Organizational Design is the process of shaping an organization to best achieve its goals. It is not a one-time project but a continuous effort to adapt to business trends, internal processes, and client needs.
While formal elements like structure and information are attractive, intangible building blocks such as norms, commitments, and networks are essential. These intangibles affect how and why people work.
Strategic Planning
Organizational design shapes the way work is done, making teams more effective and efficient. It reduces bottlenecks, allows employees to make more decisions without approvals and removes office politics, boosting employee morale, work engagement and retention.
Getting the right structure in place requires identifying your strategy and the critical capabilities that distinguish you from competitors. Then you need to design a pattern of hierarchical relationships that will support those unique strengths, based on your business model and industry.
Size and life cycle also impact organizational design. For example, a 20-person company has different challenges than a 200,000-person enterprise.
It's important to have a clear sequence of interventions that will move the company from the current state to the desired future. The new design should be the capstone of that sequence. It helps to start with an amnesty for the past: an explicit declaration that senior leadership will neither criticize nor try to justify the old organization design.
Designing the Organization
While organizational design often triggers visions of box charts and internal schisms, it is better to think about the process as system change. The changes are more significant than the structures themselves, affecting everything from the way decisions are made to how information flows throughout the company.
A well-designed organization creates clearer roles and processes, lifts workplace productivity and efficiency, and reduces wasted effort. Moreover, it builds an inclusive culture where people pull together as a team. It also makes your company nimble and ready to change when your market and customers call for it.
As such, it is important to focus your energy and resources on making these changes. This approach will help your company achieve its business goals, while minimizing the impact on people and existing systems. It will allow your company to respond quickly to changes in the marketplace, and it will help you take advantage of growth opportunities. It will also make it easier to manage staffing levels in a challenging employment market.
Developing the Organization
If your company's current structure is not aligned with your business strategy, it's time for a change. Organizational design involves designing a way of allocating jobs, roles and responsibilities within an existing structure to better support the company's goals. It also includes deciding how information, authority and resources are shared.
The first step in the Change Process Frameworks process is to declare "amnesty for the past." Avoid getting caught up in blaming or justifying the previous structures and instead focus on moving forward with the new strategic plan.
The next step is to identify the real-world constraints that you must work with. This may include the limitations of your people, technology or prevailing industry regulations. These are the bottlenecks that you must overcome to achieve your goals. You can make progress on these problems without changing your org chart by eliminating non-productive meetings, clarifying accountabilities in the matrix structure and changing how you reward people. You can also improve performance by changing the way you communicate and facilitating collaboration across teams.
Implementing the Organization
A business's internal structures, procedures and systems can outlive their usefulness, becoming a barrier to efficiency, customer service and employee engagement -- and ultimately financial performance. Organizational design is a step-by-step process that identifies dysfunctional aspects of those structures and realigns them to fit business realities and goals.
This process includes setting up teams to gather and analyze information, and determining reporting relationships and broad job responsibilities. It's important to involve as many people in the initial data gathering as possible, including employees who may be affected by new changes to their role.
Efficient org designs streamline work processes, eliminate bottlenecks and promote collaboration across teams to increase output quality. Combined with employee morale-boosting tools and empowerment, these improvements boost workplace productivity and profitability. A well-designed organization can also provide a flexible foundation for developing and adapting to changing environments. A rigid organizational structure slows down innovation and hinders agility. This is a major risk for companies that rely on their brands and reputation to succeed.
