Optimizing Your Business with Effective Organizational Design
Organizational Structure
Organizing encompasses the entire workforce—all the people supervised in an organization and involved in accomplishing its work, including: permanent employees, part-time employees, temporary staff, telecommuting staff, contract workers, volunteers, and managers at all levels.
Factors Affecting Work Organization
Several factors influence how work is organized:
- Company and operational guidelines
- Management style
- Customer influences
- Company size
- Diversity and complexity of product line
- Stability of product line
- Financial stability
- Availability of personnel
Organizational Hierarchies
Basic department structures include:
- Departments focused on functions
- Departments focused on products
- Departments focused on geography
Matrix Organizational Structure
In a matrix structure, directors of products report to the president, and product managers report to the VP of products.
Span of Control
As the use of information technology increases, the span of control increases, and the number of management levels decreases.
Conditions Affecting Span of Control
Several conditions affect the span of control:
- Extent of subordinate training
- Clarity of instruction and delegation
- Staff assistance
- Task complexity of jobs supervised (span of control decreases)
- Rate of change of activities and personnel (span of control decreases)
Leadership System
“The way leadership is exercised formally and informally, the basis for key decisions and the way they are made, communicated, and carried out.”
Line Functions
These functions accomplish the main mission of the organization, including production, sales, and finance.
Line Relationships
Superior/subordinate relationships are typically represented vertically in organizational charts.
Staff Functions
These are advisory in nature, and the degree of influence may vary from advising only on request to having veto authority.
Service Functions
These are centralized support functions.
Centralized (Mechanistic) vs. Decentralized (Organic)
- Centralized (Mechanistic): Concentration of decision-making is in a few hands and at top levels of management. Characterized by many rules, division of labor, and formal coordination. Cannot change rapidly.
- Decentralized (Organic): Decision-making authority is delegated to lower management levels throughout an organization. Characterized by few rules, loose division of labor, and informal coordination across departments. May sacrifice reliability for flexibility.
Problems with a Functional Structure
Problems include:
- Separating employees from customers
- Inhibiting process improvement
- Often having a separate function for quality
Deming’s Points 9 & 14
“Break down barriers between departments; people in research, design, sales, and production must work as a team to foresee problems of production and in use that may be encountered with the product or service.”
How do we do this? Focus on processes:
- Value creation processes
- Design process
- Production process
- Delivery process
- Support process
Make Quality Everyone’s Job
Deming’s points 3 & 14: “Cease dependence on inspection to achieve quality; eliminate the need for inspection on a mass basis by building quality into the production.” Recognize that all jobs involve managing quality.
Customers
Recognize internal customers and put external customers first.
Create a Team-Based Organization
Structure the quality organization around functional or cross-functional teams. Types of teams:
- Leadership teams
- Natural work teams
- Self-managed teams
- Virtual teams
- Problem-solving teams
- Project teams
Use Leadership Teams
Leadership teams are responsible for overall policies and deployment of new initiatives, characterized by four elements: leadership, planning, implementation, and review.
Reduce Hierarchy
Eliminate layers of middle management and empower frontline workers. Benefits include improved communication. Risks include impact on morale and loss of valuable experiences.
Develop an Agile Organization
To be agile, an organization needs both effective processes and the ability to modify those processes as business conditions change. Shorter cycles for the introduction of new or improved products and services require faster reaction to competitive challenges and changing customer demands. Simplification of work processes and rapid changeovers can facilitate cycle time reduction.
Redesign Work Systems
The objective is a high-performance culture with respect, aligned values, shared purpose, communication, and trust.
Levels of Organization
Organizations may be viewed at three levels: individual job level, process level, and organizational level.
Common Approaches to Work Design
Common approaches include: job enlargement, job rotation, and job enrichment.
Vertical Job Loading
Workers are given more authority, responsibility, and autonomy rather than simply more or different work to do.