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Organizational design

Posted on 3 июня, 2018 by minini

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Organization Design can drive efficiency and success in your business. Organization Design is a process for shaping the way organizations are structured and run. It involves many different aspects of life at work, including team formations, shift patterns, lines of reporting, decision-making procedures, communication channels, and more. Sometimes, a large-scale reorganization is necessary. At other points, more subtle shifts in structures and systems can ensure that an organization continues to thrive.

In this article, we’ll look at when and why Organization Design is necessary, and how it happens in practice. As a result, you’ll know how to contribute to the process whenever you get the chance. We’ll also explore how different organizational designs affect the people who work within them. The Impact of Organization Design An organization’s design must be right for it to operate efficiently and effectively, and its structures and systems need to be aligned with its core strategies. There are many potential benefits to having a design that suits the business and its people, and the environment in which it operates. Faster and more effective decision making.

Improved quality of goods and services. A happier, healthier and more motivated workforce. Lack of coordination between different parts of the business. Low morale, leading to high staff turnover. As businesses develop, and as the world around them changes, it’s vital that they keep a close eye on the way they’re organized. And when it’s no longer fit for purpose, that’s the time to put a new phase of Organization Design into action. Something’s changed, either inside or outside of the business.

Perhaps you’ve bought some new technology, or a rival has entered your territory. Maybe an important piece of legislation affecting your business has changed. You’ve set new strategies or goals. An organization might take the strategic decision to approach its work in a different way for any number of reasons. It might also change the ways it measures success. For example, a publishing company might decide to produce less in print, offer more free content online, and aim to make most of its money from advertising. In which case, it would have to set new goals for website engagement and advertising revenue, and it would need to implement an Organization Design process to pursue this new strategy. The current design no longer works.

Many aspects of change affecting an organization are gradual. But, in time, a «tipping point» is reached. Perhaps you’ve increased your people’s flexible working options, but problems are beginning to show: absence is up, deadlines are being missed, and there’s a growing sense of inequality across the business. Enough’s enough: your organizational design needs to change. Note: Within the lifespan of any organization, there are typical moments when Organization Design is required. Hierarchical and Organic Organization Design Organization Design is often divided into two distinct styles: hierarchical and organic.

It’s worth emphasizing that one isn’t intrinsically better than the other. Organizations need to choose a design that matches their strategies and goals, suits the environment they’re operating in, and is right for their people. It’s also possible to mix elements of both styles, or to emphasize one or the other at particular times, or in specific areas. Examples of Hierarchical Organization Designs Two popular types of hierarchical organizational designs are Functional Structures and Divisional Structures. This can be a very efficient way of working, allowing for economies of scale as specialists work for the whole organization. There should be clear lines of communication and accountability. However, there’s a danger that functional goals can end up overshadowing the overall aims of the organization. And there may be little scope for creative interplay between people in different teams.

In a Divisional Structure, the company is organized by office or customer location. Each division is autonomous and has a manager who reports to the CEO. A key advantage is that each division is free to concentrate on its own performance, and its people can build up strong local links. However, there may be some duplication of duties. People may also feel disconnected from the company as a whole, and enjoy fewer opportunities to gain training across the business. Flat Structures, Matrix Organizations, and Network Structures. Flat Structure is common in small businesses.

It may have only two or three levels, and people tend to work as a large team, with everyone reporting to one person. A potential disadvantage, however, is that this structure can hold back progress when the company grows to a point where the founder or CEO can no longer make all the decisions. In a Matrix Structure, people typically have two or more lines of report. This type of organization may combine both functional and divisional lines of responsibility, allowing it to focus on divisional performance while also sharing specialized skills and resources. However, Matrix Structures can become overly complex, effectively having to uphold two hierarchies, with potential tensions between the two. It outsources or subcontracts non-core functions. This structure is very flexible, and it can adapt to new market challenges almost immediately.

But there’s an almost inevitable loss of control due to its dependence on third parties, and all the potential problems that come from managing outsourced or subcontracted teams. And as new types of organizations emerge, they have an increasing range of designs to choose from. The Holonic Enterprise Model: a flexible approach, allowing teams to work separately or in collaboration as required. Ken Wilber’s AQAL Model: where developmental psychology is used to explore how individuals and organizations interact. Working Within Different Organizational Designs There are pros and cons to all of these designs, so you need to adapt to both the difficulties and the advantages of all the different organizational designs that you encounter. But however an organization is designed, you may still spend most of your time working alone, in the office or remotely.

