Is your organisation well designed? And how do you know? What does a well designed organisation look like, and how does it feel to work there? And how is it different from a poorly designed one? These are the types of questions we will explore in looking at organisation design.
Aligning organisational structure with business goals
Many people equate organisation design with an organisation’s structure: the words “lean” and “flat” are used to describe organisation design as well as its structure. In fact, organisation design encompasses much more than simply the structure: organisation design is the process of aligning an organisation’s structure with its mission. This means looking at the complex relationship between tasks, workflow, responsibility and authority, and making sure these all support the objectives of the business.
The value of organisation design
Good organisation design helps communications, productivity and innovation. It creates an environment where people can work effectively. Many productivity and performance issues can be traced back to poor organisation design. A company can have a great mission, great people, great leadership, etc., and still not perform well because of poor organisation design.
Take the example of a company whose sales department and production department both work well as separate units, yet they need to communicate about customer needs and have not been organised to do so. Company performance suffers as a result. Then take the example of a company that wants to grow by acquiring new customers, yet its sales team is rewarded for customer retention instead. Again, performance is compromised as a result.
How work is done, business processes, information sharing and how people are incentivised – all of these directly affect how well the organisation performs. All of these factors are facets of the organisation’s design and each facet is important to the organisation’s success.
Given that organisation design is so important, why is it so often to blame for inefficiency and ineffectiveness? The reason is that organisations often evolve rather than get designed. With little or no planning and intervention, the organisation design that emerges is likely to be flawed with misaligned incentives, processing gaps and barriers to good communications.
Without due planning, an organisation’s design often takes on a hierarchical structure. This structure is common because business executives and managers are often reluctant to relinquish control. However, such structures can lack flexibility, soak up resources, and underuse key people and skills. When it comes to good organisation design, it’s a question of getting the right balance – getting the right controls, the right flexibility, the right incentives; and getting the most from people and other key resources.
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