Organization Design And Development PdfBy Imanimver In and pdf 29.04.2021 at 19:02 5 min read
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Organisation design is the process and outcome of shaping an organisational structure to align it with the business purpose and context in which it exists.
- What is Organizational Design?
- Organisational design and development
- Organization design for new product development
- Organisational development & design explained
What happens in a company is not simply a matter of organization structures, processes, and systems but also one of behavior—that is, how people act, interact, and make decisions.
Regular progress reviews are something I advocate in organisation design work. From experience I know that chapter submission is not the end but the beginning of a whole process of re-drafting, re-thinking, switching things around and so on. My focus is on getting all nine chapters written. The schedule that I prepared last November — for chapter completion and blog posting — I have amended in the light of slower progress than I anticipated. Not the case.
What is Organizational Design?
Organizational design is as much an art as it is a science. The process of creating a system in which people can work together to achieve common goals is highly complex and there is no one way to do it right. In this article, we will explain what organizational design is, what drives organizational design, how to design an organization, and how an effective design can be measured in terms of organizational effectiveness.
Contents What is organizational design? A definition Five organizational design principles Five factors affecting organizational design Organizational effectiveness Conclusion FAQ. Organizational design is more about creating the best fit between the strategic choices of the organization and the organizational setting. This is represented in the figure below. Organizational design is determined by the strategic direction of the company, a. These lead to strategies that the company competes on which are enabled through the organizational design.
For example, Company A operates in an established market and is looking to maintain its position. This company will have a low-cost leadership strategy focused on efficiency. In terms of organizational design, this company will have a strong, centralized authority, tight control, and many standard operating procedures. Company B is an innovative and fast-growing organization that emphasizes learning. This company will have a more fluid and flexible design, a much more decentralized structure, loose control, employees are working directly with customers, and are rewarded for creativity and risk-taking.
In company A, risk-taking and failing are punished while in company B, it is much more likely to be rewarded, evaluated, and learnings from the failed project will be used as a stepping stone for a new project. One of the most difficult things in organizational design is about what we are designing. However, what exactly is it that we are designing about the organization?
This is where the five organizational design principles come in. Goold and Campbell propose five organizational design principles. Organizational design is a tug of war between these five principles. Each principle has its own test to see if the current situation is valid.
This will be slightly complicated, so hang in there! We will make it more concrete with different examples later on. These five principles are affected by different factors in the internal and external environment of the organization.
Earlier, we spoke about strategy. The previously mentioned Company A aimed at maintaining its market share and optimizing its profit margin. These five principles enable an organizational designer to re design and align the organization with the key factors that affect the organizational design.
When an organization is structured and designed in a way that fits its purpose, it will result in organizational effectiveness. Organizational effectiveness includes obtaining resources that the company competes on i. In the following section, we will go over each of these five factors, explaining how these impact organizational design. The organizational strategy is the most important starting point for the organizational structure and design.
It goes beyond the scope of this article to explain how a strategy is created — we have a great article on HR strategy in case you want to check this out. Michael E. Porter proposed that organizations can compete through lower cost or through the ability to offer distinctive products and services which command a premium price. The second step is to determine whether the organization has a narrow or broad scope. This means that the organization either competes in many or in select customer segments.
Different strategies justify a different organizational design. For example, take a beverage company that sells premium whiskey liquor. The focus here is a specific market segment well-off customers who drink whiskey with differentiation strategies involving strong branding.
In this organization, production may be a specialized business unit focused on one thing: producing a specialist technological product for DJs. Similarly, sales and marketing are business units. They have different, cooperative, horizontally coordinating overlay units under them — e. These units are highly collaborative with each other and are constantly in touch with the market, leading to high coordination. Specialists have high responsibility and although there is a formal sign-off procedure for marketing campaigns, many of the campaigns happen in decentralized project teams that consist of people from multiple overlay units that communicate with each other frequently as the market is a niche market in which marketing needs to be well-coordinated.
Compare this to a low-cost, broad target cost leadership strategy. We take a soap production company as an example.
They produce hundreds of soaps — and although they do some marketing and sales to retail stores for a few of their lines, most of the soaps are produced for external brands. The organizational setup is highly siloed and not expected to change. Indeed, when a new soap line is introduced, the specifics are communicated to the production department and after a few test runs, the company is set to produce that soap for years to come. The environment also impacts organizational structure and design.
The industry, raw materials, labor market, international governmental, and sociocultural influences all shape the required design to different degrees. The most important factor is environmental stability.
There are two dimensions that influence environmental stability:. A highly stable and similar environment justifies standardized and non-dynamic organizational processes. Examples include soap producers or container manufacturers. On the other hand, a highly unstable and complex environment requires the organization to constantly adapt. Examples include chip makers and aerospace firms. Technology greatly influences organizational design.
We saw this through the COVID-crisis where many companies effortlessly went digital and some even closed their offices. Learn to build a digital HR strategy and start leading the digital transformation in HR. This is possible through the extensive use of technology and technology-driven collaboration.
Information Technology also enables organizations to become more decentralized, improve horizontal coordination through intranets, and external collaboration becomes possible through extranets. In fact, Slack, one of the most-used collaboration tools allows internal and external collaborators to join the same team through different internal and external channels, enabling fast communication.