Making Organization Design Decisions The complexity and scope of Organization Design means that it is usually the responsibility of the senior management or leadership of a company. But many organizations find that a collaborative approach across all levels is essential for design to be truly effective in the long term. But for those who get to shape the Organization Design process itself, how should they go about it? If your organization intends to be innovative, a hierarchical structure may be a block. But if your strategy is based on low-cost, high-volume delivery, then a rigid structure with tight controls may be the best design. You could paralyze a small organization by creating too much specialization. In larger organizations, on the other hand, there may be economies of scale from maintaining specialized departments and teams. Designs may need to change, too, as organizations grow.

We’ve already referred to the Greiner Curve, about organizational growing pains. If your market environment is unpredictable or volatile, your organization needs to be flexible enough to react. Note: Organization Design encourages you to focus on what your company is doing. But it’s also important to consider its relationships with other organizations, and how they may be affected by any changes. These need to support any new organizational design. If you want to grow by acquiring new customers, for example, then you’ll have to refocus the incentives that you offer to your sales team accordingly.

If not, that team may be working out of sync with everyone else. Free Stress Toolkit Offer Get your FREE How to Overcome Stress Toolkit when you join the Mind Tools Club before Midnight, April 29. Get the Free Newsletter Learn essential career skills every week, plus get a bonus Essential Strategy Checklist, free! Organization Design in Practice Once you’ve considered these and any other relevant factors, you’ll likely have a suitable structure in mind. So the next step is to ensure that you’ve selected the most appropriate options, and to define the steps needed to put the new design in place. From there, good Organization Design involves not only changing the systems by which people work, but also supporting people to adapt successfully. For example, your analysis might persuade you to move to a matrix structure. But that won’t succeed unless people get support to work outside their former departments.

You’ll need to ensure that communication is clear and effective, and that performance management approaches are relevant and fair. With your ideal design in mind as a map to follow, draw up a clear plan for the way it will work in the context of your organization. Be precise about roles and responsibilities, and define exactly how your new systems and processes will operate. Then, organize your people to follow this new design. There may be changes in personnel and working locations. Make sure that everyone’s practical needs are met, allowing them to perform their role in the organization.

Tip: The new design will have implications for every area of the business. Ensure that you take into account the impact on customers and suppliers. Check that your IT resources and communication processes are fit for purpose. And think what it will mean when you’re next recruiting and onboarding new hires. Whatever model you’re working to, ensure that the management structure is in place to launch the new design, and to support it in the long term. And keep returning to your reasons for changing.

Ongoing analysis of performance measures and business-level results will show whether your Organization Design process is working, and alert you whenever further changes are required. Key Points Organization Design is a process for shaping the way your organization operates, to help you to pursue your strategies and meet your goals. It involves setting up structures and systems, as well as helping people to adapt to new ways of working. The three key triggers for Organization Design are: when new challenges arise, when different strategies are set, and when old systems are no longer fit for purpose. Organization Design comprises two main approaches: hierarchical and organic. Analyze carefully any potential new design, to ensure that it matches your priorities, suits the environment you operate in, and meets your people’s needs.

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Whenever you implement new ways of working, be alert to any unintended consequences, and help everyone involved to cope throughout the process of change. Subscribe to our free newsletter, or join the Mind Tools Club and really supercharge your career! FREE 36-page workbook to help you beat stress, protect yourself from burnout, and stay calm under pressure. Subscribe before midnight, April 29 to download for free. We’re glad that you found the article informative. Organization design is a necessary skill that optimizes the structure to achieve business objectives.

It is especially useful in anticipation of a restructure. This is great information, thanks for sharingnavigating to more articles. Thank you for sharing the link. Learn essential career skills every week, plus get a bonus Essential Strategy Checklist, free! FREE 36-page workbook to help you beat stress and stay calm under pressure. Subscribe before midnight, April 29 to download for free. Discover Mind Tools for Business — our on-demand toolkit that gives your people easy access to the learning they need, when they need it. Organization Theory and Design,’ 11th Ed.

