October 17, 2024
8:03 AM
By Kimberlee Henry
Many organizations struggle to keep up with seemingly endless changes. Even before the pandemic, research conducted by McKinsey & Company found many companies operate in a “nearly permanent state of organizational flux.” Over half of the global executives McKinsey surveyed in 2015 underwent an organizational redesign within the past two years, with another quarter doing so three or more years ago.
The frequency of shifting organizational designs is in stark contrast to generations ago when an organizational redesign might have happened once or twice in an individual’s career. “The modern-day organization is under increasing pressure to adapt quickly to changing markets and disruptive organizational events such as mergers and restructures as well as changes in working habits with digitally engaged, mobile workforces,” said Concentra CEO Rupert Morrison in a 2015 Society of Human Resource Management (SHRM) post. “This means people need to shift their perspective from seeing organizational design as a one-off activity to a continuous process required to hone and improve performance over time.”
Five years later, the pandemic would prove his point. The crisis required organizations to be agile, a difficult task for many larger organizations due to poor data quality or reliance on inefficient tools.
For a thriving business, choosing the right organizational design is important. Read on to explore several organizational design models to help you choose the best design for your organization.
Organizational design is the process of structuring an organization to align operations, roles, and workflows with business goals. A strategic analysis helps business leaders choose the most optimal organizational design for their needs. How an organization is structured can impact everything, from how decisions are made to the flow of communication and overall performance.
Organizational design aims to create a structure that positions the business for success. The foundation of any business is its structure. For streamlined operations, the structure must match the organizational objectives. Selecting the right design model has many benefits, allowing organizations to:
Organizations may choose from several organizational design models. These fall under one of three primary categories: diagnostic, transformation, or experimental.
Diagnostic models are all about analyzing operational inefficiencies and fine-tuning the organization’s structure. These models offer a structured approach to identifying challenges within the organization that can be realigned to improve performance. There are three common diagnostic models: the McKinsey 7S, Jay Galbraith’s Star Model, and Weisbord’s Six Box Model.
The seven elements include:
The pros of using the McKinsey 7S Design Model include:
The cons of using the McKinsey 7S Design Model include:
This model evaluates five essential components with a focus on aligning each element to support the business objectives.
The five elements include:
The pros of using the Kay Galbraith Star Model include:
The cons of using the Kay Galbraith Star Model include:
This model concentrates on evaluating six key areas to diagnose performance challenges across the organization by getting to the root cause.
The six elements include:
The pros of using Weisbord’s Six Box Model include:
The cons of using Weisbord’s Six Box Model include:
Transformation models are designed to reshape the organization to adapt to significant changes, such as mergers and acquisitions, market shifts, and new strategic directions. They help organizations steer through these organizational changes to avoid disruptions to operational functioning. Transformation models differ from diagnostic models in that they focus more on navigating the changes than diagnosing the challenges.
The Congruence Model framework addresses aligning the organization’s tasks, people, structure, and culture with external factors to ensure harmony. This model improves organizational performance by targeting the way information flows throughout the organization.
The pros of using the Congruence Model are:
The cons of using the Congruence Model are:
This model addresses the interplay between leadership, work environment, systems, and culture to handle organizational change. It encompasses twelve factors across five groups, including external factors, strategic factors, operating factors, individual factors, and outputs. It is considered a comprehensive organizational design model.
The pros of the Burke-Litwin Organizational Change Framework include:
The cons of the Burke-Litwin Organizational Change Framework include:
Experimental models are the third type of operational design model. These are used to foster innovation, flexibility, and agility. Forward-thinking organizations use experimental models to structure operations in novel ways. These models address the unique challenges that traditional organizational structures cannot handle. They encourage decentralized decision-making and adaptability.
The Helix Organization Model balances flexibility and stability in organizational structure. It encompasses two parallel accountability lines–the “dynamic axis” for the product lines and the “stable axis” for the people, functions, and domains that support the products.
The pros of the McKinsey Helix Model are:
Cons of the McKinsey Helix Model:
“Holons” are semi-autonomous, self-reliant units that can operate both independently and as part of a larger system. The Holonic model enables flexibility where units can rapidly adapt to changes while maintaining organizational goal alignment.
The pros of the Holonic Enterprise Model are:
The cons of the Holonic Enterprise Model are:
Organizational leaders should carefully consider several factors to select the best organizational design model to support their business objectives. As you contemplate the design model to use, consider the size of your:
Strategic organizational design positions organizations for operational efficiency, adaptability, and growth. The four key principles that contribute to effective organizational design include:
Begin with the end in mind. Even if you don’t currently have growth plans in the works, it’s important to structure an organization in a way that allows for expansion without continuously overhauling the structure.
Organizational design is a complex process. It requires careful planning and efficient execution. Consider the following steps to successfully navigate this process.
The first step entails evaluating the current challenges your organization experiences. Identify pain points, including bottlenecks, communication barriers, and gaps in decision-making. Conduct employee surveys, interviews, and collaborative meetings to gather insight regarding the current challenges and successes. Analyze your existing structure. Consider how your organizational structure either supports or hinders your company’s performance.
When defining your goals and objectives, clarify what you want to achieve, both in the short and long term. Where is your company heading? Consider anticipated and desired growth and market positioning. Establish Key Performance Indicators (KPIs) and gather baseline data on those metrics to evaluate progress before and after organizational changes.
Considering the previously discussed organizational design models, decide on one that most accurately aligns with your company’s needs, goals, industry context, flexibility needed, and other factors.
Craft a detailed and transparent implementation plan. This plan should outline each step you’ll take in transitioning or developing your organization’s structure.
Your implementation plan should include:
Transparent and timely communication with stakeholders is necessary for a smooth sailing transition. Host meetings and provide ongoing updates to keep everyone in the loop and engaged throughout the process. Make sure staff understand their roles, responsibilities, and the chain of command in the new structure.
Organizational structure can fluctuate as needs and market conditions change. Be sure to have a plan to regularly evaluate how well the structure is meeting your evolving business needs. Gather feedback from staff and stakeholders, review performance metrics, and make adjustments as needed.
Never One-and-Done: Agile Organizational Design with OrgChart
No matter what model you’re using today or where you’ll be tomorrow, OrgChart enables:
A seasoned marketing leader with two decades of experience in fast-growing tech organizations, B2B SaaS, and professional services. Known for her results-driven approach and people-first leadership style, she has a proven track record of creating innovative marketing strategies that resonate with both new and existing customers.
As an author, Kimberlee draws from her deep understanding of customer behavior, market trends, and hands-on leadership to offer valuable insights that educate and empower audiences.
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