Organizational Design – laying the foundations of Organizational Effectiveness

The speed of constant change and challenges confronting us today in world affairs is accelerating. We face climate change, the pandemic, record energy prices, supply bottlenecks, digitization, and talent workforce shortages. Organizations must constantly re-evaluate proven processes and structures to become more nimble to anticipate and respond to challenges. These new agile organizations will thrive and improve their market position, while rigid and non-transparent hierarchies with long decision paths will increasingly struggle to survive. It is not surprising that the phrase “organizational design” is currently on people’s minds. As the American organizational theorist, Jay R. Galbraith concludes, “A well-designed organization makes the collective work of accomplished complex tasks easier.”

What is organizational design?

Organizational design –- so the theory goes – creates an environment in which companies can achieve their goals, fulfil their purpose and implement their vision. However, there is no universal formula for good organizational design, and the structural conditions that make a company successful are as individual as the company itself. It’s therefore essential to consider influencing factors when conceiving one’s organizational design. Case in point:

  • What is the company’s market strategy? Is it producing a low-priced product for the mass market or operating in a niche market? What is the priority for sustainability? Is it about the speed of growth and rising profits or establishing a long-term position in the market?

  • What is the company’s operating environment? How crisis-prone is the industry or sector? Which raw materials are critical? What are the labor market conditions? In which country or cultural area is the company located?

  • How large and mature is the company? How many people are employed? Is it a young start-up or a traditional company with a long history? What are the key revenue streams?

After evaluating the status quo, it is essential to act nimbly by surveying the need for action and initiating change. “But this alone is not the end game!” advises Steve Jenkins, International Sales and Partnering at Ingentis Softwareentwicklung GmbH. “Rather, one must repeatedly test the entire corporate structure and its underlying processes to measure how nimbly it can drive change, rather than simply looking at a snapshot of the result.” Only in this way will it become clear in time what optimizations are necessary to drive more effectively towards the defined goals. “Anyone who wants to be successful in today’s world with all its challenges must be flexible and agile – a continuous questioning and curiosity of the current state is essential towards this end,” states Jenkins.

Software supports organizational design

Rapidly accelerating technology and AI enable constant change – one more reason to take advantage of it! When applied correctly, the appropriate software becomes indispensable to support organizational design. A tool, such as Ingentis org.manager is highly beneficial for the first step, executing the current state analysis in providing a clear visualization of HR data and the organization’s structure. A comprehensive overview of all information relevant to driving well-informed decisions becomes quickly available. The individual company decides which data and facts to focus on – a vital aspect of each organization’s above-mentioned unique traits for purposes of organizational design.

Simple Approaches for Getting Started

One option is to look at the number of employees at various hierarchy levels of the organizational structure. A well-established rule of thumb is that the lower the hierarchical level, the more employees should occupy it. If this is not the case in one’s organization, examine and re-evaluate the root cause and whether changes might be necessary.

Another approach analyzes spans of control: Two managers accountable for similar areas should carry responsibility for a comparable number of employees. However, if the leadership spans diverge significantly, it may make sense to question why and make changes. Tools such as Ingentis org.manager, will quickly identify these discrepancies and allow you to keep control of your layers and spans of control.

Well-founded decisions through simulation

In addition to the dynamic data visualization to measure and identify possible courses of action, Ingentis org.manager can simulate (What-if) structural changes based on the current situation. Simple drag-and-drop facilitates objects being easily added, deleted, or changed and moved to other locations in the org structure. Key metrics directly impacted by changes will update with a simple click. In this way, the impact of planning can be evaluated and discussed before execution. The organizational design process is both simplified and accelerated using such a dynamic tool.

Simulate possible changes to the organizational structure without changing the data in the HR system. Key figures are updated at the push of a button.

Organizational Design to successfully navigate today’s challenging times

“During these rapidly changing times, a successful company will be the one that doesn’t restrict itself to legacy processes and structures. Today’s organizations must react boldly and swiftly, and ultimately be willing to transform themselves in response to constantly changing conditions,” Steve Jenkins concludes. “The right organizational design that promotes an environment in which the company can achieve its goals, fulfil its purpose and realize its vision is essential.” Dynamic HR software solutions such as Ingentis org.manager, which visualizes HR data and the company’s structure, with the additional benefit of simulating change, offer significant added value.

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Steve Jenkins, with over 15 years’ experience within the HR Technology arena, leads the Ingentis business across the Middle Eastern region as well as managing the UK.  His experience covers the areas of Recruiting, Contingent Workforce Management, Talent Management, Workforce Planning and HR Analytics solutions. More recently, Steve has dedicated his energies to the field of dynamic Org Charting solutions.  Empowering organisations to gain a deeper visualisation of their most important asset – their people, which in turn enables the business to become more nimble with transformation projects, dealing with rapidly changing scenarios and building more agile organisations to deal with the future challenges that will face businesses in years to come.

Source: Ingentis