Organization designGrip on your organization with a robust design
In addition to a clear strategy a well-designed organization is crucial to achieve your strategic goals. Think of it as the vehicle by which you have to win the race. The organization design is often not carefully looked at, whereas the circumstances in which the organization needs to be successful may significantly change. Besides a new strategy, there might for example be a merger, a new growth phase for the company or changes in laws and regulations. If your organization recognizes these things above, it is wise to check whether the design of your current organization is still sufficient.
“Chaos in the midst of chaos isn’t funny, but chaos in the midst of order is.” – Steve Martin
Where does an organization design consist of?
There are many different views on what an organization design really is. An organization design is not about governance or legal structure but about how to organize. In our approach a good design always consists of three parts, namely:
- The organization structure
- Coordination mechanisms
- Roles and responsibilities
The three components are closely related. The organization structure determines the focus of the organization. For example, on products, processes, markets or locations. Coordination mechanisms monitor coordination and consultation, also in areas where the organization structure provides no guidance. Roles and responsibilities make clear who can take decisions and who has executive responsibility.
In order to achieve a good design various considerations are involved
Does this design match with our strategic objectives and the external
environment in which we have to achieve this?
Does the design contribute to the governability of our organization?
Does the design guarantee an efficient and effective deployment of people
Organization design in 6 steps
Step 1: Design brief
Discuss the reason for change and the objective of the new organization design. For instance, you want to innovate more.
Step 2: Design criteria
Set up a list of design criteria. The design will be constantly assessed against these criteria. You may find speed important, but also cost.
Step 3: Organization structure
Determine the organization structure, both at the organizational level and at the level of the first echelon. Draw ‘the rake’ and pay attention to the pros and cons.
Step 4: Coordination mechanisms
Create coordination mechanisms. Look here for both hard (consultations, procedures, indicators, mandates, standards etc.) and softer (training, values, customer promises etc.) mechanisms.
Step 5: Responsibilities
Define the hierarchical, operational and functional responsibilities and specify who (from what authority) is involved in major decisions.
Step 6: Test design
Test the design for implementation using simulations and prototypes. You can for example simulate various processes in the new model.