Is your organization well designed? How do you know? What does a well designed organization look like, and how does it feel to work there? How is it different from a poorly designed one?
The answers to these questions lie in the functional structure, also known as the Organization Design, of your work place. You’ve heard the term before, “Organization Design”. The words are familiar to you at a high level, yet may be indistinct as to how they apply to your organization.
Although the concept has been around for ages, many HR professionals are unaware of its strategic impact, and more importantly, how Organization Design should be approached.
In this article we will examine the concept of Organization Design (OD) and how it can work in your organization.
Doesn’t OD mean Organization Development?
While they share the same acronym, Organization Design is not to be confused with Organization Development. In fact, these are two separate concepts. Organization Development deals with the “people” side of business performance; leadership, team dynamics, and operational effectiveness.
Organization Development is an effort that is planned, organization wide, and managed from the top. It is intended to increase organization effectiveness and health through planned interventions in the organization’s process, using behavioral science knowledge. It is used to change beliefs, attitudes and values in an organization. Organization Development entails leadership coaching, effective communication strategies, and change awareness to name a few factors.
The key to recognizing the difference is to understand that Organization Development is a response to Organization Design. In simpler terms, Organization Development deals with “soft matters”, while Organization Design is “hard”.
So what exactly is Organization Design?
Let’s look at a few definitions. Organization Design is:
- About how work gets done. It examines the link between the goals of the corporation and how managers and staff are working to achieve those objectives.
- A process for improving the probability that an organization will be successful by assessing and re-shaping structure and positions to better meet (business) goals. It is a formal, guided process for integrating the people, information and technology of an organization.
- Used to match the form of the organization as closely as possible to the purpose(s) the organization seeks to achieve.
- About determining the configuration of formal organizational arrangements, including the formal structures, processes and systems that make up an organization.
- The way an organization is structured to comply with a strategic plan.
It deals with the allocation of tasks, reporting relationships and levels to provide a means of achieving full organizational alignment between the “people” aspects and the “function”. This alignment refers to the complete integration of skills, jobs and people, with the goals, functions and structure of the environment on an ongoing basis.
Is this a good thing?
An effective organizational design helps communications, productivity and innovation. It creates an environment where people can work effectively.
According to Capelle Associates Inc., an Organization Design consulting firm in Toronto and Montreal, the benefits of Organization Design include:
- Improved employee satisfaction
- Improved customer satisfaction
- Improved financial performance
- Improved competitive advantage
- Significant return on investment