Size is another factor that impacts organizational design. Small organizations are usually responsive, flexible, flat, organic, and entrepreneurial. Large organizations create value through efficiencies, have a global reach and brand, a more stable market, and put more emphasis on managers. This leads to different organizational design choices. As organizations grow, they go through different stages of development.
Knowing which stage an organization is in helps to spot misalignment between the organizational goals and strategy and the organizational structure. In addition, it helps to identify which crisis the organization is likely to face.
Every organization has its own unique culture based on their values, assumptions, beliefs, attitudes, feelings, stories, heroes, symbols, language, and habits. These cultures are best summarized in the competing values framework. This framework proposes that there are a number of competing values in an organization: flexibility vs. The values compete, meaning that it is not possible to be both stable and flexible, or both internal and external focused.
Different cultures lead to different organizational structures. An internally focused organization will have more collaboration, while an externally focused organization will have more customer-facing project groups and business units. Similarly, a highly stable organization has clearly defined business units while a flexible organization has much more market-focused horizontal overlay units that use different specialists to create customer value. Once you have created an organizational design appropriate for the five factors we mentioned earlier, the result is an effective organization.
This means an organization that is able to reach its mission and goals. Organizational effectiveness is hard to measure. However, when we understand it well, the signals in the organization can provide us with input on improvements for the organization. The approaches correspond with different phases of the production process.
This is an input — process — output IPO model. At each step, organizational effectiveness can be measured. To learn more about the finetuning of organizational effectiveness, check out our guide on organizational development.
To illustrate this, let me share this case study about a coffee bean production company. This company occasionally struggles to supply the coffee beans required for production. This leads to supply problems and after the company had missed its latest quarterly sales targets, an inquiry is launched. It turns out that there is a misalignment between the increasingly unstable political landscape of the coffee production countries, leading to disruptions in supply, and the fixed organizational structure.
Further inquiry into decision-making processes, shows that decisions to switch supply lines have to be approved at C-level, leading to a delay in decision making capabilities. These hiccups are the main reason the quarterly sales targets were missed.
To fix this, the organization decides to put the responsibility for parts of the supply chain management and procurement departments lower in the organization. This leads to faster decision-making, hence making the organization more flexible to respond to changes in the external environment.
In this case study, we saw symptoms at all three levels: the input, the process, and the output. In an ideal system, you will want to recognize these symptoms at the input or process level before they will affect the outcome.
This can be done by implementing safeguards and creating an early warning system. And that wraps up this article about organizational design, in which we reviewed the five key principles of organizational design, which are coordination, specialization, knowledge and competence, control and commitment, and innovation and adoption.
There are a series of factors influencing these principles. These factors exert pressure on the different organizational design principles.
Organisational design and development
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Organizational design is as much an art as it is a science. The process of creating a system in which people can work together to achieve common goals is highly complex and there is no one way to do it right. In this article, we will explain what organizational design is, what drives organizational design, how to design an organization, and how an effective design can be measured in terms of organizational effectiveness. Contents What is organizational design? A definition Five organizational design principles Five factors affecting organizational design Organizational effectiveness Conclusion FAQ.
The alignment process is done through organisation design and organisation development (Holbeche, ). Organisation design's focus is on.
Organization design for new product development
Authors: Christian Schumacher. Citation: Journal of Organization Design Content type: Research. Published on: 9 February Seeing such clusters as meta-organisations, we suggest that these can mak
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Organisational development & design explained
Organization development OD is the study of successful organizational change and performance. OD emerged from human relations studies in the s, during which psychologists realized that organizational structures and processes influence worker behavior and motivation. More recently, work on OD has expanded to focus on aligning organizations with their rapidly changing and complex environments through organizational learning , knowledge management and transformation of organizational norms and values. Organization development as a practice involves an ongoing, systematic process of implementing effective organizational change. OD is both a field of applied science focused on understanding and managing organizational change and a field of scientific study and inquiry. It is interdisciplinary in nature and draws on sociology , psychology , particularly industrial and organizational psychology , and theories of motivation , learning, and personality. Although behavioral science has provided the basic foundation for the study and practice of OD, new and emerging fields of study have made their presence felt.
The process focuses on improving both the technical and people side of the business. For most companies, the design process leads to a more effective organization design, significantly improved results profitability, customer service, internal operations , and employees who are empowered and committed to the business. The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that touches all aspects of organizational life, so you can achieve:. A well-designed organization ensures that the form of the organization matches its purpose or strategy, meets the challenges posed by business realities and significantly increases the likelihood that the collective efforts of people will be successful. As companies grow and the challenges in the external environment become more complex, businesses processes, structures and systems that once worked become barriers to efficiency, customer service, employee morale and financial profitability. Although adaptable to the size, complexity and needs of any organization, the design process consists of the following steps.
Organizational design is as much an art as it is a science. The process of creating a system in which people can work together to achieve common goals is highly complex and there is no one way to do it right. In this article, we will explain what organizational design is, what drives organizational design, how to design an organization, and how an effective design can be measured in terms of organizational effectiveness. Contents What is organizational design? A definition Five organizational design principles Five factors affecting organizational design Organizational effectiveness Conclusion FAQ. Organizational design is more about creating the best fit between the strategic choices of the organization and the organizational setting.
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