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Organizational Design
The Fundamentals of Organization Design
There are a few simple yet profound factors to be considered when designing organizations. These factors fall into two categories: the mechanism of the organization (how the “machine” that is the company works) and the human relations component.
With respect to the mechanistic side, ask:
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Does the design support the business and operational strategy? Start with spelling out how you want things to operate, e.g., should activities be grouped by function, product, geography? What are the advantages and disadvantages of each? |
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Does the design facilitate the flow of work? Create flowcharts showing how things will be produced. |
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Does the design enable managerial control? Ensure that the design is manageable and can be monitored. |
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Does the design result in doable jobs? Ask if there are combinations of jobs that entail a manageable scope of responsibilities. |
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What are the various levels of interdependencies and cross-department interfaces? |
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What is the design’s impact on the utilization of resources? |
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What is the design’s impact on specialties and economies of scale? |
With respect to the human dynamic side, ask:
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How will existing people fit into the design? Will you need to replace some of these people? |
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How will the design mesh with the organization’s existing values and assumptions about what is important, the nature of the business, and what it takes for the enterprise to be successful? |
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How will the design affect power relationships among different groups? Who will gain and lose power? |
Combining the mechanistic and human dynamic sides, the next questions are:
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What are the implementation challenges? |
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(And, once implemented) Is it working? |
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