Key Considerations in Organization Design
Role of organizational structure
Developing an organizational structure involves defining the framework around which the business operates and provides guidance to all employees by laying out the official reporting relationships that govern the workflow of the company.
It is therefore important for every organization to have a well-structured organizational chart that indicates how an organization functions, how it is managed, how information flows and is processed within an organization, and how flexible or responsive the organization is.
The development of the organization structure highly impacts other aspects in the company such as communication, corporate governance, operations and procedures, organizational strategies, customer relations, and job satisfaction.
Tall organizations use many layers of management, whereas organizations use fewer levels, and managers often have a wider span of control. If the organization is at a developmental stage, then it may require a simple structure showing clear lines of overall communication, functions and responsibilities of each unit, lines of authority linking units, and lines of communication between units.
Developing an organization structure begins with defining the objectives of each department, as this is crucial in determining the organizations direction through goals, objectives, values and/or missions. The strategy defines the criteria for selecting an organizational structure and helps guide decision-making by:
- Establishing an agreed-upon definition of objectives and strategies that is relevant to the business and its success.
- Once defined, integrating those strategies into the corporate vision and linking to the organization's mission, values, job descriptions, corporate beliefs and goals.
- Focusing on developing strengths by understanding that the organization has areas where it may lead, and others where it may lag.
- Establishing accountability by encouraging people to set their own targets and report regularly.
- Building on what already exists if the organization if a part and subsidiary of another larger one.
The next level in the design of the organizational structure involves mega processes. Each mega process involves many different departments, units and divisions, which need to work together. Using both mega processes and company objectives, the main departments can be identified with clear functions and divisions under each department.
The development of the organization structure then identifies clear roles and decisions in job descriptions which are key resources for all staff members. For managers, job descriptions are important to clarify levels of authority, and reporting relationships for each particular job. They are also an effective tool to be used in preparing performance standards and conducting performance appraisals, and can also be used for hiring, supervision, training, orientation, and workplace coordination.
For other staff members, a job description is vital to clarify job duties, tasks, roles, and responsibilities. It spells out the skills, qualifications, personal qualities, and supervisory channels (to whom the staff member reports, or who is being supervised).
Once all these ideas are aligned, an organizational structure that clearly indicates communication lines and reporting relationships, and that is adaptive to change can be formulated.
How we help
Helping to optimize structures and procedures is a key area of expertise at MENTOR. We draw from the latest research in global HR & talent management and international best practices to develop an efficient organizational structure aligned with the company's mission, vision, values, and objectives.