Organization Design: Smart organization design improves performance
Organization design prescribes how an organization should be structured to function effectively and efficiently. It is a systematic approach to aligning structures, processes, leadership, culture, people, practices, and metrics to enable organization, achieve its mission and strategy.
There are usually four type of organization structure-
Organization structure also determines how the information flows between levels within the company. For example, in a centralized structure, decisions flow from top to down, while in a decentralized structure decision making power is distributed among various levels of the organization. Having an organization structure allows companies to remain efficient and focused.
A successful organizational structure defines each employee’s job and how it fits within the overall system. It boils down to who does what when, or how to allocate task, resources, customers etc., to each of the small problems and how to coordinate these small units and tasks.
An organization structure is either centralized or decentralized. Traditional organizations have centralized structure with centralized leadership and a defined chain of command, like the military. There has been a rise in decentralized structure of many technology startups. This allows company to remain fast, agile, and adaptable.
Most of the small to medium business implement a functional type organisation structure. Dividing the firm into departments consisting of marketing, sales, and operations is the act of a bureaucratic organizational structure.
Divisional or Multidivisional Structure
Common among large companies with many business units. Called the divisional or multidivisional structure, companies using this method structures its leadership team based on products, projects, or subsidiaries they operate, example Johnson and Johnson. With thousands of products and lines of business, the company structures itself, so each business unit operates as its own company with its own president.
Used among many startups, it flattens the hierarchy and chain of command and gives its employee lot of autonomy. Company using this structure have a high speed of implementation.
This structure matrixes employees across different superiors, division, and departments. An employee in a matrix structure could have duties in both sales and customer service.
Putting an organization structure in place is extremely beneficial as the structure will help not only define the hierarchy, but also lay out the pay structure for its employees. You can define the salary grade and ranges for each position. Also makes operations more efficient. By separating employees and functions into departments, companies can perform different operations at once seamlessly.
In going beyond shifting lines and boxes in an organization chart. We start with the guiding principles and design criteria Our approach, decisions and execution in organization design projects is based on a set of guiding principles. These principles come from our experiences as practitioners and learnings from diverse experts, and organizations. The guiding principles are-
a) Design with ‘’DNA’’ in mind to achieve purpose and sustainability.
b) Promote accountability and build on strengths to the internal challenges.
c) Promote adaptability and agility to the external environment.
d) Fix the structure last, not first; look at execution speed, information flow and decision making.
e) Leverage the informal