Organizational Design is a name given to the ongoing process of improving organizations so that they are better able to achieve their strategies. The organizational design process involves identifying and then improving ineffective strategies, structures, processes, metrics, incentives, capabilities, ways of working and systems.Summary by The World of Work Project
Organizational design, which is sometimes known as organizational architecture, is the process of deliberately designing the key mechanisms that organizations use to function so that they are as effective as possible. This is an ongoing process with involves assessing current mechanisms, designing improvements to them, implementing improvements and then repeating.
There are many different mechanisms used by organizations to shape their ability to perform and meet their organizational objectives. These can be thought of as the levers of organizational performance.
Several different business authors have sought to define what these mechanism are, but as yet there seems to be no firm consensus. The types of things that may be considered mechanism, and which organizational design seeks to improve, include:
- Business Processes
- Roles and Responsibilities
- Rewards and Incentives
The Organizational Design Process
The organizational design process is not too different from a fairly standard organizational change process. At it’s simplest, the organizational design process is as follows:
- Agree that the organizational design is required and obtain sponsorship,
- Understand the current state of the organization,
- Determine what the desired future state of the organization is,
- Devise a plan and design the interventions required to move from the current state to the desired future state,
- Implement the plan, and
- Review, learn lessons and repeat the process.
Of course, this is a very simple summary of what is a considerably more complicated process which may include designing new operating models, deciding on and implementing new systems and ways of working, recruiting new leadership teams and refining organizational strategies.
Good Organizational Design
Good organizational design work has one eye on the current needs of the organization and the other on the future needs of the organization. Overall, organizational design work should aim to be as simple as practicable, flexible to meet the future needs of the organization, reliable under a range of scenarios, economically viable and acceptable to the people within the organization.
The World of Work Project View
We don’t have much to say about organizational design. It sort of is what it is, an effort to design or architect the key factors of an organization so that it’s more effective. At its core it’s a strategic change process, like many others.
We do like the fact that organizational design appears to be fairly systemic in its thinking. However, we are somewhat wary of the fact that organizational design work is often done by agents external to the organization, which in our view diminishes the probably knowledge of the designers as well as making organizational buy-in more difficult to achieve.
As we said at the start of this little reflection, we don’t really have much to say on the subject of organizational design…
Sources and further reading
Where possible we always recommend that people read up on the original sources of information and ideas.
The concepts behind this post are based on conversations we’ve had with guests on our podcast, our experiences in the world of work and general reading. If you’d like to read more on this subject, Jay Galbraith’s 1977 book, “Organization Design” is a seminal work.
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