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Organizational design:
More than just an org chart

We all know what an org chart looks like. Traditionally, it’s a pyramid, but more and more organizations are moving away from that. The balance between the theoretical structure and the daily coordination makes the organizational design of the organization. What does this look like, and can it help your company grow?

Understanding organizational design

Organizational design is a strategic approach that puts to paper what the structure of a company is. It makes it clear what the mission, vision, and values are. Almost like a blueprint for how an organization operates and evolves. At its core, organizational design is about ensuring that all parts of a company — its people, processes, and technology — work together smoothly.

But organizational design is not just drawing an org chart. It’s about creating a system for the roadmap to function well. It balances the structure of the company with the coordination in daily life. This involves making strategic decisions about the division of tasks, the hierarchy, the flow of information, and the systems for decision-making.

In its design, an organization can already be flexible, adaptable, and ready to meet the challenges of the business landscape. As you can imagine, the way the organization is designed has a big impact on the company culture and the way people work there.

Organizational design isn’t a one-time task. It’s an ongoing process of refinement and adaptation. Change is inherent to any business, so the design needs to be agile.


Different ways to design an organization

There are many ways to envisage organizational design. Some common ones:

Functional structure

This is one of the most common types of organizational design, where employees are grouped based on their specialties or functions, such as marketing, finance, or human resources. This structure needs in-depth knowledge and skills within specific areas.

Divisional structure

In this design, the organization is divided into units based on products, services, or geographical locations. Each division operates somewhat independently, often with its own set of functional units like marketing, sales, and operations.

Matrix structure

This design combines functional and divisional structures. Employees have dual reporting relationships - typically with a functional manager and a product or project manager. This structure requires flexibility and balances the focus between functional expertise and product or project objectives.

Flat structure

A more modern and innovative design. Flat structures bypass hierarchy and minimize levels of management. This structure promotes a culture of autonomy and empowers employees to take on various roles.

The importance of organizational design

Research in the field of organizational design has highlighted the importance of several key principles. These include alignment with strategy, specialization, coordination, flexibility, balance of power, culture integration, simplicity, and innovation. These principles serve as a guide, but their application will vary depending on the unique context and needs of each organization.

For instance, the principle of alignment with strategy suggests that the design of the organization must support the execution of its strategic plan. This means that the structure, roles, and relationships within the organization, should be configured in a way that does that. The same goes for the other principles.

In essence, organizational design is about creating a company where everyone can do their best work, every day. It’s about building a company that’s not just successful, but also a great place to work. That happens to be what we’re all about, too!

Corporate Rebels: let’s design ‘em flat

At Corporate Rebels, our goal is to make work more meaningful. One way to do that is by challenging the traditional norms, also in the field of organizational design. Why not design a workplace that promotes transparency, encourages innovation, and empowers its people?

Our approach to work is rooted in our core values like freedom, trust, and transparency. We advocate for flat hierarchies, open communication, and a purpose-driven culture. When people are free to work in ways that make them happy, they are more creative, productive, and committed to their work.

That’s what we believe. And many rebels are with us.

We’re on a mission to inspire and support other companies in their journey towards better organizational design. So how do we spread our gospel? Through our newsletter and blog, where we share insights and inspiration. We have a Bucket List, full of pioneers that have already innovated their organizational design. In fact, we’ve taken all our findings and combined them in easy-to-follow courses. This way, you can go forward with reshaping your organization without having to reinvent the wheel. Saves time and money. And, thanks to our community, you don’t have to do it alone. Join us in our rebellion against the status quo, and let’s make work more fun.

Why is organizational design important?

Making a good and well-thought-out organizational design is crucial, also in organizations with no or less hierarchy. That has several reasons, like:

Autonomy

In flat organizations, employees often have more autonomy and are empowered to make decisions. A well-thought-out organizational design can provide clear guidelines and frameworks that help teams and individuals make informed decisions.

Efficiency and effectiveness

A well-designed organization promotes efficiency and effectiveness. It makes sure that resources are used well, and that teams are motivated. It also doesn’t lose sight of the organization’s goals.

Clarity

The organizational design provides clarity. It defines roles and responsibilities, establishes reporting relationships, and sets expectations. It makes it clear what the org chart would look like (organizational design does more, but this is part of it). This helps employees understand their role in the organization and what is expected of them. It also shows how they contribute to its success.

Communication

With fewer levels of management, communication can flow more freely and directly, promoting collaboration. An effective organizational design ensures that this communication is structured and efficient, preventing misunderstandings as well as the dreaded ‘knowledge-hoarding’.

Adaptability

A good organizational design allows for adaptability. It enables the organization to respond to changes in the business environment, whether it’s a new competitor, a change in market conditions, or a new technological advancement. One benefit of flatter organizations is that there’s often more innovation. The design should have room for that.

Employee engagement

Organizational design often impacts employee engagement. A design that empowers employees, gives them autonomy and makes them feel valued can lead to higher job satisfaction and productivity.

Experiments have been done to handle organizational design scientifically. The conclusion was that more experimentation is needed before knowledge can be generalized. But in the end, each organization is unique. So is the talent it attracts. So maybe it’s time to fine-tune your organizational design.

Our courses provide insight into different parts of your design, both the overall strategy (like Transform Your Organization) and the day-to-day (like Make Better Decisions).

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