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Organization Design – What is Organization Design?

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“Curiously, however, executives rarely talk about it (Organization Design), and even more rarely act to consciously design or redesign their business for success” Naomi Stanford ‘Guide to Organisation Design’

IT organisations are almost infamous for the amount of “restructuring” that takes place in fairly short periods of time. Is this, perhaps, because it is a result of knee-jerk reactions with insufficient attention given to the process of Organization Design?

What Is An Organization?

The word organization is used in a number of contexts. An organization can be a whole corporation or just one part of it.  It can comprise tens of thousands of people or just a few dozen.  Organizations are nested inside one another.  The smaller the organizational unit, the fewer design choices and decisions there are to make, and the more those decisions will be influenced by the larger organization.  Regardless of size, there are still tremendous opportunities for the leader to shape the organization and improve its effectiveness through the Organization Design process.

What is Organization Design?

There are a number of definitions.  Here are a few that really hit the mark:

  • A formal, guided process for integrating the people, information and technology of an organization to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve. (Source: unknown)
  • The deliberate process of configuring structures, processes, reward systems, and people practices and policies to create an effective organization capable of achieving the business strategy. (Source: Galbraith et al)
  • Aligning the structure of an organisation to its objectives and improving the relationships between individuals and groups (Source: unknown)
  • Aligning the organisation to reach its strategic goals (Source: Little)
  • The outcome of shaping and aligning all the components of an enterprise towards the achievement of an agreed mission (Source: Guide to Organisation Design by Naomi Stanford)

From these definitions it is clear that:

  • Organisation Design is a Process
  • The Process is both Formal and Deliberate
  • It is much broader than a “restructure”, and
  • It is based on enabling the organisation to achieve its Strategic Goals and Objectives.

What Organization Design is Not!

A reorganization or restructuring of an organization – be it a team, a department or the whole organization – that is based on structural aspects alone, is not Organisation Design.  This is just moving people around a structure with often less than desirable affects.  Not the least of which are:

  • Confusion, exasperation and stress,
  • Low morale and motivation,
  • Key staff looking for jobs elsewhere,
  • Drop in productivity, and, most importantly,
  • It seldom achieves the desired intention, unless of course the above points were the intention.

Rules of Thumb for Organization Design

According to Naomi Standard in her book “Guide to Organisation Design, there are five Rules of Thumb when it comes to Organization Design.

  1. Design when there is a compelling reason.  There needs to be a strong, strategic, widely accepted business case for the Design, based on the operating context of the organization at the time.
  2. Develop options before deciding on the Design.  Map workflow and identify the impact that different options may have.  It might lead to other interventions, rather than a Design.
  3. Choose the right time to Design.  The organization needs to be kept both stable and moving before, during and after the Design and needs to be incorporated into an overarching Change Management process.
  4. Look for clues that things are out of alignment.  Lack of current alignment with the organizations strategy is generally a good signal for Design.
  5. Stay alert to the future.  The environment in which the organization functions changes constantly, but not all of these changes will change the strategic plan of the organisation to the extent that a Design is needed.  This requires judgement.

Organization Design decisions should not be taken lightly.  It is a resource intensive and costly exercise at the best of times.  Be aware also, that Organization Design, because it involves realignment of all organizational elements (culture, systems, structure, people, processes, and performance measures), may not be the rights solutions.  By doing a thorough assessments of present issues as well as the “as-is” and “to-be” states, may well point in the direction of other, less disruptive and less costly interventions.

If you are considering a Redesign of your IT Organization – be it a team, a department or the organisation as a whole, TalentAlign can help you through the process, including the assessment of current state – give us a call.

By Gail Sturgess

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