Designing organizational structures is a step-by-step methodology that identifies dysfunctional aspects of the workflow, procedures and systems, realigns them in accordance with current business realities and goals, and then develops plans for introducing new changes. The process is aimed at improving both the technical and personnel parts of the business.
For most companies, the design process leads to more significant improvement in the organization, increased results (profitability, customer service, internal operations) and employees who are empowered and committed to business.
A distinctive feature of the design process is a comprehensive and holistic approach to organizational improvement, which affects all aspects of corporate life, so you can achieve the following advantages when developing the right methodology:
- Great customer service.
- Increase profitability.
- Lower operating costs.
- Improved efficiency and cycle time.
- A culture of dedicated and committed employees.
- A clear strategy for managing and developing your business.
By design is meant the integration of people with core business processes, technologies and systems. A well-designed organization ensures that the form of the company meets its goals or strategies, meets the challenges associated with the realities of the business, and greatly increases the likelihood that people's collective efforts will be successful.
With the growth of companies and the complexity of tasks in the external environment, business processes, structures and systems that once worked become barriers to efficiency, customer service, employee morale and financial profitability.
Organizations that are not updated periodically suffer from symptoms such as:
- Ineffective workflow with breakdowns and steps without added value.
- Excessive effort (“we don’t have time to do something right, but we have time to do it again”).
- Fragmented work with little attention to the good in general.
- Lack of knowledge and customer focus.
- Lack of responsibility (“This is not my job”).
- Cover up and blame, and not identify and solve problems.
- Delays in decision making.
- People do not have the information or authority to solve problems.
- Leadership, not cutting-edge, is responsible for solving problems when something goes wrong.
- It takes a long time to do something.
- Systems are poorly defined or reinforce abnormal behavior.
- Distrust between employees and management.
Methods used
It is important to consider that various systems of interaction are involved. Although the design process for organizational structures adapts to the size, complexity, and needs of any firm, this is not limited to the internal requests of senior management. Each solution path is worked out individually. The system itself is built on the following methods, which will be listed below.
1. The charter of the planning process
As senior managers, you come together to discuss current business results, the state of the company, environmental requirements, and the need to begin such a process. What are the next actions? You are setting a charter for the organizational design process. It includes the “reason for change”, desired results, volume, resource allocation, timing, participation, communication strategy and other parameters that will guide the project.
From time to time, management may go through either a strategic planning process or a team development process before initiating a project change initiative, depending on how clearly they understand their strategy and how well they work together as a team.
2. New policy development
The management team (or other employees who were invited to participate in the process) look ahead and design organizational structures that include recommendations for an “ideal future”. At this level, the steps in this process include the following points:
- Defining your core organizational principle.
- Optimization of the main business processes that lead to revenue or results for customers.
- Documentation and standardization of procedures.
- Organization of people around the main processes. Determination of the number of personnel required for the main work.
- Definition of tasks, functions and skills. What are the performance metrics for each team feature? How are they evaluated and held accountable?
- Determining the needs for equipment, planning and staffing of various groups and units throughout the organization.
- Identify support resources (finance, sales, staff), mission, staff, and where they should be located.
- Defining a management structure that provides strategic, coordinating and operational support.
- Improving coordination and development systems (hiring, training, remuneration, information exchange, goal setting).
At some point, the design process turns into transition planning, since critical implementation dates are set and concrete action plans are created for the implementation of the new project.
And a key part of this step is informing the progress of other members of the organization. A communication plan has been developed that teaches people what is happening. Education brings awareness, and the inclusion of everyone at the beginning of commitment.
3. Project implementation
Now the task is to bring the project to life. Methods of designing organizational structures should always include elements of implementation. Without them, tasks will not be performed. People are organized into natural working groups that learn the new plan, team skills and the formation of initiative groups. New work roles are being explored and new relationships are being established inside and outside the unit.
Equipment and hardware are rearranged. Remuneration systems, efficiency improvement systems, information exchange, decision-making and management systems are changed and adjusted. In part, this can be done quickly. Some companies may require more detailed information and be implemented over a longer period of time.
Basic principles
Design methods of organizational structures perform various business functions. They are designed to meet specific motives. Efforts should also be made to align organizational structure with changing needs. A good system not only facilitates communication, but also brings efficiency in different segments. Therefore, when developing it is important to pay attention to the principles.
1. Promotion of efficiency
Designing the organizational structure of an enterprise includes some positive elements for employees. In response, you can get a positive response from employees. The main objective of the organizational structure is to bring efficiency to various functions. Systematic work will not leave anything accidental, and each action will be coordinated to perform it to the maximum.
