Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]
Organizational Elements Model
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The Organizational Elements Model provides a systematic approach to Organizational Analysis. It is a potent tool to evaluate an organization, comprehend its competitors and their strengths, and track problems.
The Organizational Elements Model provides a way to view an organization holistically. The model facilitates in examining the organizational structure, operations, culture, capabilities, data, people, and technologies in place to unearth underlying issues and critical success factors.
The Organizational Elements Framework takes its root from the McKinsey’s 7S Model. It helps organizations identify their areas of strength and weakness and develop strategies to better meet their goals and objectives.
The most important use cases of the model are:
- The 7 components of the framework serve as an inventory of organizational elements to be examined for improvement.
- The model helps in analyzing the environment and identifying the external forces that affect the organization—e.g., competitors, regulations, technology, customers.
- The model is used to measure and assess the performance of various organizational elements—i.e. departments, teams, and individuals—to ensure that they are on track to meet their objectives.
- The model facilitates the organizations in identifying areas that need improvement and develop strategies to implement required changes.
- The model aids in determining how resources should be allocated to different departments, teams, and individuals in order to maximize efficiency and productivity.
- The model functions as a consolidating framework to organize notes, keep a repository of data, and to draw critical insights.
- The model can be used to identify and develop the skills and abilities of employees.
- The elements of the model serve as conversation opener with internal team members or organizational stakeholders.
The 7 elements of the Organizational Elements Model are a prerequisite for an enterprise to focus on in order to be effective. The elements include:
Let’s dive a bit deeper into some of the elements of the model.
Element 1: People
People are the most important element of the Organizational Elements Model. Organizations are nothing on their own; it’s the people, the unique capabilities they employ to get things done, their values and viewpoints that make or break an organization. People are responsible for establishing relationships with the other elements of the model, developing strategies, laying out organizational structures, and executing processes and systems to achieve the desired outcomes. People are also the source of motivation, innovation, and leadership. They are the ones who create and deploy the technology element in an organization.
Element 2: Structure
The structure element of the Organizational Element Model plays an important part in analyzing and understanding an organization. This element elaborates how an organization is structured, including its hierarchical levels, units, and divisions, and how they coordinate with each other. Organizational structures are designed by people for doing business, executing initiatives, and innovating novel products and systems. Organizational structures ensure appropriate management of resources, responsibilities, approvals, relationships, performance, decisions, and consistent flow of information within the organization.
Element 3: Processes
Processes are utilized to ensure efficient flow of resources, supplies, information, and value propositions to the customers. Processes involve input of resources, utilization of personnel, implementation of rules and regulations, and generation of desired outcomes. The processes element identifies inefficiencies, wastes, redundancies, areas of improvement, as well as strengths of an organization. Properly designed and implemented processes ensure that an organization runs efficiently, meets its customer demands, and remains profitable.
Interested in learning more about the other elements of the Organizational Elements Model? You can download an editable PowerPoint presentation on Organizational Elements Model here on the Flevy documents marketplace.
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Organizational Design (AKA Organizational Re-design) involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. It includes:
1. The overall organizational "architecture" (e.g. decentralized vs. centralized model).
2. The design of business areas and business units within a larger organization.
3. The design of departments and other sub-units within a business unit.
4. The design of individual roles.
In the current Digital Age, there is an accelerating pace of strategic change driven by the disruption of industries. As a result, to remain competitive, Organizational Design efforts are becoming more frequent and pervasive—with the majority of organizations having experienced redesign within the past 3 years. This has only been exacerbated by COVID-19.
Frustratingly, only less than a quarter of these Organizational Design efforts are successful. Most organizations lack the best practice know-how to guide them through these Transformations effectively.
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About Mark BridgesMark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.
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