Organizational Design

Understanding and getting started

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In the fast-paced world we are living in today, there is probably just one thing that remains certain – constant change. Therefore, it is crucial for companies to find a way to be flexible and adapt quickly to altered conditions. Engaging in thorough organizational design to maintain organizational effectiveness has become inevitable for companies to survive and gain competitive advantage in an everchanging environment.

What is organizational design and why is it important?

Organizational design is the creation of an environment that facilitates a company to achieve its goals, fulfill its purpose, and – most significantly – deliver on its vision. Since these aspects are different for every organization, there is no one way or standard template to perform organizational design. For that reason, each company needs to find its own approach to this and align it to its own strategy and needs. 

The continuously changing circumstances in which organizations are finding themselves, combined with their own growth and advancement require frequent reconsideration of established processes and structures. This is essential for them to remain efficient, effective and thus, competitive. Therefore, organizational design should not be considered a one-time project but rather a continuous, cyclical process. It starts with a critical examination of existing structures and processes that leads to the derivation of several recommended actions aimed at improving results and achieving goals more easily. After implementing these changes, a new evaluation is necessary to monitor whether the outcome delivered the desired results. This restarts the organizational design process.

Once this process becomes habitual and integrated into a company’s core values, organizational effectiveness can become a sustained reality.

Considerations when designing an organization

There are several aspects that should be considered before and throughout the organizational design process:

What strategy am I following?

The strategy pursued by the company is probably the most important factor to consider in organizational design. After all, the goal is to create an alignment between employees, their work, and competencies and the organization’s strategy and business objectives. Whether your product is meant for a large audience and its price is comparably low or whether it is the other way around, largely determines the required form of the organization. Consider, for instance, if and to what extent coordination and cooperation between different departments is necessary and make sure it is reflected in the outcome of your organizational design process.

In which environment am I operating?

As mentioned before, a changing environment is something with which every company has to deal. However, for some organizations these changes may be more frequent and more impactful than for others. Aspects influencing the stability of a company’s surroundings can be:

The industry in which it operates,
raw materials needed for production,
conditions of the labor market,
rules and regulations as well as
the culture of the country in which the company is located.

The more unstable the environment of an organization, the more it needs to be able to quickly adapt to changes. For companies in a rather stable environment, it might make more sense to establish standardized processes to focus on efficiency.

Which technology am I using?

Before jumping into the process of reorganizing the entire organization it makes sense to take a look at the currently implemented technology. Are there systems in place that can quickly provide you with data necessary for you to make informed business decisions or do you need to manually gather the required information in various Excel sheets? The answer to this question may greatly impact your organizational design processes.

Are people ready for change?

Starting the process of designing an organization will sooner or later result in changes made to business processes and/or structures. It remains paramount to have all employees on board and ready to accept changing conditions. This can sometimes be challenging. Make sure that employees understand why it is necessary to abandon old habits and point out how things will change for the better if they do so. Keep them engaged throughout the process and communicate plans as well as results for them to not feel left out. 

Size and age of the organization

As companies age and grow, the challenges, which they have to face, change. It is crucial to know in which state of development one currently is to ensure that the set goals and chosen strategy are reasonable. Keep in mind that processes are likely to become more complex the bigger the organization grows and establish ways to adjust organizational structures to stay on track to achieving your goals.

Go beyond structure

When designing an organization, you should not necessarily focus on the organizational structure only. It is also important to understand the processes and strategies as well as the connection between them that form the company. Once it has been identified where things are going wrong in these areas and what is required to fix it, the necessary changes to the organizational structure will come naturally. 

How Ingentis org.manager facilitates organizational design

Ingentis org.manager offers many features that can support you in the organizational design process. Advanced capabilities for data visualization allow for the display of all kinds of data in almost any desired form. This way you can gain a quick but at the same time holistic overview of information necessary to make informed business decisions. Thereby, you decide which aspects you want or need to focus on. 

Moreover, its powerful feature for workforce modeling makes Ingentis org.manager an even more valuable tool in designing the organization. Model different what-if scenarios based on the current state of the organizational structure. Affected key metrics are updated in the process making it easy for you to immediately see and evaluate consequences of potential changes. This does not only facilitate the organizational design process but also helps making decisions that will really lead to the desired outcomes. 

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