Designing organizational structures: methods, principles, steps and elements

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Designing organizational structures: methods, principles, steps and elements
Designing organizational structures: methods, principles, steps and elements

Design Organizational Structures is a step-by-step methodology that identifies dysfunctional aspects of workflow, procedures, and systems, realigns them to current business realities and goals, and then develops plans to implement new changes. The process is aimed at improving both the technical and personnel aspects of the business.

For most companies, the design process results in a greater improvement in the organization, results (profitability, customer service, internal operations) and employees who are empowered and committed to the business.

Formation of principles

The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that affects all aspects of corporate life, so you can achieve the following benefits when developing the right methodology:

  1. Great customer service.
  2. Increase profitability.
  3. Decrease in operationalexpenses.
  4. Improved efficiency and cycle time.
  5. A culture of dedicated and engaged employees.
  6. A clear strategy for managing and growing your business.

Design refers to the integration of people with core business processes, technologies and systems. A well-designed organization ensures that the form of the company is consistent with its purpose or strategy, meets the challenges associated with the realities of the business, and greatly increases the likelihood that the collective efforts of people will be successful.

As companies grow and challenges in the external environment become more complex, the business processes, structures and systems that once worked become barriers to efficiency, customer service, employee morale and financial profitability.

Organizations that do not update periodically suffer from symptoms such as:

  1. Inefficient workflow with no value added breakdowns and steps.
  2. Over-effort ("we don't have time to do it right, but we have time to do it again")
  3. Fragmented work with little attention to the greater good.
  4. Lack of knowledge and customer orientation.
  5. Lack of accountability ("It's not my job").
  6. Cover and blame instead of identifying and solving problems.
  7. Delays in decision making.
  8. People don't have the information or the power to solve problems.
  9. Management, not front line, is responsible for solving problems when things go wrong.
  10. It takes a lottime to do something.
  11. Systems are poorly defined or reinforce misbehavior.
  12. Distrust between workers and management.

Methods used

It is important to consider that different systems of interaction are involved. While the process of designing organizational structures is adaptable to the size, complexity, and needs of any firm, it is not limited to the internal demands of upper management. Each solution path is worked out individually. The system itself is based on the following methods, which will be listed below.

1. Charter of the planning process

As senior executives, you have come together to discuss current business results, the state of the firm, environmental requirements, and the need to embark on such a process. What are the next actions? You establish a charter for the organizational design process. It includes the "reason for change", desired outcomes, scope, resource allocation, timing, participation, communication strategy, and other parameters that will guide the project.

From time to time, management may go through either a strategic planning process or a team development process before starting a project change initiative, depending on how clear they understand their strategy and how well they work together as a team.

2. New policy development

The management team (or others who have been invited to participate in the process) look ahead and design organizationalstructures that include recommendations for an "ideal future". At this level, the steps in this process include:

  1. Determine your main organizing principle.
  2. Optimizing core business processes that result in revenue or results for clients.
  3. Documentation and standardization of procedures.
  4. Organizing people around core processes. Determination of the number of personnel required for the main work.
  5. Define tasks, functions and skills. What are the performance metrics for each team function? How are they judged and held accountable?
  6. Identify equipment, layout and staffing needs for various teams and departments throughout the organization.
  7. Define support resources (finance, sales, personnel), mission, personnel, and where they should be located.
  8. Define a governance structure that provides strategic, coordinating and operational support.
  9. Improving coordination and development systems (hiring, training, remuneration, information sharing, goal setting).

At some point, the design process turns into transition planning as critical implementation dates are set and specific action plans are created for the implementation of the new project.

And a key part of this step is to communicate progress to other members of the organization. A communication plan has been developed that educates people about what is happening. Education brings awareness, and inclusionof each - to the beginning of obligations.

3. Project Implementation

Now the task is to bring the project to life. Methods for designing organizational structures should always include elements of implementation. Without them, tasks will not run. People are organized into natural work groups who learn the new plan, team skills and the formation of initiative groups. New job roles are explored and new relationships are established within and outside the unit.

Equipment and technical means are being rearranged. Remuneration systems, performance improvement systems, information exchange, decision-making and management systems have been changed and adjusted. Some of this can be done quickly. Some companies may require more details and be implemented over a longer period of time.


Organizational design methods perform various business functions. They are designed to satisfy specific motives. Efforts must also be made to align the organizational structure with changing needs. A good system not only facilitates communication, but also brings efficiency in different segments. Therefore, when developing, it is important to pay attention to the principles.

1. Encouraging Efficiency

Designing the organizational structure of an enterprise includes some positive elements for employees. In response, you can get a positive response from employees. The main purpose of the organizational structure is to bring efficiency to the various functions.Systematic work will leave nothing to chance, and every action will be coordinated to perform it to the maximum.

Schema building

Members of an organization strive to maximize the output of goods and services from given resources. Efforts are being made for a systematic, rational and coordinated effort to control various wastes and losses. Various organizational models have been developed to ensure the efficiency of operations. They are determined to achieve their goals.

