Strategic Organization Design The Need: Senior organizational leaders are constantly facing the need to restructure their organizations. Changes in leadership, a shift in strategy, or changing factors within an organization often create the need for reorganizing. Organization design is one of the most potent tools available to senior managers for shaping the direction of their organizations. It can be a key leverage point for directing attention and energy to certain critical activities in an organization.
Organizational leaders, however, often lack the tools necessary to help them in aging decisions about how to structure their organizations. Efforts at restructuring are often uneven and unsystematic. Decisions to reorganize are often made with Insufficient Information and without a clear process to guide the effort. The result Is that reorganizations often fall to produce the desired effects, leading Instead to further confusion or problems within the organization.
The Process: Strategic Organization Design Is a four-phase participative process Intended to provide senior leaders with a systematic, step-by-step method for examining the structure of their organizations. The four-phases are as follows: p Preliminary Analysis p Strategic Design p Operational Design p Implementation The preliminary analysis involves the collection of information necessary for making design decisions. Structured interviews are conducted focusing on the strategy of the organization, the key tasks being performed and current strengths and weaknesses of the organization.
Operational design involves the structuring of supervisory roles, information flows, and Jobs within the context of the strategic design decisions. Implementation Involves managing the translator from the current design too new design. The key restructuring decisions are made during the strategic design phase. This phase involves six steps: Step 1. Identify design criteria. Step 2. Generate grouping alternatives. Step 3. Evaluate grouping alternatives against the criteria. Step 4. Generate linking mechanisms. Step 5.
Conduct an impact analysis. Step 6. Select a new design. The goal of the strategic design phase is to develop grouping and linking combinations that best support the strategy and basic work of the organization. Before any design decisions are made, the management group identifies design criteria – statements about what the new design will need to be able to do. These statements are reflections of the organization’s strategy, its basic tasks, and the current strengths and weaknesses identified during the preliminary analysis.
Next, several different grouping alternatives are developed by the group and assessed against the design criteria. Linking or coordinating mechanisms such as liaison roles, integrator departments, etc. Are then generated for each of the possible grouping alternatives. This step depends on the need for information exchange between groups in a particular design. Finally, an impact analysis is conducted to determine the effect that the new design will have on the organization. At this point a final design can be selected using the information and ideas generated during each step.
Often the final design is a hybrid of several alternatives considered during the process. Who Should Be Involved? This process is highly participative, involving each member of senior leadership staff of an organization, I. E. A Vice President and each of his or her direct reports. The process draws heavily on the knowledge of the organization that each senior staff member has, and its success depends on the sharing of their ideas, concerns, and for each member of the senior staff. The process is not only for those groups who have an immediate need to restructure.
Leadership groups who only want to modify their organization slightly, or who simply want to reexamine their current structure may also benefit from using this process. The process can help managers to solidify their strategy and ensure that their structure is consistent with it. Page 3 Strategic Organization Design Process Outline Objective: To provide a systematic participative process to help leaders structure their organizations in a way which helps accomplish the overall business strategy as well as the day-to-day work.
Phase l: Preliminary Analysis Conduct structured interviews to: v Identify strengths and weaknesses of the existing organization Clarify issues related to business strategy and organizational design Phase II: Strategic Organization Design v Design Criteria: Review information from the preliminary analysis and generate criteria for a new design v Grouping: Generate several design options and evaluate against criteria – Grouping By Output – Product, Service, or Project – Grouping By Activity – Function, Work Process, Knowledge or Skill – Grouping By Customer – Market Segment, Customer Need, Or Geography v Linking: Identify information flow requirements, select ways to facilitate the flow of information to meet the requirements, and evaluate against the criteria v Impact Analysis: Analyze each option to determine feasibility given the existing leadership skills, power relationships, and work environment. Phase Ill: Operational Design v Carry out the operational homework necessary to put organization design decisions in place v Design work charters, reporting relationships, information flows, etc. Phase lb. Implementation v Develop a strategy for implementing the new design v Assess the potential resistance to the new organization new one.