Organizational Design Best Practices

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Organizational Design

What is Organizational Design?

Organizational Design is a step-by-step methodology which detects inefficient or malfunctional aspects of roles, procedures, and structures and redesigns them to reach the company’s goals. Thus, Organizational Design includes developing plans to implement changes to improve both the technical and human side of the business. This may occur at different levels: the overall organizational architecture at the corporate level, the design of business areas and units, the design of departments as well as the design of individual roles.

What are the different types of organizational designs and structures?

Organizational Designs tend to fall into four different models. Firstly, the functional model is centred around basic functions such as accounting, marketing and human resources and is when a company executive hires manager in each of these functional areas to better harness expertise. Secondly, the customer-oriented structure aims at positioning employees or departments so they can best serve customers. The matrix model, by contrast, is a hybrid of the two different structures and thus involves the combining of functional and customer structures to better meet market demand. Finally, the strategic business unit model is a product-based model which operates when company departments operate like separate business units. For example, a consumer products company may sell different products with each product becoming a separate business unit.

What are the positives of Organizational Design?

A successful Organizational Redesign results in accelerated growth, better decision making and greater efficiency. This results in improved results in profitability, customer service, internal operations and employee productivity. Despite this, less than 25% of redesign efforts actually improve performance. This usually occurs if the redesign consists merely of small structural changes or if they are off-the-shelf approaches for de-layering. In order to achieve a successful redesign, the organization must go step outside the box to deliver a holistic and personalised set of design imperatives.

What are the negative aspects surrounding Organizational Design?

Organization Design problems are often some of the hardest problems that leaders face. Finding the right design to fit each organization regularly requires inventing new solutions to resolve the dilemma. The decisions made often directly impact the jobs and careers of employees as well as the ability of the firm to reach its strategic objectives. Moreover, organizations that don’t regularly renew themselves suffer from problems such as inefficient workflow, redundancies, poor customer service or satisfaction, delays in decision-making and workplace mistrust.

Learn more about Organizational Design:

Organizational Design

10 Principles of Organizational Design

Different Types of Organizational Design

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