Designing organisation structure is much more than the pyramid organisation chart with names on.
“Poor organisational design and structure results in a bewildering morass of contradictions: confusion within roles, a lack of coordination among functions, failure to share ideas, and slow decision-making bring managers unnecessary complexity, stress, and conflict.” Gill Corkindale
So, how do you decide which type of organisational structure is the best fit for your company, division, or team?
In the world of organisational structures/charts, the options you have to choose from include things like chain of command (long or short?), span of control (wide or narrow?), and centralisation (centralised or decentralised decision-making?).
This ‘gist’ compares some of the types of organisation structure charts and lists the pros and cons of each.
This tool has been put together from a range of sourceshttps://blog.hubspot.com/marketing/organizational-structure-building-blockshttps://bizfluent.com/list-6313135-elements-organizational-structure.htmlhttps://naomistanford.com/2021/02/08/questions-to-ask-about-structures/Jacob Morgan – 5 types of new organisation structure
First find out more about the six aspects of organisational structures.
The line of authority that extends from the top of the organisation (e.g. a CEO) all the way down to the bottom. Depending on the size of your organisation, your chain of command can vary in length. But regardless of how long it is, all chains of command clarifies who reports to whom within your organisation.
Consider the chain of command in your organisation. How well does it function e.g. how quickly do decisions get made? How are queries escalated, does authority sit at the right level?
The number of subordinates a superior at your organisation can effectively manage. The higher the ratio of subordinates to superiors, the wider the span of control.
Assess the spans of control in your organisation – do some managers have broader spans than others? Why? Is to do with role content, managerial experience, cost, etc. Are there issues/opportunities you spot in the spans?
See also: Optimal management structures
If decision-making power is concentrated at a single point or by a single person, your organisational structure is centralized. When decision-making power is spread out through a department or a team, your structure is decentralised.
Determine whether your organisation is primarily centralised or decentralised (or if a mix, what characterises each). What would be the benefits/disbenefits of becoming more centralised or more decentralised?
Tthe degree to which activities or tasks in an organisation are broken down and divided into individual jobs. High specialisation can be beneficial for an organisation, as it allows employees to become “masters” in specific areas, increasing their productivity as a result and giving your organisation the benefit of having experts at your disposal. However, low specialisation, or “wearing lots of hats,” allows for more flexibility, as employees can more easily tackle a broader array of tasks.
Look at your organisation structure does it have high specialisation or low specialisation or a mix? What are the outcomes of your specialisation mix – does it affect career progression, recruitment, etc. Is the mix something that is problematic and may need to be addressed?
is how jobs are structured within an organisation in terms of the degree to which an employee’s tasks and activities are governed by rules, procedures, and other mechanisms. A formal organisational structure seeks to separate the individual from the role or position, as the role or position stays the same regardless of who’s holding it. An informal organization, on the other hand, places more value on the individual. It allows for the evolution of a role or position based on an individual’s preferences, skill set, etc., and places less importance on what team or department that individual is part of.
Reflect on your organisational values and culture. Does the degree of formalisation you have impact role autonomy or the culture you might be aiming for? For example, a culture of collaboration and autonomy should have low degrees of formalisation.
The way you group jobs together to coordinate common activities and tasks. If an organization has rigid departmentalisation, each department or team is highly autonomous, and there is little to no interaction between different teams. There is a risk of silos developing and duplication of effort. On the other hand, loose departmentalization means that teams have more freedom to interact and collaborate, reducing silos and making it easier to spot overlaps and duplication.
Examine the way you group activities and tasks – does it make sense for workflow, customer journeys/experience and efficiency or effectiveness? Are there signs of silo building?
Once you’ve done so, download and review the structure comparison tool. This also contains information on spans and layers. Please also see Jacob Morgan – 5 types of new organisation structure for some excellent new thinking. However, as always, think about what works for your organisation rather than think of any structure being a panaceahttps://qz.com/work/1776841/zappos-has-quietly-backed-away-from-holacracy/
Objectives of organisation structures
- The structure must demonstratively deliver the strategic goals of the organisation
- Department accountabilities must be clear
- Structures should be as flat as possible
- Avoid unnecessary duplication
- Structures should be flexible and responsive to change
- Structure demonstrates appropriate governance and risk standards
- Structures will support the development of key capabilities
- Organisation design process should be consistent between departments
Questions to ask about structures
“I want my organisation to have this structure instead of the current one, make it happen and quickly.” Every senior manager at some point!
This statement is generated by a change/shock to the organisation system. Perhaps someone leaves or there’s a financial pressure/cuts imposed by ‘head office’. However, many managers don’t know that different structures have different capabilities (as discussed in the comparison tool).
Use Naomi Stanford’s questions to provoke a different conversation