Demystifying organizational design – process (2)

Last week’s blog ended with the question: What else influences the design of organizational structure? Well, we now delve into the second element that affects the architecture of organizations – process.

What is a process?

A series of activities undertaken to achieve a particular end

When we discuss organisational configuration, process is the invisible aspect. The tendency by OD practitioners is to discuss hard elements that influence the design of structure like strategy and the skills required to operationalise the strategy. However, there is something between strategy and the skills, that is  necessary to attain strategy, and that is the process.

So in effect, instead of rushing to identify and recruit skilled labour immediately after choosing a firm’s strategy, companies should perform detailed business process mapping.  Corporations should not jump from strategy to skills identification and recruitment.  Designing an organisation structure on the basis of technical skills needed to achieve a strategy is foolhardy.

What should be done?

For process to adequately inform the design of an organisation’s structure, we have to revert to Fredrick Taylor’s reductionist tendencies. Taylor is famously referred to as the father of ‘scientific management’. Taylor, via his reductionist methods, brought ‘efficiency-management’ to the factory floor. He mapped tasks and studied, how to improve human productivity.

Much as reductionist tendencies reduced humans to machines, when used in the appropriate context, the linear and boxed approach to task analysis, enables organisation structure designers to map the A-Z of product and service delivery processes. From the detailed organisational process maps, organisations are able to design effective structures, required to achieve their strategic goals

How does process influence organisational design?

Below is an eight-step toolbox for process mapping and structure design:

  1. Determine the Vision and Mission of the organization
  2. Determine a strategy to achieve the vision and mission
  3. Determine the main work activities that are needed to deliver the vision and mission – for example, the disruptor firm in last week’s blog may need to conduct market research and subsequently, product design activities as its core tasks
  4. Map processes – i.e. the sub-activities that have to be performed in order to conduct successful market research and product design
  5. From the process maps above, collate and identify commonalities along the map and group them into any of: major functions, teams, task zones, skill zones, etc. For traditionalists, these may be termed functions like design, production, logistics, marketing, accounts, etc
  6. From the grouping above identify specific tasks that need to be accomplished
  7. From the specific tasks create specific jobs – this involves creating job descriptions
  8. And then move to place the individual jobs, under the major functions or whatever collation system you have opted to use, and create an organizational structure

Other factors influencing organizational design

It’s important at this stage to separate factors that influence the shape of your organization on a daily basis, from those that influence design especially at inception or whenever an entity decides to embark on major structural review. The latter situation is similar to the difference between variable and fixed costs in Management accounting. Variable costs change based on the amount of goods or services produced while fixed costs do not vary with the volume of production.

According to the Effectiveness lab, Strategy, Process, and People are the ‘ fixed costs’ of organisational design. They are the foundation for organisational architecture and will always be treated as such. On the other hand, there is the equivalent of ‘variable costs’ – these are factors that influence design and are mainly situational.

Situational factors influencing design:

  • The size of an organisation – simply put, as organisations grow in size (bottom line revenue metrics), they tend to also get complex organisational structures. On the other hand, smaller organisations tend to work with small and organic structures that they tweak based on need
  • The life cycle of an organization – let us use a three-tier organisational life-cycle: Start-up – Mid-life – and Mature. Organisations tend to tweak their structures as they gradually morph through the three organisational life-cycle stages. Organisations usually become more complex as they age. There is a correlation between size and the life cycle of an organization. For example, start-ups are likely to be small in size, while more mature entities are likely to have grown large in size over time. Of course, some entities may skip certain stages of the life cycle. For example, a firm may jump from start-up to mature – for example Uber.
  • The environment and technology – from stable environments we see more linear and stable organisational configurations, while turbulent environments and dynamic-technology, bring about continually shifting organisational shapes. Advances in technology force organisations to change the manner in which they organise themselves. Technology changes more often than not result in efficiency and effectiveness gains. And when firms become more effective and efficient, they usually consider reducing workforce or re-configuring the way labour is organised.

What else influences the design of organisational structure? See you next week



Categories: Design

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