2. Communication

Designing the organizational structure of the enterprise includes the moment of creating contacts in all departments. Communication is the number one problem in every organization. A good structure provides a proper channel of communication between individuals working in an organization. The established reporting relationships, and the hierarchy of those who report, are also indicated in a good structure. There is a need for a horizontal, vertical and lateral communication process and this is done by a well planned structure.

3. Optimal use of resources

Proper allocation of resources also helps in their optimal use. Designing the organizational structure of the organization assigns a more important place to the activities to achieve common goals. Events are placed according to their importance in the system, and appropriate recommendations are made to allocate resources. Optimal asset allocation is essential for business growth.

4. Job satisfaction

Gooddesigning the organizational structure of an organization ensures that the duties and responsibilities of the various people working in the business are clearly assigned. Jobs are distributed according to their knowledge, experience and specialization. People get a chance to explain their work. When people can work within limits, there will be job satisfaction.

5. Creative Thinking

The principles of designing organizational structures may include the item freely plan and carry out their work. It allows the individual to think and develop new and better ways of accomplishing the tasks at hand. The organizational structure tries to place people in the places where they are most suitable. Many people have contributed to the development of managerial thinking through their creativity in a particular part of the company.

6. Ease of management

The principles of designing organizational structures are also based on the optimization of this process. There are many people working in the business. Their function should be defined and responsibilities assigned according to the requirements of the organization. A good structure will help establish relationships between people working in different positions. The organizational system is the mechanism by which management directs, coordinates and controls the activities of various individuals.

Task optimization

A well thought out structure will help both the management and the running of the business. It is guaranteed that no activity is left unattended and work is distributed inaccording to the capabilities of the persons carrying it out. Well thought out organizational design steps are a great aid to good management. Consider them.

Design stages

The system being created must meet the requirements of the business. This should ensure optimal use of manpower and the various functions should be performed properly. Harmonious relations between people in different positions are necessary. Structural design is an important task that must be carefully considered. Below will be listed the main points on which a complete planning is being developed.

Step 1: Defining activities

The actions to be taken in order to achieve the firm's objectives must be defined. It is also required to define the functions that must be performed to achieve various goals, and the actions associated with these functions. Without this stage of designing the organizational structure, managers will not be able to get the desired result.

Distribution of responsibility

The main activities are divided into a number of subtypes of each industry. When defining species, it should be borne in mind that none of them has escaped duplication of activities, and the various functions are performed in a coordinated manner.

Step 2: Grouping activities

Closely related and similar activities are grouped for departments and industries. Coordination between activities can only be achieved through proper accumulation. Grouped Viewsactivities can be assigned to different positions. Giving directions to individuals creates authority and responsibility. This factor in the design of organizational structures allows you to increase the importance of a particular employee. Authority is delegated to the lower levels of various departments and responsibilities are established.

Stage 3: Delegation of Authority

Delegation is an administrative process where people do something different by making them responsible. When different jobs are created in an organization, those individuals are assigned a job. To get the job done, you need authority. Authorities are delegated to different persons in accordance with the distribution of responsibility. The final stage of designing the organizational structure of management should clearly reflect this. In the process of task assignment, authority is created in the organization, a system that determines who will formally interact with whom.

Features of a good system

Designing an organizational structure suggests that the created device must meet the various needs and requirements of the company. It should be borne in mind that each company has its own unique form of management. If we consider the features as a whole, summarizing, they will look like the following.

1. Clear line of authority

The basics of designing organizational governance structures begin with the creation of a basic hierarchy. There must be a clear line of authority from top to bottom. The transfer of authority should be carried out in stages and in accordance with the nature of the assigned work. All inorganizations must have a complete understanding of the work and authority delegated to a particular person. In the absence of this clarity, there will be confusion, disputes and conflicts.

2. Adequate delegation of authority

The tasks of designing organizational structures additionally include a competent distribution of responsibilities. Delegation of authority must be consistent with established responsibility.

Creating a Hierarchy

If there is not enough power to receive the assigned task, the job will not be completed. Sometimes managers assign tasks to subordinates without giving them proper authority, indicating a lack of decision making on their part. Inadequate assignments will create problems for subordinates because they may not be able to meet the established requirement.

3. Fewer levels of management

Design elements of an organizational structure should avoid complex patterns. As far as possible, it is necessary to reduce, but within reasonable limits, the levels of management. The greater the number of these levels, the greater the delay in access. Transferring decisions from top to bottom will take longer.

Modeling steps

Similarly, information from lower levels will take a long time to reach the top. The number of management levels depends on the nature and scale of operations. No specific number of structures can be specified for each problem, but efforts should be made to keep them to a minimum. This optimization will reduce coststime.

4. Control Range

The process of designing organizational management structures should include oversight functions. The degree of supervision refers to the number of people a manager can directly supervise. A person should only keep track of the number of subordinates with whom he can communicate directly.

