Organization Design/Transformation

What is Organization Design?

Organization design is simply defined as the organization and division of labor to produce or deliver a company's goods or services.  "Organization design" is more than "organization structure".  When executives think about "organization", they typically think about "organization structure". 

This leads to decisions about different ways to coordinate and divide work functions in order to:

• Meet customer demands
• Manage operations efficiently and control variability
• Make a profit
• Gain market share
• Develop or maintain core competencies
• Create a high performance work environment

The traditional "solutions" to achieving these objectives lead executives to organize work along one or more of the following principles:

• Customer/Market organization
• Functional organization
• Product/Service/Program organization
• Geographic organization
• Matrix organization

Any of these organizing principles brings trade-offs.  There is no "one" right way to organize and coordinate work in a large, small, or mid-size organization.

The keys to success lie not only in the "organization structure" but in the "organization design".  The organization "design" has to do not only with how the work is structured, but with other elements that have significant impact on overall organizational performance.  These elements include such things as:

• Job design
• Teaming arrangements
• Management practices
• Compensation practices
• Policies and procedures
• Communication practices
• Use of technology to control variability and provide information
• People processes (performance management, hiring talent, developing talent, etc.)

And most important.....

• How well all of these elements are in "alignment"

Approach:

Whether starting a new plant or facility, or redesigning an existing one, the approach to this type of project requires careful planning and execution. 

Organization design/re-design represents a holistic approach to transforming the organization, as opposed to a piecemeal approach for improving business processes.  Organization design looks not only at how the core process is working, but other aspects of the organization as well.  This is done in a structured, systematic, yet efficient manner, enabling the achievement of significant improvement in not only operational performance, but in how the culture of the organization supports or reinforces employee commitment to those improvements. 

The organization is viewed as a set of process steps that transform inputs into outputs.  The effectiveness and efficiency of this transformation process is affected by a number of things, as depicted in the diagram below.

To the extent that:

• The organization's strategy is well understood and executed

• The structure is aligned to support that execution

• Technology enables the transformation process

• Management practices reinforce effective work practices, and

• That policies, procedures, and various people processes are in alignment...

...the organization design will enable high performance.  If these elements are not aligned, however, the organization's performance will be sub-optimal.

Key actions typically associated with an Organization Design/Re-design initiative include:

• Establishing a formal governance structure and processes for the initiative with the direct involvement of executives who have direct authority and responsibility for the organization's core business processes

• Identifying and scoping the organization design initiative

• Establishing a design team

• Systematically analyzing the organization's core business processes to identify the root causes of poor quality, customer dissatisfaction, high costs, low throughput, and other key operational problems

• Systematically analyzing organizational and people processes that may be contributing to sub-optimal performance

• Formulating a design solution and implementation plan to address the root causes of problems, and lead to lasting organizational improvement.