Organizing an organization is a process that requires a detailed understanding of the organization’s purpose, the context of the organization, and the goals of the organization. The organization design should be consistent across the organization, and should help to achieve the company’s goals. An organization’s structure is critical to its ability to meet customer needs and achieve strategic objectives. Using the right organizational design can result in more efficient operations, higher quality products and services, a happier workforce, and stronger relationships with customers.
Organizations are complex organisms that are shaped by the culture of the company, the external environment, and the people in the organization. While there are many factors that influence an organization’s design, there are five important considerations to keep in mind:
Structure: An organization’s structure is the means by which it achieves its goals. An organizational structure defines how tasks are allocated, and how supervision is coordinated across departments. The organization’s structure is also the means by which the organization can respond to changes in the environment. The best organizational structure is one that is flexible, yet coherent.
Groupings: An organization’s groupings should be consistent with its size, age, and industry. This can be achieved by following Galbraith’s star model, which is based on the five main functions of an organization. This model allows for a wide variety of company sizes, and also can be used to design the management team.
Hierarchy: An organization’s hierarchy ensures that employees understand their responsibilities and that there is a clear chain of command. Hierarchies are also a good way to ensure that the organization can respond to changes in the environment.
Functional: An organization’s functional structure consists of departments that are organized around specific business functions. This structure allows departments to self-determine and is easy to scale. However, it can lead to silos within the organization and may hinder interdepartmental communications.
Matrix: An organization’s matrix structure involves employees in different departments. These structures can be a good option for some organizations, but they can also be confusing. The matrix structure can make it difficult for departments to communicate, and there may be overlap in responsibilities between departments. A matrix structure also has a dual focus, which may increase conflict.
Flatarchy: An organization’s flatarchy consists of a horizontal structure. This structure places higher level employees at the center of the organization. It is also a good option for organizations that require a high degree of autonomy, or those that want to encourage open communication.
Process-based: An organization’s process-based structure is a good choice if it wants to increase productivity and flexibility. These structures reduce functional department borders, increase speed, and increase responsiveness to client needs. This type of structure is also more naturally fit for a particular type of work. However, process-based organizations can be more complicated to manage, and may require more creative problem solving.
Teams: An organization’s team-based structure serves a particular function, such as production or sales. Teams are often close-knit, and consist of leaders and workers. In team-based organizations, employees often take on more responsibility, and may even have responsibilities that span departments.