Members of the organization strive to maximize the output of goods and services from specified resources. Efforts are made for systematic, rational and coordinated efforts to control various wastes and losses. Various organizational models are designed to ensure operational efficiency. They are committed to achieving their goals.
2. Communication
Designing the organizational structure of the enterprise includes the moment of creating contacts in all departments. Communication is the number one problem in every organization. A good structure provides an appropriate channel of communication between people working in the organization. The established relationships in reporting, and the hierarchy of those who report, are also indicated in a good structure. There is a need for a horizontal, vertical and lateral communication process, and this is accomplished by a well-planned structure.
3. Optimal use of resources
Proper allocation of resources also helps in their optimal use. Designing the organizational structure of an organization gives a more important place to activities to achieve common goals. Events are placed in accordance with their importance in the system, and appropriate recommendations are made for resource allocation. Optimal asset allocation is essential for business growth.
4. Job satisfaction
A good design of the organizational structure of the organization provides a clear distribution of duties and responsibilities of various people working in business. Jobs are distributed according to their knowledge, experience and specialization. People get the opportunity to explain their work. When people can work within the set limits, there will be job satisfaction.
5. Creative thinking
In the principles of designing organizational structures, an item may be included to freely plan and carry out their work. This allows a person to think and develop new and better ways to accomplish assigned tasks. The organizational structure is trying to place people in places where they are most suitable. Many people have contributed to the development of managerial thinking through their creativity in a certain part of the company.
6. Facilitation
The principles of designing organizational structures are also based on the optimization of this process. There are many people working in business. Their function must be defined and responsibilities will be allocated according to the requirements of the organization. A good structure will help establish relationships between people working in different positions. The organizational system is a mechanism through which management directs, coordinates and controls the activities of various individuals.
A well-designed structure will help both management and business. It is guaranteed that no activity is left unattended, and the work is distributed in accordance with the capabilities of the persons carrying it out. Well-designed organizational design steps are great help for good management. Consider them.
Design steps
The created system must satisfy the requirements of the business. This should ensure optimal use of the workforce, and various functions should be performed appropriately. A harmonious relationship between people in different positions is needed. Designing the structure is an important task that must be carefully considered. Below are listed the main points for which full planning is being developed.
Stage 1: Activity Definition
The actions that must be completed to achieve the goals of the firm must be identified. It is also required to identify the functions that must be performed to achieve the various goals, and the actions associated with these functions. Without this stage of designing the organizational structure, managers will not be able to get the desired result.
The main activities are divided into a number of subspecies of each industry. When defining species, it should be borne in mind that none of them escaped duplication of actions, and various functions are performed in a coordinated manner.
Stage 2: Grouping Activities
Closely related and similar activities are grouped for departments and various industries. Coordination between activity can only be achieved by proper accumulation. Grouped activities can be assigned to different positions. Issuing instructions to individuals creates credibility and responsibility. This factor in the design of organizational structures can increase the importance of a particular employee. Powers are delegated to lower levels of various departments, and responsibility is established.
Stage 3: Delegation of authority
Delegation is an administrative process when people do something else, making them responsible. When different positions are created in an organization, jobs are assigned to these individuals. To do the job you need authority. Powers are delegated to different persons in accordance with the distribution of responsibility. The final stage of designing the organizational structure of management should clearly reflect this. In the process of task assignment, the organization creates authority, a system that determines who will formally interact with whom.
Features of a good system
The design of the organizational structure suggests that the created device must meet the various needs and requirements of the company. It should be borne in mind that each company has its own unique form of management. If we consider the features as a whole, summarizing, they will look like below.
1. Clear line of authority
The basics of designing organizational management structures begin with the creation of a basic hierarchy. There should be a clear line of authority from top to bottom. The transfer of authority should be carried out in stages and in accordance with the nature of the assigned work. Everyone in the organization should have a complete understanding of the work and authority delegated to a particular person. In the absence of this clarity, confusion, debate and conflict will arise.
2. Adequate delegation of authority
The tasks of designing organizational structures additionally include a competent distribution of responsibilities. Delegation of authority should be consistent with established responsibility.
If there is not enough power to receive the assigned task, the work will not be completed. Sometimes managers assign tasks to subordinates without giving them proper authority, this indicates a lack of decision-making on their part. Inadequate instructions will create problems for subordinates, because they may not be able to fulfill the established requirement.