The number of people to be supervised cannot be set universally because it will depend on the nature of the work. Efforts must be made to keep a well-managed group under surveillance, otherwise there will be inefficiency and poor performance.

5. Simplicity and flexibility

Approaches to designing organizational structures should not get complicated. You should not add unnecessary levels of control. A good structure should avoid ambiguity and confusion. The system must also be flexible to adjust to changing needs.

Expansion or diversification may occur, which would require a reclassification of duties and responsibilities. The organizational structure must be able to incorporate new changes without adjusting the core elements. This will allow you not to change all previously entered provisions.

Basic elements

The organizational design analysis should show the talent deployment strategy of the company. Whether this deployment achieves the business goal depends in part on the strength of the overall internal system. Organizational design creates working relationships between people, establishes boundaries of responsibility anddetermines who is accountable to whom.

There are several ways to structure a company. The correct principles for designing organizational management structures stem from the needs and aspirations of the firm. Based on this, they promote the right people.

1. Strategy

The best approach to organizational design takes into account the company's strategic plans. Such activities, meanwhile, follow from the company's vision. Mission - the reason for the existence of a business - its purpose.

Vision is the highest achievement of the company, the implementation of the tasks set. All strategy attempts to realize the vision, and the organizational structure must support these efforts. For example, a company that has decided to expand into foreign markets may consolidate into geographical divisions. Changes in strategy call for an updated structural design

2. Environmental factors

The business environment in which employees work cannot be ignored by organizational designers. An unpredictable, rapidly changing system requires flexibility, adaptability and interagency cooperation.

In such a situation, the design of the organizational management structure of a mechanical enterprise will constrain the dexterity and responsiveness of the staff. Instead, developers can build an organic, horizontal system that aligns levels of government and decentralizes decision-making. At the same time, a stable environment allows the use of controls, well-defined tasks and centralized authority in a mechanistic structure.with its vertical levels of growing power.

3. Company size

Small businesses with few people often have different roles, are informal and don't write many rules. Since the company emerges organically, it would be a mistake to try to impose a formal, mechanistic structure on it. The design of the organizational structure and system in this case should not include imperative and conservative elements of conducting internal activities.

This would be a useless action. In addition, unnecessary bureaucracy can interfere with operations. Large organizations need more control and oversight. A mechanistic structure creates clear accountability and accountability and is therefore suitable for companies with large numbers of employees.

4. Company age

At the beginning of a company's life, its small size provides organic structural qualities that promote flexibility and agility. As the firm develops and expands, it starts:

  • mechanize by adding rules, policies and procedures;
  • set clearly defined goals;
  • implement extensive internal control systems and command chains.

In short, maturity breeds bureaucracy. The older the company, the more likely it is that the internal system will become unwieldy, creating a barrier to innovation, adaptability, and quick responses. The organizational design process must take into account the extent to which the old company needs to restructure itself in order to reduce itsmechanized system. Otherwise, serious managerial and personnel problems may arise.

Structural projects

Structural designs have their pros and cons, so designers must carefully consider each step. Two common themes here are functional and divisional divisions. The functional structure creates departments according to activities such as production, marketing and finance.

Planning and implementation

Clustered activities increase efficiency but can create barriers between departments. The divisional structure groups people according to product, customer, or geographic location, effectively creating small companies with their own marketing, financial, and manufacturing capabilities. This keeps departments focused and responsive, but duplicates business activity between departments and within the company as a whole.

Control type scheme

The org chart is a visual representation of a formal type of design. The plan shows the structure of the organization, relationships and relative levels of positions in each industry. It helps organize the workplace by outlining the direction of control for subordinates.

Even a small one-person business can use some kind of organizational chart to see what functions need to be done. Such planning and vision structures the work and helps to realize all the tasks and solve emerging communication problems.problems.

Organization charts offer the following benefits:

  1. Effectively communicate organizational, service and corporate information.
  2. Enable managers to make resource decisions, provide a foundation for change management, and communicate operational information throughout the organization.
  3. Everything up to the business should happen in a transparent and predictable way.
  4. Provides a quick replacement for formal business hierarchies.
  5. Tells everyone in the organization who is responsible for what and who reports to whom.

There are, of course, a few restrictions on organizational design views:

  • They are static and inflexible, often obsolete as firms change and go through phases of growth.
  • They do not help to understand what is really going on in an informal organization. The reality is that organizations are often quite chaotic.
  • They cannot cope with changing firm boundaries due to outsourcing, information technology, strategic alliances and the network economy.

In the early stages, a business may decide not to establish a formal organizational structure. However, the firm must exist even without a clearly defined plan for the course of development to be successful. Most small businesses find organizational charts useful as they help the owner or manager track growth and change in every industry and direction.


This design approach leads to significant improvements in quality, customer service,cycle time, reduced turnover and absenteeism, increased productivity from 25 to at least 50%. The good news is that the plan can be used for almost any type and size of business. The length of time required to complete the design varies depending on the nature, size and resources of the firm. Large and complex projects can be completed within days. Small firms require much less time and resources.

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