Organisational design is the process of aligning the structure of an organisation with its objectives. The ultimate goal is to pursue strategies and meet goals with the help of improved efficiency and effectiveness.
The strength of an organisational structure is that it enables a business owner to have close control over the company’s operation. In order to get to this point, you need to review your organisation’s wants, needs and an analysis of the gap between its current state and where you want it to be in the future.
What triggers organisational design?
- Internal factors require a reaction.
One trigger for organisation design is when external or internal factors have become significant. This could include anything from new competition, new technology, new legislation or new profit margins.
A relatable external factor for many is the Covid-19 Pandemic which forced many businesses to rethink their design strategy to be more flexible.
2. The business’s overall purpose or goals have changed.
Naturally, organisations change over time. This would be classed as a future-focussed organisational redesign.
A full review of existing operations is needed in order to identify what can be kept compared to what needs changing.
Many of our clients who we partner with when moving from ‘start-up’ to ’scale-up’ mode following investment, have a clear need to complete an OD analysis exercise to satisfy the new demands and ambitions of rapid growth to hit financial forecasts.
What are the different types of organisational design?
There are multiple types of organisational structures: functional, multi-divisional, flat, matrix, circular, team-based and network structures.
Some structures are more appropriate for certain types of businesses than others.
A functional organisation structure is one that groups employees by skill, speciality or related roles. It helps to manage employees and meet their business goals.
The advantages of a functional structure include increased productivity, skill development, clarity and minimising cost of operation.
‘The key benefit our clients express from delivery of this approach is the improved role clarity it gives for each employee (old and new) as their role naturally evolves with the opportunity for people to work in a more specialised way as more people join the business.’
A multidivisional organisational structure is a business structure where the divisions in the business will work independently to complete a task. Each division will work towards the same goal but will only concentrate on their own tasks rather than trying to keep up with tasks throughout the entire company.
The advantages of a multidivisional design are that it allows businesses to act quickly. Workers in a multidivisional design have greater control over their tasks allowing them to directly focus.
A flat organisational structure is a model with relatively few or zero levels of middle management between the executives and the frontline employees. Its goal is to have as little hierarchy as possible.
It promotes an increased involvement in decision-making with less supervision.
The Matrix structure is a combination of more than one type of organisational design. It’s typically a way of organising your business so that it does not follow a hierarchical model.
The main advantages of a matrix structure is the improved decision making, breakdown of ‘silo’ barriers, allowing staff to apply skills in different roles and increase efficiencies by sharing resources across company departments.
The circular organisational structure helps to visualise the structure of a business to show information such as who reports to whom and which department every employee belongs to
Circular organisational structures provide strong, centralised leadership and vision. It supports communication and collaboration across divisions and encourages an atmosphere of shared purpose.
A team-based structure is one where multiple teams work together towards a common goal while performing their own specialised tasks. It discourages hierarchy, allowing professionals to have more flexibility.
A network-based organisational model is a type of matrix structure that uses digital technology and specialised employees to complete tasks and assignments without the need for traditional workspaces.
Something that many organisations have had to adhere to over the last few years due to the pandemic!
Many successful businesses have taken the time to choose and incorporate an organisational structure that helps them run more efficiently. Companies of different sizes can benefit from implementing one that is best suited for its size and work environment.
Understanding more about the various organisational structures can help a company decide which structure would be best to complement it based on its unique goals.
In order to make a suitable choice you will need to:
- Review the different structures (Listed above)
- Determine the companies strategy
- Consider the businesses age, size and environment
- Review the information gathered
- Create a visual chart and make a decision
Based on the results of your charts, you can decide which organisational structure might benefit the company the most in order to reach its long-term goals.
If you would like to learn about Organisational Design more in-depth or have any questions, don’t hesitate to drop us a message here.