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Why should businesses challenge the organizational status quo?

October 27 2022 | Blog

Organizational structures have existed for much longer than the human race – a 2021 Heritage Daily article highlights the discovery of archaeological artefacts showing how early dinosaurs organized themselves into herds to protect their young.

Organizational design may have become more sophisticated since then, but its fundamental purpose remains unchanged; bringing people (or dinosaurs) together in the best way to deliver a desired outcome.

As modern human enterprises have grown in complexity since the Industrial Revolution era, delivering the optimal organization to achieve desired business outcomes has become progressively more challenging. For much of the industrial and post-industrial era, businesses have tended to rely on stock ‘good enough’ functional and hierarchical models, rather than challenging the organizational status quo.

In today’s fluid, fast-moving business world, competitive pressures grow and change almost daily, and external social and economic factors become increasingly influential and unpredictable. In such an environment, tuning organizational structures to optimize business outcomes is rapidly becoming a prerequisite for business success.

This article considers the current drivers for challenging the organizational status quo, and the role that Ingentis org.manager for SAP Success Factors can play in helping enterprises to optimize their organizational design. It complements the Ingentis eBook and articles exploring criteria for challenging the status quo, and the role of technology.

What is the organizational status quo?

From the various organizational structures that have evolved, most enterprises still tend towards a functional model where operations, marketing, manufacturing and other functions are organized into departments that report to an overall or divisional executive level.

There are variations to meet specific business needs or to address the shortcomings of this kind of structure in areas such as cross-functional working. One typical variation found in project-driven organizations is a matrix structure where the project management function takes ownership of resources from other functions for the duration of a project.

Recently, shifts in business pressures, working practices and technology have fostered radically different organizational structures where, for instance, rigid hierarchical and functional structures are replaced with a more fluid, team-based setup.

These factors are growing in importance and coalescing into specific drivers for enterprises to continually assess and optimize their organizational structure.

Drivers for challenging the organizational status quo

The fast-changing business environment

A July 2022 IHS Markit Article on global volatility explores how factors from climate change to the lingering impacts of Covid-19 are driving fluidity at the level of the global political system.

It seems certain that businesses will continue to be impacted directly by these factors, and by the resulting geo-political volatility, for the foreseeable future.

Organizations must be ready to continually adapt to this fluidity, and this extends to the way in which they are structured. Organizational structures need to be optimized for today’s challenges, and flexible to meet whatever changes tomorrow brings.

Competitive pressures

In a world where digital disruptors and global competition can transform the competitive environment almost overnight, organizations can no longer afford to carry any inefficiencies that could place them at a competitive disadvantage.

Strategies, processes, systems, people and organizational structures need to be continually monitored and tuned to deliver maximum efficiency and effectiveness.

Demographics

The combination of an ageing demographic and a new wave of people entering the workforce with different life skills and expectations creates a range of challenges and opportunities for organization design.

Enterprises need to understand their demographic in relation to how the organization is structured – for example, are older workers concentrated in a particular key functional area – and be prepared to tune the organization to avoid the pitfalls and realize the benefits of this change.

Technology

While discussions of technology’s impact on organizational structures may tend to focus on the role of automation in replacing human roles, its effect is actually much broader.

Digital business transforms customer interactions, altering the scope and focus for sales, marketing and customer services. Capabilities to connect and share information from anywhere, or to spin up and tear down collaborative digital teams based on immediate business need, break down some of the barriers that have historically necessitated more rigid, hierarchical organizational design.

As technology advances, organizational designs need to continually evolve to sustain maximum benefit from technology investment.

How Ingentis org.manager for SAP SuccessFactors helps challenge the organizational status quo

Ingentis org.manager for SAP Success Factors offers the visualization and modelling capabilities that today’s businesses need, to surface essential HR data and build an informed understanding of the strengths and weaknesses of their current organizational structure, and the alternatives.

To find out more about how Ingentis can help your organization, visit us at the SAP Store or contact sales@ingentis.com to continue the conversation.

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