Five Common Mistakes in Organisation Design — and How to Avoid Them

Organisation design is one of the most consequential decisions a business makes. Get it right, and you create the conditions for people to do their best work. Get it wrong, and you embed inefficiency, confusion, and frustration into the very structure of the organisation — often for years.

In my work with organisations across sectors, I see the same mistakes made repeatedly. They are rarely the result of bad intentions. They are usually the result of moving too fast, working from the wrong starting point, or underestimating the complexity of what good design actually requires.

Here are the five I encounter most often — and what to do instead.

Mistake 1: Designing Around People Rather Than Purpose

The most common mistake in organisation design is building the structure around the people you currently have, rather than the work that needs to be done.

This happens for understandable reasons. Leaders want to protect valued individuals. They are reluctant to create roles that do not have an obvious incumbent. They design around personalities, relationships, and existing hierarchies rather than asking the more fundamental question: what does this organisation need to do, and how should it be structured to do it?

The result is a structure that reflects the past rather than enabling the future. Roles are created to accommodate people rather than to fulfil a clear purpose. Reporting lines reflect political realities rather than operational logic.

What to do instead: Start with the work. Define the outcomes the organisation needs to deliver, the capabilities required to deliver them, and the accountabilities that need to be clear. Then design the structure — and consider the people separately.

Mistake 2: Treating Restructuring as a Cost Exercise

When organisation design is driven primarily by a need to reduce headcount or cut costs, the design process is compromised from the outset. The question becomes "how do we do more with less?" rather than "how do we organise ourselves to deliver our strategy?"

Cost reduction may well be a legitimate outcome of good design. But when it is the primary driver, organisations tend to cut without redesigning — removing roles without rethinking how work flows, eliminating layers without clarifying accountabilities, and creating structures that are leaner but no more effective.

What to do instead: Be explicit about the design objectives from the start. If cost is one of them, name it — but ensure it sits alongside strategic and operational objectives, not above them. Design for effectiveness first, and let cost implications follow from that.

Mistake 3: Ignoring the Informal Organisation

Formal organisation charts show reporting lines and role titles. They do not show how work actually gets done — the informal networks, relationships, and influence patterns that determine whether the organisation functions effectively in practice.

Designs that ignore the informal organisation often fail in implementation. A restructure that looks clean on paper can disrupt the informal connections that were holding things together, creating coordination failures and cultural damage that take years to repair.

What to do instead: Before finalising any design, map the informal organisation. Understand where the critical relationships and knowledge flows are. Design in a way that preserves what is working informally, or creates deliberate mechanisms to replace it.

Mistake 4: Under-investing in the Transition

Organisation design is not complete when the new structure is announced. The transition — the period between the old design and the new one being fully operational — is where most designs succeed or fail.

Transitions require careful management of people, process, and culture. Roles need to be clearly defined. Accountabilities need to be understood. Leaders need to be equipped to operate in the new model. And the organisation needs time and support to adapt.

Many organisations under-invest in this phase, treating the announcement as the end of the design process rather than the beginning of the implementation. The result is a structure that exists on paper but does not function as intended in practice.

What to do instead: Build a transition plan that is as rigorous as the design itself. Define what needs to happen, in what sequence, and who is accountable for making it happen. Invest in communication, capability development, and change support throughout the transition period.

Mistake 5: Designing Once and Assuming It Will Last

Organisation design is not a one-time event. The business environment changes. Strategy evolves. New capabilities become critical. What was the right design for the organisation two years ago may not be the right design today.

Yet many organisations treat their structure as fixed — something to be revisited only in a crisis or when a major restructure is unavoidable. The result is a gradual accumulation of misalignment between structure and strategy, which compounds over time until it becomes a significant drag on performance.

What to do instead: Build a rhythm of regular design review into the organisation's operating cadence. This does not mean constant restructuring — it means staying alert to signals that the design is no longer serving the strategy, and being willing to make targeted adjustments before misalignment becomes entrenched.

The Common Thread

What connects all five of these mistakes is a tendency to treat organisation design as a structural or administrative exercise rather than a strategic one. The organisations that get design right are those that approach it with the same rigour and intentionality they bring to their business strategy — because the two are inseparable.

Structure is not just a way of organising people. It is a statement of what the organisation believes matters, how it expects work to flow, and what it is designed to achieve. Getting it right is worth the investment.

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3 Step HR supports organisations through the full organisation design process — from diagnostic and design through to implementation and transition. If you are considering a restructure or redesign, I would be glad to discuss what a rigorous approach might look like for your organisation.