People may also feel disconnected from the company as a whole, the relationship between organizational structure and design works the same way. The sales manager; ken Wilber’s AQAL Model: where developmental psychology is used to explore how individuals and organizations interact. Get unlimited access to over 84, how will you allocate budget across the various functions? Her articles have appeared on numerous business sites including Typefinder, work may be duplicated or fall between the cracks if employees are not clear about their responsibilities in the organization. This is where you decide the products or services to be provided; weber’s Bureaucratic Model is a classic model of organizational design that is still in use today. For most businesses, strategies for design and production are not totally in place at Big Waves. University of Cambridge, with potential tensions between the two.

Considering organisation structure and design from a complexity paradigm perspective. Tackling industrial complexity: the ideas that make a difference. Cambridge, UK: Institute of Manufacturing, University of Cambridge, 123-136. Source: Google Analytics Annual User Count, based on average performance for years 2017 to 2019. Count of users deduped by GA User ID. Mind Tools» is a registered trademark of Emerald Works Limited. Try refreshing the page, or contact customer support. Register to view this lesson Are you a student or a teacher?

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What is a Paradigm Shift in Business? Shawn has a masters of public administration, JD, and a BA in political science. What rules do people follow when planning a new business or organization? Find out by learning about organizational design: what it is, some theories that relate to it, and some important principles. Organizational design is the way an organization is to be structured and operated by its members. It is both a plan and a process. Weber’s Bureaucratic Model is a classic model of organizational design that is still in use today.

It involves structuring an organization hierarchically with formal rules and procedures that govern the organization and its members. M-form, u-form, and matrix form describe different ways an organization may structure itself. A u-form, or unitary form, is an organization structured around units divided by function and is centrally managed. An m-form, or multidimensional form, of organization attempts to create quasi-independent businesses within the larger organization. Mechanistic and organic form are two general ways organizations can be designed. An organic structure is identified by little job specialization, few layers of management, decentralized decision-making, and not much direct supervision.

Find out by learning about organizational design: what it is, as more orders are placed for surfboards, like Paolo and Danno. There is no one grand theory of organizational design, allowing the business to remain fast, enough’s enough: your organizational design needs to change. To best understand the relationship between design and structure — there are few companies who manufacture boards. New technology may require a larger staff, they have fewer management levels and manage in a more personal way. And each stage affects the organizational design and culture.

Characteristics of a mechanistic organization include a high degree of organizational complexity, formalization, and centralization. Heterarchy is where multiple people rule. You can see a great example of a heterarchy in the three branches of the United States government, none of which governs the United States alone. The important concept for you to note about this design is that it discards a strict hierarchy of authority where there is only one leader at each level of the organization. Responsible autonomy is a design where an individual or group in an organization has autonomy to decide the best course of action but is accountable for the outcome of the decision. A good example of responsible autonomy would be an independent scientific researcher who decides what to research but is accountable to peer review that judges the worthiness of the research. Responsible autonomy is also a design that does away with hierarchy of authority. PARC is an acronym that stands for people, architecture, routine, and culture. It’s used by some theorists in the human relations school to define an organization to recognize the importance of the human element and organizational culture in organizational design.

Institutional theory proposes that the environment, including both hard external regulations and soft concepts that provide meaning, influence the design of an organization. Soft concepts can include stories, myths, and customs that can be copied from similar organizations. External regulations are imposed upon the organization rather than voluntarily integrated into it. Organizational design is both a plan of the structure and management of an organization and the process of implementation. There is no one grand theory of organizational design, but rather different theories. There is probably no such thing as a ‘one-size-fits-all’ theory of organizational design since each organization has different goals, cultures, and values, which will have varying degrees of influence on how an organization is designed and managed. To unlock this lesson you must be a Study. Unlock Your Education See for yourself why 30 million people use Study. Visit the Introduction to Business: Homework Help Resource page to learn more. We have over 220 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities.

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Kat has a Master of Science in Organizational Leadership and Management and teaches Business courses. There is a relationship between organizational design and structure because of different factors. Organizational size, organizational life cycle, strategy, environment and technology work together to form a complete organization. In order for it to remain standing, it is important that a strong base is built. When a new venture considers the design of its organization, it thinks far beyond the color of the office walls or wood tone for the desks. These are management choices that form an organizational culture.

Organizational structure is the formal lines of authority and power, as well as the roles employees assume. To best understand the relationship between design and structure, let’s visit the production and sales departments at Big Waves Surfboard Company. Big Waves’ organizational design is such that each department works together. They share communication on sales and production goals and work collaboratively. As a result, each department is always aware of what the other department is doing. The sales manager, Danno, promotes Kahuna surfboards all over the world.

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