A crossroad without a traffic light or street signs may cause accidents, as drivers don’t know whether to stop or go first. Similarly, a business without an effective organizational design may end up in chaos, with employees not knowing who to make decisions or what systems to follow.

Every business must have an organizational design to help employees define the chain of command and improve operations. It can help a company streamline its processes, boost team member productivity, strengthen customer relationships, and increase sales.

What Is An Organizational Design?

An organizational design is a process that defines team formation and systems to improve the business’s procedures and achieve its goals. A good structure aligns the company’s operations with its strategies.

Aside from your strategies, you must tailor your organizational design to your unique environment, systems, company size, team member turnover, and work culture. You may work with expert advisors or hire the consultants at Navalent to help you create the right structure for your business.

When Do You Need To Work On Your Organizational Design?

All businesses need a functioning and effective organizational design to guide them toward success. Here are certain situations when you need to start planning or redesigning.

• The Current Design Is Ineffective

Your current organizational design may need to be revised as the company grows. When you notice that your current procedure is inefficient, your team member turnover increases, or your customer satisfaction declines, it may be time to revisit your design. It’s important to continuously measure your structure’s effectiveness to ensure it drives your business toward its goals.

• You Have Updated Your Goals And Strategies

You should always align your organizational design with your strategies to ensure its effectiveness; hence, you must also update it if you decide to change your business strategies to meet your current and future goals.

• There Are Changes Inside And Outside The Business

Changes can happen at all times. Reevaluate and modify your organizational design whenever you experience internal or external changes in your business. Doing so ensures your organizational design continues to serve its purpose. Internal changes could include new apps or digital systems to improve operations. In contrast, external changes can be new laws and regulations impacting your business or changing market trends and competitors.

What Are The Types Of Organizational Designs?

Organizational designs should be planned with the company culture in mind. So, you must choose the right structure that works for your business. Here are the different types to consider.

• Hierarchical Structure: This structure is designed like a pyramid where an executive makes decisions and employees are at the bottom. The chain of command is easier to follow with this setup. However, it can slow down business processes as the top management roles only make decisions. Furthermore, this organizational structure can demotivate team members as they may feel unimportant to the company.
• Flat Or Simple Structure: Common among startups and small companies, this setup has fewer management roles than a hierarchical format. So, there’s no big gap between the top management and the team members. This organization effectively encourages staff involvement in business operations and decision making.
• Functional Structure: Team members are divided into different departments based on their knowledge and specialization.
• Divisional Structure: This structure is used when team members are divided into sub-groups or sub-units based on location or market segment.
• Matrix Structure: To encourage collaboration among team members, they are assigned to different departments and report to multiple heads.
• Team-based Structure: This arrangement sets up smaller teams and assigns them specific products or services.
• Network Structure: In this setup, the business works with external employees, freelancers, or independent contractors to help with company operations.

You may review these structures to determine which one best aligns with your business culture.

How Can You Create Or Redesign Your Organizational Design?

The creation and implementation of an organizational design takes careful planning and decision making. Follow these steps to develop an organizational design that guides your business toward its goals.

1. Planning

The first step is to define your goals to set the strategies to implement. Once you’re clear with your goals and strategies, you may start planning your timeline and the necessary resources to implement your plan.

2. Assessment

Review your current processes to assess your business’s strengths and weaknesses. You can ask your team members for their insights into the present structure and business procedures. From here, you can pinpoint any loopholes in your operations and find areas for improvement.

3. Redesigning

Once you know what area in your business to focus on, you may start designing your new structure and processes. You can start by standardizing procedures to ensure efficiency. Restructuring your organizational chart can also ensure you set an effective setup for your company and assign the best people to perform certain tasks to improve business performance.

4. Implementation

Ensure every team member is on board with the changes in the organizational design. You can help smooth the transition by discussing new roles with your staff. Furthermore, you may provide training to ensure they know the new processes and systems.

5. Measurement

You must constantly check its effectiveness to ensure it works properly. Set key performance indicators for all team members to measure efficiency. You may also conduct surveys to ensure your new structure fosters a good working culture for all employees. There are also other ways to measure success, like profits and customer satisfaction.

Final Thoughts

Organizational designs ensure the business functions well to achieve its goals. Plan and implement it based on sound data to effectively guide your structure, processes, and strategies to avoid wasting time and resources. If done right, it can improve your overall business performance allowing you to grow and maintain a competitive advantage in the market.