ESTIMATED READING TIME – 3:45
Learning goals for this activity– Understand why designing organizational structure is important to talent optimization. – Be able to list and describe the two steps you can take to design your organization. – Be able to match a business strategy to an appropriate organizational structure. – Recognize common steps to take when designing an organization. – Identify best practices for how frequently to update your organizational structure.
Why selecting your organization’s structure is important to talent optimizationOrganizations that follow the talent optimization discipline have structures that are purposefully designed and carefully planned—not merely a result of uncoordinated forces and influences that build up over time. Business strategy provides the context for effective organizational structure. For example, if your business strategy requires innovation and collaboration you’ll need an organizational hierarchy that’s flat, with little middle management, so that communication will flow freely. Additionally, the behavioral requirements of roles in this type of organization will favor taking risks and processing information quickly. To effectively choose your organization’s structure, take the following steps:
- Select an organizational model that supports your strategy.
- Update your organizational structure whenever needed.
1. Select an organizational model that supports your strategy.It doesn’t matter how good your people are or how hot your industry is. If you don’t get your organizational design right, you’re setting yourself up to fail. The right organizational structure is one that’s aligned with your business strategy. For example, a small startup with a strategy that’s focused on competitiveness, customer intimacy, speed, and intensity will need an operating model that enables rapid decision-making. This type of organization requires a flat structure with relatively few middle managers. By contrast, a large organization in a highly-regulated environment may need a more hierarchical design with several layers of management to maintain compliance. Common steps when designing an organization include:
- Create new jobs.
- Consider how jobs relate to one another.
- Define span of control.
- Define workflows and systems.
2. Update organizational structure whenever needed.
Less than 1 in 4 executives said they intentionally align their organization structure with their business strategy.
-State of Talent Optimization Report
Diagnose tells you when it’s time to update your organizational design. Changes in organizational design are often proactive and planned. But other times you’ll need to update your organizational design in response to a problem. For example, a high-performing, highly engaged department starts to struggle—job performance or engagement data is slipping. This may reflect some change in the business environment that now requires you to update your organizational design.