{"id":9889,"date":"2021-10-28T07:23:38","date_gmt":"2021-10-28T12:23:38","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=9889"},"modified":"2021-11-24T10:50:13","modified_gmt":"2021-11-24T15:50:13","slug":"10-principles-of-organizational-design","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/10-principles-of-organizational-design\/","title":{"rendered":"10 Principles of Organizational Design"},"content":{"rendered":"

\"\"Research by PwC indicates that leading companies are in a near perpetual state of Reorganization.\u00a0 This upsurge in Organizational Design<\/a> initiatives is owing to the accelerating pace of strategic change caused by disruption of industries, changing competitor landscape, customer behaviors, and distribution channels.<\/p>\n

Companies opt to commence efforts to restructure their organization in the hopes of enhancing efficiency, perpetuating growth, and surviving in future. \u00a0Some shift their Business Models, few alter their focus from products to customer-centric<\/a>; whereas others adopt new behaviors, systems, or IT architecture.\u00a0 However, merely a quarter of the Organizational Design initiatives succeed in achieving their anticipated objectives.<\/p>\n

The reason for this high failure rate is simple.\u00a0 Reorganization is not about changing a company\u2019s organogram.\u00a0 It\u2019s a methodical processes that necessitates transforming \/ streamlining the decision-making process, mindsets, talent pipeline, reward structures, reporting lines, and the way responsibilities are assigned.<\/p>\n

There is no cookie-cutter approach to Reorganization that can work across all organizations.\u00a0 However, research and management best practices reveal 10 principles that are critical for developing an effective Organizational Design<\/a>, applicable to any enterprise:<\/p>\n

    \n
  1. Don\u2019t get caught in past Reorganization initiatives <\/strong><\/li>\n
  2. Consider Organizational Design elements <\/strong><\/li>\n
  3. Transform Organization Chart in the end <\/strong><\/li>\n
  4. Don\u2019t overlook top talent <\/strong><\/li>\n
  5. Converge attention towards controllable factors<\/strong><\/li>\n
  6. Encourage responsibility <\/strong><\/li>\n
  7. Use best practices with care <\/strong><\/li>\n
  8. Harmonize organizational hierarchy with Strategic Objectives<\/strong><\/li>\n
  9. Give due emphasis to intangible elements of organization <\/strong><\/li>\n
  10. Make efficient use of company culture and practices<\/a><\/strong><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    Let\u2019s dive deeper into these guiding principles.<\/p>\n

    1. Don\u2019t Get Caught in Past Reorganization Initiatives<\/strong><\/h2>\n

    Leaders at most organizations tend to keep discussing and focusing on the old reorganization initiatives.\u00a0 This takes away much of their time and energy which should rather be spent on making the current Organizational Design a success.<\/p>\n

    Organization Design should be created on the basis of an enterprise\u2019s sense of purpose<\/a>, strategy<\/a>, core competencies<\/a>, products<\/a>, competitive advantage<\/a>, and experience offered to customers<\/a> and employees<\/a>.\u00a0 Senior leaders need to be able to see the broader perspective, set clear organizational objectives, and steer the workforce to achieve their personal as well as organizational objectives.<\/p>\n

    2. Consider Organizational Design Elements<\/strong><\/h2>\n

    Reorganization is a complex undertaking, but a structured approach to Organizational Design assists in identifying and prioritizing key priorities. \u00a0Organizational Design has 8 fundamental elements that are important for all organizations, Business Models, sectors, or regions.\u00a0 These elements can be categorized into 4 pairs.\u00a0 Each of these 4 pairs constitute a formal (tangible) and an informal (intangible) element:<\/p>\n