Organizational Design in Recession

The recession puts a lot of the pressure on the organizational design of the organization. Most organizations get fat during the economic growth as the focus on cost saving is not that important. The number of managerial job positions grows, the number of employees grows and no one cares about the total payroll of the organization.

The HRM Function is usually not responsible for the organizational design of the organization, mainly in the times of the economic growth. When the economic crisis or the recession comes, the top management tries to make a specific unit responsible for the future organizational design. The HRM Function is a typical victim of such an effort.

The change of the organizational structure is not an easy decision and when it should lead to some cost savings, the pressure against the HRM Function will be enormous. The HRM Function has to reach the buy-in from the top management for several principles to bring a successful organizational design:

1. The top management has to reach the common consensus on the strategic products and services for the future.
2. The top management has to name a change champion, who will be responsible for the proposal of the organizational design.
3. The top management has to decide about the span of control in the organization. It is then used as the basic principle for setting the number of subordinates for the individual managers.
4. The top management has to set the rules for the responsibility in the organization. The HRM Function has to know the responsibilities and how they will be distributed in the organization. The more responsible the employees are, the less organizational levels are needed.

The future organizational design is very painful tasks for the whole team including the HRM Professionals as the managers lobby for their own interests and their own jobs. The HRM Function has to play the role of the facilitator and the HRM Function has to keep the consistency across the whole organization.

The organizational design should unblock the full potential of the organization, the processes should run smoother and the organization should react quickly to changed condition on the external market. The organizational design is not easy, but the result can be amazing.