ORGANISATIONAL DESIGN FOR SUCCESS

 


What is organisational design? A definition                                                     
Organisational design is the administration and execution of an organisation's strategic plan. This means that the organisation's strategy determines the optimal organisational design. As we discuss in our , organisational development certificate programme  design is about creating the best fit between the strategic choices of the organisation and the organisational setting. Organisational design is determined by the strategic direction of the company, a.k.a. the vision,mission, and goals of the company. Erik van 
Vulpen (2023)

Work design can be defined as the “content of work tasks, activities, relationships and responsibilities, and how those tasks, activities and responsibilities are organised” (Parker, 2014). Good work design addresses physical, bio mechanical, cognitive and psycho social characteristics of work, together with the needs and capabilities of the people involved

The majority of businesses find that the design process produces a more efficient organisational structure, much better outcomes (profitability, internal operations, customer service), and motivated staff members. A thorough and holistic approach to organisational change that affects all facets of organisational life is the hallmark of the design process, enabling  to accomplish the following: 
  • Excellent customer service
  • Increased profitability
  • Reduced operating costs
  • Improved efficiency and cycle time
  • A culture of committed and engaged employees
  • A clear strategy for managing and growing your business

The role of HR in organisational design

In the past HR has just recently become involved in organisational design, and its primary focus has been on job profiles and implementation. HR professionals are increasingly expected to lead and assist in the organisational design process, making organisational design competency and abilities essential components of their toolkit.

Newer operational models also tend to feature deeper specialised knowledge in organisational design, as evidenced by the fact that many Centre of Excellence structures now have access to a specialised OD staff. This is a wise decision because issues with organisational design frequently lead to problems with business performance. The organisation will benefit from improved alignment between the OD, Talent, Reward, and Performance functions.

“When starting on an OD initiative, the first step HR needs to take is to understand the current reality,” says Dr. Dieter Veldsman.

“We often jump straight into defining the to-be state of the organization, but I have found that starting with the as-is is crucial to gain insights that will inform the future design. Being data-driven is crucial, and the as-is analysis should collect multiple data points to understand the strengths and limitations of the current design,” Veldsman explains.



1. Strategy -- The most crucial foundation for designing and structuring an organisation is its organisational strategy. Explaining how a strategy is developed is outside the purview of this article.According to Michael E. Porter, businesses can compete by offering unique goods and services that demand a higher price or by cutting costs. Finding out if the organisation has a broad or small scope is the second step. This indicates that the company either competes in a wide range of client categories or only a few.

This led to the creation of Porter's framework for competitive strategies, which identifies four tactics for competing: differentiation, focused differentiation, cost leadership, and cost focus.



2. Environment -- The environment has an effect on organisational design and structure as well. The necessary design is shaped to varying degrees by the industry, raw materials, labour market, international governance, and social factors.The stability of the environment is the most crucial component. Environmental stability is influenced by two factors:

  • Simple-complex dimension. This speaks to the extent to which outside forces impact the competition and the organisation. For big businesses like British Telecom and AT&T, where all of the aforementioned factors are at play, they are numerous. By contrast, the environmental complexity of a suburban family-run hardware business is little.
  • Stable-unstable dimension This is used to describe the dynamic components of the surroundings. Online media affects major consumer brands, such as McDonald's. On social media sites like Twitter, Instagram, and TikTok, they are very prominent, and a single tweet or blog post has the power to seriously harm a company. Public utility firms, however, have exhibited stability over an extended period. In the United States, consider public libraries from the 1970s to 2000s. Funding for these came from the federal, state, county, and municipal authorities.


3. Technology --    Organisational design is significantly impacted by technology. This was demonstrated during the COVID-19 pandemic, when numerous businesses seamlessly transitioned to digital platforms and a few even shut down.The whole staff of popular blogging platform WordPress works remotely. Technology is used extensively, and technology-driven collaboration makes this feasible.

Additionally, through the use of intranets and extra nets, information technology helps organisations become more decentralised, enhance horizontal coordination, and facilitate external communication. One of the most popular collaboration applications, Slack, actually enables quick communication by allowing external and internal collaborators to join the same team via several external and internal channels.

4. Size & life cycle -- Another element that affects organisational design is size. Small businesses are typically flat, organic, flexible, responsive, and entrepreneurial. Big businesses focus more on managers, have a more stable market, a global reach and brand, and generate value through efficiencies. This results in various decisions about organisational design.

Organisations go through several stages of development as they expand. Finding misalignment between the organisational goals and strategy and the organisational structure is made easier by being aware of a company's current stage in the organisational life cycle. It also aids in determining which crises the organisation is most likely to encounter.

5. Culture -- Based on its principles, presumptions, beliefs, attitudes, feelings, narratives, heroes, symbols, language, and customs, each organisation has an own culture. The framework of competing values provides the greatest summary of these cultures.

An organisation may hold conflicting ideals, such as internal versus outward focus and flexibility versus stability, according to this culture paradigm. Being both internally and externally focused, or both flexible and stable, is impossible due to the competition between the values.


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


Evaluating an organisation's effectiveness is challenging. Nonetheless, if we fully comprehend it, the organisations signals might offer us suggestions for how to make it better.
The methods line up with various stages of the manufacturing process. This model is an example of an input-process-output (IPO). Organisational effectiveness can be gauged at every stage.

  • The use of resources is the primary measure of the effectiveness of an organisation. By analysing the input and determining whether the organisation successfully acquires the resources required for high performance, this method evaluates effectiveness.
  • The internal process approach examines the manufacturing process and evaluates its efficacy based on economic efficiency and internal wellness. Strong organisational cultures, reliable communication, prompt decision-making, clear communication, and interactions between the organisation and its components are a few examples.
  • The goal approach is the third indicator. This method evaluates efficacy by examining how successfully the company accomplishes its objectives. Prioritising operational goals is crucial in this situation since they are simpler to define and assess.

CONCLUSION

To sum up, organisational design is a crucial component of strategic management that influences how a company runs and accomplishes its goals. Through meticulous planning of its systems, procedures, culture, and structure, an organisation can build a foundation for success and flexibility in the fast-paced commercial world of today.


References

  •  Erik van Vulpen  (2023) Organizational Design: A Complete Guide (online)a

           Available at https://www.aihr.com/blog/organizational-design/


  •  The Center for Organizational Design (2012). What Is Organization Design? [online] Available :https://centerod.com/2012/02/what-is-organizational-design/


  • McMillan, Elizabeth (2002). 'Considering organisation structure and design from a complexity paradigm perspective.' In Frizzelle, G. and Richards, H. (eds.), Tackling industrial complexity: the ideas that make a difference. Cambridge, UK: Institute of Manufacturing, University of Cambridge, 123-136

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