Organizational design refers to the structure of an organization, design in a way that helps the organization to achieve its goals effectively. It can be called the backbone of an organization. Through it, the roles, process, chain of command, and other elements of the structure are determined.
You can compare the organizational design as a mechanical arrangement, showing which part is connected to what, and what powers which part. Through it, aspects of the business become very clear. And these are some of the essential elements to have a clear idea.
With it, one can find out who is responsible for which activity and who holds the authoritative power. Through that design, the limitation of the authority becomes apparent, and employees have a concrete idea to whom to report to. Besides these, you can also see who has control over the resources and, most importantly, how the information flows through the organization.
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What Is Organizational Design?
Elements of Organizational Structure
The organizational design depicts the structure of an organization, and through that design, you can see the elements that come into play. Organizational structure has some specific aspects. These elements include the organizational chat, board of directors, roles, the chain of command, job descriptions, and other elements like policies, and more.
When creating a company, people use it to structure their organization with familiar elements. Familiar elements usually include the chain of command, different departments, managers, and more.
Organizational Design Drivers
Few drivers play an important role in determining the organizational design, which in return affects the organizational structure. These elements are organizational strategy, the human resource of the organization, the law, and the operations.
Organizational strategy is one of the most critical drivers of organizational design. Based on the strategy the firm wishes to follow, they will have to chalk it up. However, it can also affect the strategy. Sometimes firms will decide that it will determine their organizational strategy.
Organizational operation means how the organization will work, and it is vital to keep a close connection between the organization’s operation and its design. Another major factor that affects organizational design is the industry’s laws and regulations. Based on the laws and regulations, organizational design may change.
Human resources or people are the fundamental drivers of organizational design. Based on the roles given to the people, the organization design is drawn. Moreover, people who are participating in the designing of the organizational structure influence it; they can have both direct and indirect influence.
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Why is Organizational Design Important?
The organizational design depicts how the organization will operate, who reports to whom, who’s in control, and how the information flows within the organization. Failure to design an effective organizational structure can be detrimental to the firm.
It has to be drawn in such a manner that it will help the firm to operate effectively and efficiently. Also, it has to be done in such a way that the core strategies align with the way the organization operates.
With so much depending on it, it’s best to come up with a design that best suits the firm. Because, what worked for one firm won’t translate the same for your firm.
Through the best suitable design, you can see an increase in inefficiency, and the decision-making process will become faster and more effective. Also, a good design will increase the quality of the product or service; this, in return, will generate more profit. By providing products/services of more exceptional quality, you will find your customer satisfied. Moreover, with a solid design, the working process will be much better and safe, resulting in happier and more motivated human resources.
Furthermore, with a robust design, your firm will be more prepared for the future and the challenges it will bring. On the other hand, a bad design can cost the firm but introducing a problem.
With the bad design, you will find the overall effectiveness and efficiency of the organization have decreased. You will also find the decision-making process to be very ineffective. Time will be wasted, and you will witness disarray in the departments of your firm. Consistency of quality work will decrease, and the customer will not satisfy.
As a result, you will lose customers, and the reputation of your firm will take damage. Overall, because of bad design, you will be getting below-average performance from your firm, and you will fail to achieve the organizational targets.
The organizational design doesn’t translate to a permanent infrastructure; instead, the design needs to be updated. The business world is rapidly changing, and to keep up with the changes, you will need to re-design your design. Failing in to do so will result in the downfall of a robust organizational design.
Organizational Design: Re-Designing
The business landscape is always changing, and it’s in the best interest of a firm to keep up with that change. Keeping up with that change can mean re-designing the organizational design. So, when do you re-design the design? Three triggers will tell you when to change the design; those triggers are:
Change in inside or outside
Chances are you’re trying to innovate your business by bringing in technology, or specific legislation has passed that is keeping you from operating the way you did. Whatever the reason is, internal or external, when the change is need, you need to re-design.
Business strategies need constant development, and sometimes utilizing a different approach will improve the output of your firm. You might want to go eco-friendly. Whether it’s a new strategy or a goal you’re trying to use and achieve, changes need to be made.
Your current organizational design might be outdated. As the business world is changing rapidly, it’s bound to happen. Your solid design will output the best it can to a certain point. After that, your existing design won’t give you the optimum output.
When the existing organizational design reaches that point, it’s a must to re-design your organization.
In conclusion, good organization design is a stepping-stone to success. Through good organizational design and needed re-design, a business will perform its best.
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