3. Less control levels
Organizational design elements should exclude complex patterns. As much as possible, it is necessary to reduce, but within reasonable limits, the levels of management. The greater the number of these levels, the more delays in handling. Transferring decisions from top to bottom will take longer.
Similarly, information from lower levels will take a lot of time to reach the top. The number of management levels depends on the nature and scale of operations. No specific number of structures can be specified for each problem, but efforts should be made to minimize them. Such optimization will reduce the time spent.
4. Control range
The design process for organizational management structures should also include oversight functions. The degree of observation refers to the number of people that the manager can directly control. A person should only monitor the number of subordinates with whom he can directly communicate.
The number of people subject to control cannot be established universally, because it will depend on the nature of the work. Efforts must be made to ensure that a well-managed group is monitored, otherwise there will be inefficiency and low productivity.
5. Simplicity and flexibility
Organizational design approaches should not be complicated. Do not add unnecessary control levels. A good structure should avoid ambiguity and confusion. The system also needs to be flexible to adapt to changing needs.
Expansion or diversification may occur, which would require a reclassification of duties and responsibilities. The organizational structure should be able to incorporate new changes without adjusting the core elements. This will allow not to change all the previously entered provisions.
Main elements
An analysis of organizational design should show the talent deployment strategy of the company. Whether this will achieve the goal of the business, partly depends on the strength of the entire internal system. An organizational project creates working relationships between people, establishes boundaries of responsibility, and determines who is accountable to whom.
There are several ways to structure a company. The correct principles of designing organizational management structures stem from the needs and aspirations of the company. .
1.
. , , . - - .
- , . , . , , , .
2.
-, , . , , .
. , . , .
3.
, . , . .
This will be a futile action. In addition, unnecessary bureaucracy can interfere with operations. Large organizations need more control and supervision. The mechanistic structure creates clear accountability and responsibility and is therefore suitable for companies with a large number of employees.
4. Age of the company
At the beginning of a company’s life, its small size provides organic structural qualities that contribute to flexibility and responsiveness. As development and expansion, the company begins:
- Mechanize by adding rules, policies and procedures;
- Set clearly defined objectives
- implement extensive internal management systems and command chains.
In short, maturity breeds bureaucracy. The older the company, the greater the likelihood that the internal system will become cumbersome, creating a barrier to innovation, adaptability and quick reactions. The organizational structure design process must take into account the extent to which the old company needs to restructure itself in order to reduce its mechanized system. Otherwise, serious managerial and personnel problems may arise.
Structural Projects
Structural projects have their pros and cons, so developers should carefully consider each step. Two common themes here are functional and division units. The functional structure creates departments in accordance with activities such as manufacturing, marketing and finance.
Grouped activities increase efficiency, but can lead to barriers between departments. The unit structure groups people according to the product, customer or geographic location, in fact creating small companies with their own marketing, financial and production capabilities. This makes the departments focused and responsive, but duplicates business activities between departments and within the company as a whole.
Type Control Scheme
An organization diagram is a visual representation of a formal type of design. The plan shows the structure of the organization, relationships and relative position levels of each industry. This helps to organize the workplace, outlining the direction of control for subordinates.
Even a small one-person business can use some kind of organizational chart to see what functions need to be performed. Such planning and vision structures the work and helps to realize all the tasks and solve the emerging communication problems.
Organizational charts offer the following benefits:
- Effectively transfer organizational, business and corporate information.
- Allow managers to make decisions about resources, provide a framework for managing change, and transmit operational information throughout the organization.
- Everything that should happen in business is transparent and predictable.
- They provide a quick replacement for the formal hierarchy in business.
- Tells everyone in the organization who is responsible for what and who is accountable to whom.
There are, of course, several limitations to organizational design types:
- They are static and inflexible, often outdated, as firms change and go through growth phases.
- They do not help to understand what is really happening in an informal organization. The reality is that organizations are often quite chaotic.
- They cannot cope with the changing boundaries of firms due to outsourcing, information technology, strategic alliances, and the network economy.
In the early stages, a business may decide not to create a formal organizational structure. However, the company must exist even without a clearly defined plan so that the development course can be successful. Most small businesses find organizational charts useful because they help the owner or manager keep track of growth and changes in each industry and direction.
Output
This design approach leads to a significant improvement in quality, customer service, shorter cycle times, lower turnovers and absenteeism, and increased productivity from 25 to at least 50%. The good news is that the plan can be used for almost any type and size of business. The length of time required to complete the design varies depending on the nature, size and resources of the firm. Large and complex projects can be completed in a few days. Smaller firms require much less time and resources.