What is an Organization Design?

Like an architect’s blueprint, an organization design determines the nature and flow of work, as well as the ways in which employees interact with one another. When an organization design is working well, it creates alignment throughout the broader organization, facilitates effective workflow, enhances partnership and synergy, and enables better individual performance.
Structure plays an important role in an organization’s ability to deliver results, because it determines:

  • The way work is divided
  • With whom employees will interact and build relationships
  • The nature and extent of required supervision

Simply put, a well-designed organizational structure enhances the coordination of activities, accelerates the speed of producing goods/delivering service and reduces operating costs.

Indicators of an effective organization design

Here are four indicators that will tell you whether your organization design is effective:

  1. Aligns with broader organization: The organization strategy brings together the business and people strategies so that what the organization wants to deliver on…it can deliver on. Sub-units also connect with the rest of the broader organization.
  2. Facilitates effective workflow: Processes for creating and delivering products/services to customers/clients are maximized.
  3. Enhances partnership and synergy: Work is linked horizontally across departmental and geographic boundaries (which is especially important in today’s global world).
  4. Enables individual performance: Employees at every level are empowered and motivated to do their jobs effectively and efficiently.

Another way to think about an effective organization design is to understand the “fit” among all the different components of an organization. Compare an organization to the human body, for example. In the human body there are various systems – neurological, pulmonary, vascular etc. A change made to one system in the body affects the rest of the body; and for maximum health, all systems must work together. By the same token, consider what happens when you change the size of the wheels and tires on your car; other systems such as steering, braking and suspension must be aligned in order for the car to perform at its peak.

How organization design fits into the rest of the organizational system

In the case of an organization, there are three basic strategies, or systems, each with its own sub-components. These strategies are: Business Strategy, Organization Strategy and People Strategy, all of which are held together by the Leadership and Culture of the organization.

The bottom line
An effective organization design/organization strategy (structure, processes, inter-departmental coordination) makes sure that what an organization needs to accomplish (e.g., business strategy), it gets. Great leaders know that when the different strategies of an organization, business (e.g., brand/value proposition, goals), organization (structure, processes, roles) and people (staffing, training, compensation, etc.) are explicit and aligned, the long-term health of the organization is dramatically improved. For example, what people are compensated for needs to reinforce behaviors that will enable the organization to deliver on its business strategy. An effective organization design also ensures there is an alignment between the formal and informal aspects of the business, meaning how work is actually accomplished matches what we formally say about how works is accomplished.

At the end of the day, you as a leader know that you have an effective organization design when you are aware of the ways in which your decisions affect your people’s ability to deliver on your desired performance outcomes.

Are you ready to take your organizational effectiveness to the next level? Check out the other resources available online at www.acceleraconsultinggroup.com or give us a call at 407.376.8522 for a free consultation. We accelerate results by igniting leadership and organizational potential!