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Organizational Design What Is It?. Organizational Design is the creation of roles, processes, and formal reporting relationships in an organization (from Wikipedia). Used to create new organizations or departments.

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Organizational design what is it
Organizational DesignWhat Is It?

  • Organizational Designis the creation of roles, processes, and formal reporting relationships in an organization (from Wikipedia).

    • Used to create new organizations or departments.

    • Used to modify current organizational structures that may not be working effectively or require change due to changing business requirements.

Developed by Agency Human Resource Services, DHRM


Alignment of organizational strategy design why is it important
Alignment of Organizational Strategy & DesignWhy Is It Important?

It is important to match the organizational design or structure with the organizational strategy to achieve desired performance.

  • Failure to do so may create organizational performance challenges resulting from integration issues, communication problems, overload or overlap of work, too large or too small a scope, etc.

Organizational Strategy

Organizational Design

Organizational Culture

Organizational Operations

Organizational Results

Revenue

Services

Developed by Agency Human Resource Services, DHRM


Key steps in organizational design
Key Steps in Organizational Design

2

1

3

Organization Strategy

Purpose, Vision, Mission,

And Objectives Must Be

Defined And Clear

Understand Customer

Needs And How They

Influence The

Organization Design

Understand The

Influences of Technology

And Other

Environmental Issues

Develop Organizational

Designs, Understand

Pros/Cons, And

Choose An Option

Implement Organizational

Design or Reorganization

Understand Different

Organizational Types

And Challenges

Faced In Existing Design

4

6

5

Greenfield Approach: Sometimes, an organization will take a Greenfield Approach

to Organizational Design. This is an approach in which leadership does not try to

modify or use current designs. Rather, they start with a “blank board” and work to

create an organization design to match the organization strategy.

Developed by Agency Human Resource Services, DHRM


Common types of organizational structures
Common Types of Organizational Structures

Functional Structure

Divisional Structure

Design by Geography, Product, Market

Benefits

Creates focus by customer or product needs

Speed in responding to market opportunities or needs

Potential Challenges

Repetition of functions within each segment

Create silos within each division

Design by Function

Benefits

Creates operational efficiencies

Creates clarity of function, specialization

Potential Challenges

Lack of communication/coordination

Differing Interests between functions

Developed by Agency Human Resource Services, DHRM


Newer types of organizational structures
Newer Types of Organizational Structures

Matrix Structure

Network Structure

Design by Outsourcing What Can Be Done

Better or Less Expensively

Benefits

Flexible

Can be efficient in having resources only when needed

Potential Challenges

Lack of complete control over non-core components

Design by Function and Product

Benefits

Knowledge sharing

Specialists focused on products/customers/etc.

Potential Challenges

Multiple “bosses”

More conflict and organizational “politics”

Developed by Agency Human Resource Services, DHRM


Other variations on organizational structures

Team – design that uses horizontal and vertical teams on an ongoing basis (usually self managed) to accomplish goals; teams may be widespread or may be focused in particular areas and used as a component of another organizational design.

Other Variations on Organizational Structures

Boundary-less – design minimizes “boundaries” between vertical, horizontal, and external/internal relationships; combines aspects of network and team structures.

Virtual – form of boundary-less design that functions in a virtual world of network relationships through significant use of the internet.

Team

2

Team 1

Team 3

Team A

Developed by Agency Human Resource Services, DHRM


Some key factors to consider in organizational design
Some Key Factors to Consider in Organizational Design

  • Degree of Centralization

    • Does the organizational strategy support a need for centralization or de-centralization? Centralization supports standardization and central decision making while de-centralization supports flexibility for actions and decision making.

  • Span of Control

    • The span of control is a determination of the number of direct reports leadership roles have in the organization design. Small spans of control mean that leaders have few direct reports (tall organization). Large spans of control mean that leaders have many direct reports (flat organization).

  • Departmentalization

    • Higher levels of departmentalization result in higher levels of specialization. Smaller organizations often support simple structures without high levels of departmentalization (“jack of all trades” approach). Departmentalization often increases as organization size increases.

Developed by Agency Human Resource Services, DHRM


Tips and tools for organizational design efforts

Tips

Do Not focus on individuals when conducting an organizational design assessment. Individual names along with their strengths will be used later in understanding appropriate placement.

Be sure the strategy is clear and understood by all participating in the organizational design efforts.

An organization may use different types of organizational designs for different parts of the organization. For example, an organization may use components of a matrix structure for product design & engineering and use a functional structure for manufacturing operations.

Be sure to focus on implementation efforts once a design is determined. Implementation is critical to acceptance and the success of the design.

Suggested Tools

Current organization charts

Evaluation of effectiveness of current design, including an understanding of what works well and what does not

Organizational strategy – current, past, and future including an evaluation of changes

If using a Greenfield Approach, a blank board or sheet of paper

A neutral third party to help facilitate discussion – Expect conflict; conflict can be healthy in weighing all the options and a third party has no vested interest in the outcome.

New organization charts – There are lots of software options for creating organization charts from simple options like PowerPoint and Excel to purchased software.

Implementation Plan – project planning tools to create and execute implementation of the new design

Tips and Tools for Organizational Design Efforts

Developed by Agency Human Resource Services, DHRM


Measurement of success
Measurement of success

  • Once an organizational structure is implemented, it is important to regularly evaluate it’s ability to serve and meet organizational strategies and goals. Measurement may include but is not limited to the following – each organization will want and need to adapt specific measurements to it’s strategic and operational environment. Organizational ability to meet timelines and goals

    • Level of intra-organizational collaboration vs. level of friction

    • Organizational financial measures (e.g., revenue, payments, etc.)

    • Operational service measures (e.g., response time, customer feedback, etc.)

    • Employee turnover and exit feedback

    • Employee survey (or other) feedback

  • Note: organizations do not operate in a controlled lab type environment. Other factors will also influence these measures. Leadership will need to fully evaluate all measures to determine the most likely impacts on their results. It is like peeling an onion – each layer of evaluation will reveal more information and help to determine the most significant influences.

Developed by Agency Human Resource Services, DHRM