Many of us are familiar with the organization structure which we put together by putting either functions or individuals in a box and showing the connections between them. Many times simple organization charts created using MS Office or similar tools aim to communicate the various functional roles and divisions that exist in the organization. While many small and medium-sized organizations do not have such organization charts prepared and updated, in large organizations, such charts can be very complex to create & maintain.
The 2017 Deloitte Global Human Capital Trends research identified designing new organization ecosystems and networks as the top trend. 50% of the participant organizations are actively studying and developing new models and many are designing & building a new organization structure.
Thus creating and updating an organization structure is a critical business enabler and an important aspect of HR.
Organization structures are essentially created to ensure efficient and flexible functioning of the organization. It’s the most important design element in your organization that would enable effective execution of your plans and strategies through its various moving parts. The key aspects considered while designing an organization structure are – task allocation, coordination, and supervision. If there is an imbalance or too much overlap in any of these aspects it will cause noise in the organizational operations.
It serves as an important communication and networking tool, especially in medium and large organizations. Through well-defined organization structure, everyone is aware of what everyone else is supposed to be doing; this enables responsibility and accountability while driving efficient and proper functioning of the business.
How to create an effective Organization Structure
While the need for structure is understood defining a particular structure is primarily dependent on who the members are, what the organization context is and stage of evolution of the organization. Regardless of these, however, one would need to focus on following elements while designing a structure – the governance role the structure is supposed to play aka the number of hierarchies and the distribution of work within and among groups. Understanding various teams that work together to deliver the desired results is critical as more and more organizations are being designed to be team-centric.
Being able to measure the span of control each manager has, is a critical aspect of a good organizational structure. While generic rules mention that an ideal span of control is between 12 to 15 individuals per manager or supervisor, one needs to exercise caution while applying these generic rules. The aspects of task complexity and process maturity play a very important role in defining the specific span of control for your specific function or teams. However, if you monitor span of control across various teams and continue to identify ways to improve the same, it would drive business benefits over a period of time.
How frequently should you review & change the structure
The organization structure should be aligned with your overall business objectives and hence should not change very often. If you are making changes to the “boxes” every now and then question yourself what really is at work. Many times we fiddle with the “boxes” to adjust individual aspirations while compromising the overall organizational objectives. If you review your business goals and strategies once every year, then reviewing whether the structure is aligned to the same is a good idea.
Using Organization Structure for Communication & Collaboration
Once you have mapped and published a defined organization structure it’s important that you encourage individuals to refer to it every time. If you use an HRMS which has an organization structure feature, then the same can be put to good use while identifying resources for a particular project or even connecting with someone in another part of the organization.
Encourage employees to find colleagues from different parts of the organization using the organization structure feature in your HRMS to promote awareness of the structure. Many times in medium and large organizations individuals would be able to reach out to specific individuals based on their needs thus ensuring that you unleash a very important aspect of innovation and collaboration.
Designing & defining an effective organizational structure is an important aspect of your business. Once done ensuring that people have access to this information is equally critical to ensure you promote innovation and collaboration across functional boundaries within your organization.