importance of organizational design pdf

Business process analysis becomes a tool for identifying where to place organizational boundaries. If the strategy is a mass-production, low cost strategy, a different structure is warranted. As a management consult I have worked with clients to develop a statement of strategic intent prior to a redesign. In fact, analyzing core business processes often identifies where most of the critical breakdowns are occurring. They should be encourages to work together. After all, who has time to really think all these connections through, when the world around us is changing so quickly? Student of Business Management (Corresponding … Content Guidelines 2. Create the right integration mechanisms to align the product structure with overall business objectives. • The right information is getting to the right people. work specialization The degree to which tasks in an organization are subdivided into separate jobs; also known as division of labour. 3. Disclaimer 9. http://www.dr-glennhole.org/business-process-design/. A poor organization design can prevent the business unit leader from having full and adequate control over key resources (marketing, product development, etc.). How well organizations align their structures, processes, management systems and cultures with a well-articulated strategy, greatly impacts their ability to execute and achieve bottom-line results. This article demonstrates the strategic importance of organization design for business leaders; the impact effective design has on the bottom-line; and tips on how to design organizations for flexibility. • Establish systems for the seamless sharing of knowledge. In fact, analyzing core business processes often identifies where most of the critical breakdowns are occurring. In structure, the focus of this article and a central component of organization design, the researchers found that the most effective structures are those that: Simplify the environment, making it easy to work in, Promote cooperation and exchange of ideas and information. Course Hero is not sponsored or endorsed by any college or university. The structure of an organization should be designed in such a manner so as to increase control over its environment. `EĿĎ�}��tv��5�v#lĤ�U�X��=��:�ۑ��j��n%[�ҹ��N��X��Ͽ�q��- 8��8��"�`�E{W�^�~I�R��{�ԕ>'3��(��l�0�"�5gZJS�tR�h��q��%�3��i��a��3��\+��|6ưx�e�SkjY��Bq�#��m��Ҵ��F��`x$�b�m�,��A��K��>��ʕ�i ��y�(I`��J�E�z+�ff��-ԙ�� Լ�U;qi��$rj��C.�/��=z��-� .��,�,��q�HАy]��n�S��, O��T��c�G��a Develop a statement of strategic intent. Some of these systems include: rewards, goals and metrics, decision-making, training and staffing. These changes can occur slowly, “sneaking up” on the company and accumulating to the point where a redesign is needed. This will enable them to respond more quickly and effectively to market changes. 7. If the strategy is a mass-production, low cost strategy, a different structure is warranted. It provided greater ability to carefully allocate resources (people and money) to specific areas to drive strategy, It ensured that the right information was reaching the right people at the right time, It provided greater transparency in the financial performance of its key products and technologies that in turn enabled it to track the effectiveness of its strategy. Innovation and Efficiency! Competition allows a company to develop a business strategy to out-perform competitors by producing better products and services. Existing organization designs can lose relevance as market conditions change, leadership changes, and processes change to increase efficiency. These tools include process mapping, non-value analysis, variance analysis, responsibility charting, etc. The design of organisational structure is important on account of the following reasons: (a) The ability of the company is greatly affected to deal with contingencies. Strategy cannot be successfully executed without the right organization design. A critical success factor for organizations today is the ability to adapt their structures, systems and processes to capture new markets and expand existing ones. Effective organization design recognizes that mechanisms and structures must be implemented that cut across departmental boundaries so that information is properly shared. Dealing with Contingencies, 2. Centralize I/T, decentralize I/T, institute shared services, outsource, etc. The statement of strategic intent is the basic building block for an effective organization design. During the early design phase, structure/process modifications are often incorporated that address other core competencies, such as the need for production efficiency or brand/product differentiation. �k\��,�n&�J.�^�7ִ�� V?��U��>�Rvx Managers of today are under pressure to search for new and better ways to coordinate and motivate their employees to increase the value created by their organisations. Total or partial publication of this document without the express, written consent of IE is prohibited. McKinsey 7-S Model– systems, s… The underlying problem, however, is often a poor design. Yet, leaders often feel that once they have determined the key organizational boundaries, their job is done. The design and use of new and more efficient organisational structure is equally important in producing quality goods and services. �^�pe]fA�FU�iٚ��{��g��w:�M}��r3�W=9��e��9��Z��uU"��Q�AtS]��_C�oK�W�� 3?%��ξ��i:��^tu�Z�pPG�Ucg��i]��pCP),"�*H�%ρ��> >��}f�H Z'錜��l�X�`}z�k�;_��[�A&C�q��A�p� >�x"IZ��1\�(��^�D��O�^��C��-_j�N��&��q̲�QtT�~v��ƍx��E,��e%�3��i��g�x�� Many leaders believe they have a coherent organization strategy. And while these redesigns may resolve some of the current issues, without proper analysis and careful deliberation, they often produce other consequences that then must be addressed. • It provided greater ability to carefully allocate resources (people and money) to specific areas to drive strategy, • It ensured that the right information was reaching the right people at the right time, • It provided greater transparency in the financial performance of its key products and technologies that in turn enabled it to track the effectiveness of its strategy. 1. Organisational design has major implications for an organisation’s ability to deal with contingencies, achieve competitive advantage, effectively manage diversity and increase its efficiency and ability to innovate new goods and services. • Specialized roles (e.g., “Process Owner”) to ensure that processes are implemented consistently across different business units, and continuous improvement of those processes occur). An organisational design is the process by which a manager selects and manages elements of structure so that an organisation can control the activities necessary to achieve its goals. organizational design or simply don’t know what to do. Last revised, 25 November 2011. These modifications enable leaders to create unique organizational hybrid designs that can be shifted to address new market needs at later dates. Organization design is a complex undertaking with no guarantees. Slowdown/difficulty in meeting business plan targets, Disconnects in key processes as they flow across different departments or work groups, High levels of conflict within and between organizational units, Difficulty obtaining and sharing resources across the organization, Lengthy, cumbersome decision-making processes, Metrics are hard to define or overly complex. The statement needs to be involved in the leadership team and others in the organization, and then it must develop a process to ensure that this statement is communicated throughout the organization and is clearly understood. Published by IE Business Publishing, María de Molina 13, 28006 – Madrid, Spain. Business process analysis becomes a tool for identifying where to place organizational boundaries. H��"M��Ck�`�.��?�r� /3]6c�dl the key consideration is that it must enhance the primary competitive advantage needed by the company. Disclaimer 9. Organisational design plays a crucial role in innovation and search. 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