Organizational design is critical for the success of a business and it can without a doubt feed or starve a business performance.

What is Organizational design?

Organizational design is far more than organizational structure. It is about:

  • Clarifying roles and assigning responsibilities.
  • Assigning the right people to the right roles
  • Structuring each single layer of the organization. This includes establishing who controls the resources and who reports to whom.
  • Tuning the organizational design with the business strategy and aligning the organizational structure with the business goals and objectives.
  • Determining how information flows within the organization.
  • Building on your strengths based on the available resources, capabilities and practices.
  • Identifying errors or areas that need to be improved to enhance productivity, efficiency and overall business performance.

Why is Organizational Design important?

  • Clarity: Everyone is aware of who is responsible for what, who controls respective information and resources, and to whom they should report to.
  • Collaboration: The organizational design is based on the cooperation and collaboration of various departments and individuals in order to achieve a shared goal.
  • Motivation: Having knowledge of what is going on within the organization can significantly enhance the employees’ motivation and willingness to work and perform at their best. On the other hand, if there is no organizational design, employees will feel confused and will be demotivated to work.
  • Accountability: Having clear roles set out ensures that your employees remain accountable for their work. For instance, if a mistake has happened, you can easily trace it back to the person responsible for it. This way you can check and monitor your employees’ work, without them feeling that they are being micromanaged.

What should the organization design include?

  • Strategy: Strategy is the first and foremost element that your organizational design should take into account.  The structure of your organization should be aligned to your business strategy and strategic priorities.
  • Process Flows: Next, it is important that you put forward the core processes that drive your business strategy. Think about how information flows within your company and how the various departments interact with each other to get the job done
  • Organization Structure: Another key element is the structure of your organization. How do you want your business to function to achieve your goals? What is the best operating model for the type and nature of your company?
  • Governance Structure: Additionally, you need to think about the decision-making within the organization. Who is responsible for what? Who reports to whom? Who makes the final decisions?
  • Implementation Plan: In the case that you are changing your organizational design, you need to have an implementation plan in place. Look into the timings and the transition period of this change. Will it be implemented all at once or will you split the implementation into milestones? You will also need to devise a team that will lead the implementation. Make sure to select accountable and devoted individuals who are going to be committed to such a change.