poor OCM. (Prosci)

143% ROI on projects with excellent OCM. In other words, for every dollar spent on the project, the company GAINS 43 CENTS. This is in contrast to 35% ROI on projects with poor OCM. (McKinsey)

Info-Tech’s approach to OD implementation is a practical and tactical adaptation of several successful OCM models

BUSINESS STRATEGY-ORIENTED OCM MODELS. John Kotter’s 8-Step model, for instance, provides a strong framework for transformational change but doesn’t specifically take into account the unique needs of an IT transformation.

GENERAL-PURPOSE OCM FRAMEWORKS such as ACMP’s Standard for Change Management, CMI’s CMBoK, and Prosci’s ADKAR model are very comprehensive and need to be configured to organizational design implementation-specific initiatives.

COBIT MANAGEMENT PRACTICE BAI05: MANAGE ORGANIZATIONAL CHANGE ENABLEMENT follows a structured process for implementing enterprise change quickly. This framework can be adapted to OD implementation; however, it is most effective when augmented with the people and management training elements present in other frameworks.

References and Further Reading

• ADKAR (Prosci)
• CMBoK (CMI)
• COBIT 5
• Kotter’s 8 Principles
• Managing Transitions
• Kubler-Ross Curve
• The Classic Change Curve Standard for Change Management (ACMP)

Tailoring a comprehensive, general-purpose OCM framework to an OD implementation requires familiarity and experience. Info-Tech’s OD implementation model adapts the best practices from a wide range of proven OCM models and distills it into a step-by-step process that can be applied to an organizational design transformation.

The following OD implementation symptoms can be avoided through structured planning

IN PREVIOUS ORGANIZATIONAL CHANGES, I’VE EXPERIENCED…

“Difficultly motivating my staff to change.”

“Higher than average voluntary turnover during and following the implementation.”

“An overall sense of staff frustration or decreased employee engagement.”

“Decreased staff productivity and an inability to meet SLAs.”

“Increased overtime caused by being asked to do two jobs at once.”

“Confusion about the reporting structure during the change.”

“Difficulty keeping up with the rate of change and change fatigue from staff.”

“Business partner dissatisfaction about the change and complaints about the lack of effort or care put in by IT employees.”

“Business partners not wanting to adjust to the change and continuing to follow outdated processes.”

“Decrease in stakeholder satisfaction with IT.”

“Increased prevalence of shadow IT during or following the change.”

“Staff members vocally complaining about the IT organization and leadership team.”

Follow this blueprint to develop and execute on your OD implementation

IT leaders often lack the experience and time to effectively execute on organizational changes. Info-Tech’s organizational design implementation program will provide you with the needed tools, templates, and deliverables. Use these insights to drive action plans and initiatives for improvement.

How we can help

• Measure the ongoing engagement of your employees using Info-Tech’s MLI diagnostic. The diagnostic comes complete with easily customizable reports to track and act on employee engagement throughout the life of the change.
• Use Info-Tech’s customizable project management tools to identify all of the critical changes, their impact on stakeholders, and mitigate potential implementation risks.
• Develop an in-depth action plan and transition plans for individual stakeholders to ensure that productivity remains high and that service levels and project expectations are met.
• Align communication with real-time staff engagement data to keep stakeholders motivated and focused throughout the change.
• Use Info-Tech’s detailed facilitation guide to train managers on how to effectively communicate the change, manage difficult stakeholders, and help ensure a smooth transition.

Leverage Info-Tech’s customizable deliverables to execute your organizational design implementation

CUSTOMIZABLE PROJECT DELIVERABLES

1. BUILD A CHANGE COMMUNICATION STRATEGY

• McLean Leadership Index: Real-Time Employee Engagement Dashboard
• Organizational Design
• Implementation Kick-Off Presentation
• Organizational Design Implementation FAQ

2. BUILD THE ORGANIZATIONAL TRANSITION PLAN

• Organizational Design Implementation Project Planning Tool

3.1 TRAIN MANAGERS TO LEAD THROUGH CHANGE

3.2 TRANSITION STAFF TO NEW ROLES

• Organizational Design Implementation Manager Training Guide
• Organizational Design Implementation Transition Plan Template

Leverage Info-Tech’s tools and templates to overcome key engagement program implementation challenges

KEY SECTION INSIGHTS:

BUILD A CHANGE COMMUNICATION STRATEGY

Effective organizational design implementations mitigate the risk of turnover and lost productivity through ongoing monitoring and managing of employee engagement levels. Take a data-driven approach to managing engagement with Info-Tech’s real-time MLI engagement dashboard and adjust your communication and implementation strategy before engagement risks become issues.

BUILD THE ORGANIZATIONAL TRANSITION PLAN

Your organizational design implementation is made up of a series of projects and needs to be integrated into your larger project schedule. Too often, organizations attempt to fit the organizational design implementation into their existing schedules which results in poor resource planning, long delays in implementation, and overall poor results.

LEAD STAFF THROUGH THE REORGANIZATION

The majority of IT managers were promoted because they excelled at the technical aspect of their job rather than in people management. Not providing training is setting your organization up for failure. Train managers to effectively lead through change to see a 72% decrease in change management issues. (Abilla, 2009)

METRICS:

1. Voluntary turnover: Conduct an exit interview with all staff members during and after transition. Identify any staff members who cite the change as a reason for departure. For those who do leave, multiply their salary by 1.5% (the cost of a new hire) and track this over time.
2. Business satisfaction trends: Conduct CIO Business Vision one year prior to the change vs. one year after change kick-off. Prior to the reorganization, set metrics for each category for six months after the reorganization, and one year following.
3. Saved development costs: Number of hours to develop internal methodology, tools, templates, and process multiplied by the salary of the individual.

Use this blueprint to save 1–3 months in implementing your new organizational structure

These estimates are based on reviews with Info-Tech clients and our experience creating the blueprint.

Totals:

Workshop: 1 week

GI/DIY: 2-6 weeks

Time and Effort Saved: 8-17 weeks

CIO uses holistic organizational change management strategies to overcome previous reorganization failures

CASE STUDY

Industry: Manufacturing

Source: Client interview

Problem

When the CIO of a large manufacturing company decided to undertake a major reorganization project, he was confronted with the stigma of a previous CIO’s attempt. Senior management at the company were wary of the reorganization since the previous attempt had failed and cost a lot of money. There was major turnover since staff were not happy with their new roles costing $250,000 for new hires. The IT department saw a decline in their satisfaction scores and a 10% increase in help desk tickets. The reorganization also cost the department $400,000 in project rework.

Solution

The new CIO used organizational change management strategies in order to thoroughly plan the implementation of the new organizational structure. The changes were communicated to staff in order to improve adoption, every element of the change was mapped out, and the managers were trained to lead their staff through the change.

Results

The reorganization was successful and eagerly adopted by the staff. There was no turnover after the new organizational structure was implemented and the engagement levels of the staff remained the same.

$250,000 - Cost of new hires and salary changes

10% - Increase in help desk tickets

$400,000 - Cost of project delays due to the poorly effective implementation of changes

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Implement a New Organizational Structure

Workshop overview

Contact your account representative or email Workshops@InfoTech.com for more information.

Phase 1

Build a Change Communication Strategy