Whether we like it or not, the business landscape is constantly shifting. Every day, new developments in technology, globalization, and modernity are challenging organizations to keep up.
When a company fails to adapt to these changing times, its employees become disengaged. After all, what’s the point of repeating the same work that yields no positive result? This creates a mistrust between the employee and the company.
So how do we prevent companies and employees from reaching that point? This is where organizational design comes into the picture.
What is Organizational Design
An organizational design is a step-by-step methodology that reassesses the company’s structure and realigns it with current realities. This requires the company to acknowledge its flaws, create new goals, and implement changes.
To put it simply, an organizational design is an office culture makeover. The focus is on improving the company’s technical aspect and employee engagement. That is, an organization improves by integrating its employees in its business process.
A successful organizational design includes the following components:
- It matches the company’s purpose and strategy.
- It addresses the threats and challenges that external factors bring.
- It incorporates the collective effort of managers and employees to improve the workplace
Finding the Right Design
So, is there a wrong design? None at all. At the end of the day, it’s all about finding the one that fits.
A company commonly imposes a traditional hierarchal structure that places a figurehead at the top of the chain. Below them is usually a layer of vice presidents, senior and middle managers, and employees.
This type of hierarchy creates a power structure that relies heavily on the boss. That is, this figurehead calls the shots while the rest of the team follows suit. While critics feel that such structure forms detachment and alienation, a hierarchy is not exactly a bad thing.
Under this type of structure, employees can clearly determine a defined workflow. This further allows an employee to see an established career progression and possibilities.
It’s even likely to motivate an employee to set their own career goals, which can encourage them to do better in the workplace.
Furthermore, a traditional hierarchy provides more opportunities for career development. For one, this type of structure prompts senior employees to train junior employees.
Providing proper training to an employee allows them to learn new skills that engage them in more challenging tasks. This increases employee retention as well as employee morale.
Works Best For
A traditional hierarchy works best when the leaders of an organization are efficient at making decisions and creating solutions. This is also best suited for companies with multiple layers and departments as it keeps processes organized and specific people accountable.
To further drive employee engagement, the company should consider implementing ways of connecting to all layers of employees. Moreover, the management should encourage employees to experiment, speak up, and take responsibility for their work.
Employees demonstrate flexibility under the matrix structure. That is, a project manager can hire from different departments to help with a specific project. This means that the employee answers to two leaders: a superior and a project manager.
A matrix structure is rewarding for most employees as it allows them to excel in a different field. This makes it unlikely for the employee to fade into the background. It can even lead to future team collaborations.
Just like in the traditional hierarchy, exposure to different tasks and departments allows an employee to see career possibilities and set future goals.
Reporting to two leaders also means receiving more feedback. As we know, receiving feedback increases employee morale and work motivation. As such, a matrix organizational structure allows an employee to improve their work quality and grow even further into their career.
Works Best For
This type of structure is ideal for an organization that wishes to maximize the skills of its employees. Large multi-companies can benefit largely from this type of set-up.
To further drive employee engagement, the company should recognize the skills of the employee by encouraging them to participate in diverse projects. As such, the employee should also see themselves succeeding in various fields, motivating them to contribute more to the company.
Flat organizational structure
A flat organizational structure blurs the line between leadership and following. For one, it eliminates all levels of management between executives and employees.
Evening the playing field in this manner elevates responsibilities for all parties so that everyone takes part in leadership. This, in turn, highlights the employee’s talent and expertise and encourages the employee to create their own decisions.
In a flat organizational structure, employees freely assert themselves in the workplace rather than assuming their assigned roles. This type of system encourages employees to take actions without waiting for the approval of a manager.
Without someone micromanaging every detail of every single task, employees boost their creativity and efficiency under this system. This level of trust increases an employee’s happiness at work, which can lead to further growth and productivity.
Because staff members and executives can directly talk with one another, the process of communication is faster. Direct communication not only speeds up processes; companies also benefit from clearer information and instruction.
Equality among ranks also allows employees to freely impart their ideas to one another. This can even lead to improved customer service as employees now become more hands-on when answering a client’s needs.
Works Best For
A flat organizational structure is more ideal for a small unit within a large group. Ideally, each small unit must include a team of specialists whose purpose is to drive the company forward. This allows them to pursue their passions and potential while helping the company succeed.
Keeping employees engaged in important tasks lessens the risk of voluntary turnover and increases work motivation.
To further drive employee engagement, employers should encourage employees to produce meaningful results by expressing their ideas and implementing a game plan for bigger issues.
Holacratic organizational structure
Increasingly common in companies these days, a holacratic organizational structure is a hybrid system that incorporates form into a peer-to-peer workplace. It basically distributes leadership while providing employees an opportunity to work on their passions.
This system replaces job titles with roles, fostering an entrepreneurial work culture. This means that employees directly answer to no one; rather, they define their jobs. The idea is that each role has various responsibilities that constantly evolve along with the needs of the company.
With a greater sense of freedom and responsibility, employees are more motivated to step up within their circles.
Clearly Defined Roles
Despite its “boss-less” nature, there is still some form of structure within a holacracy. However, it is more based on circles or departments rather than people.
The idea is for employees to generate ideas in the interest of the company while staying in their designated circle. Holacracy delineates the roles so clearly that each employee ultimately fulfills their daily purpose.
Works Best For
Small to medium sized organizations can largely benefit from a holacratic organizational structure.
While we have yet to see more from holacracy, companies who have transitioned to this system have reported increased employee engagement, which largely stems from their creative freedom.
Organizational Design Drives Company Success
While there are different types of organizational designs, they’re not fit-for-all templates. The design that a company chooses should still depend on its focus and needs.
More than just providing a different structure, organizational designs are also meant to seal the organization’s survivability in the long run. This means reassessing goals, addressing external challenges, and engaging employees.