The manner in which an organisation operates determines the design of the organisation. The overall objectives of the organisation are aligned with the managerial functions and organisational processes through effective organisational design. Decisions related to the formation of formal and informal structures, processes, and systems are included in organisational design. The various patterns related, to the -relationships which exist among various individuals and’ groups can be treated as structures.
In relationships that are structured and interact regularly, both physical and social contracts constitute the system. The specially designed sequence of stages, operational methods, and activities are termed as processes. During the process of organisational structure designing or modification, certain characteristics must be taken into account although there are variations among different organisations based on their industry and type. When an organisation uses a traditional or rigid method of organisation in place of identifying the innovative methods, the poor organisational design can be clearly recognized.
The design of any organisation is created to accomplish the organisational objectives that are directly aligned to the mission, vision, and strategy of the organisation. An organisation’s operations, objectives, and requirements can be the foundation of determining the most effective method to organise it. The core purpose for which the organisation exists needs to be defined initially in order to select the most appropriate design, while all other activities of the organisation should focus on accomplishing this purpose.
According to Sargent and McConnell, “Organisational design can be defined as a process for improving the probability that an organisation will be successful by assessing and re-shaping structure and positions to better meet (business) goals”.
Features of Organisation Design
Main features of organisational design are described below:
1) Getting Work Done: This mainly deals with the manner in which various tasks are performed. The relationship between the objectives of the firm and the manner in which staff and managers are performing together to fulfill these goals is evaluated by it.
2) Organisational Goals Fillfilment: Organisational design involves activities for enhancing the chances of organisational success by evaluating and reframing the various positions and set-ups so that the organisational objectives are fulfilled effectively.
3) Way of Integration: It can be seen as a guided and formal procedure of combining the technology, information, and individuals of an organisation.
4) Aligning Strategic Actions: The attempts are made to have a close alignment between the organisational structure and the various objectives which are supposed to be accomplished by the organisation.
5) Deciding Organisational Structure: Decisions regarding the formation of formal organisational arrangement consisting of various formal processes, structures, and systems that create an organisation are also associated with it.
6) Allocation of Resources: Work allocation and reporting relationships are handled by it so that some tools are obtained to achieve a complete organisational fit between ‘people’ and ‘function’.
Importance of Organisation Design
The various factors which can be used to explain the significance of organisational design in current competitive global environment arc described as below:
1) Handling Contingencies:
Contingency can be any situation that might emerge and there must be a plan to handle that situation effectively. For example, environmental changes can be defined as a contingency. The ability of any organisation to effectively handle the dynamic factors related to its environment and procurement of limited resources depends greatly on the design of the organisation.
2) Competitive Advantage:
Many business organisations are identifying the significance of organisational design in gaining sustained competitive advantages. The ability of any business organisation to perform better than the competitors due to the skills of their managers in creating higher benefits from the available resources is termed as a competitive advantage. Manager’s abilities in creating value in R&D, organisational design, or manufacturing can be the source of competitive advantage of the firm.
3) Managing Diversity:
The effectiveness of any organisation is greatly influenced by the difference among organisational members in terms of race, nationality, gender, etc. The type of analysis and diversity of various perspectives that are taken into account expresses the quality of organisational decision-making.
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4) Efficiency and Innovation:
Different types of products and services which are valuable for customers are produced by the organisations. Higher levels of values can be created with the help of various goods and services produced by the organisation if organisation performs in an effective manner. As various innovative and technologically advanced methods for production and distribution of goods and services are designed by the organisation, the value creation from the organisations has increased drastically. The significance of the more efficient and well-designed organisational structure is paramount. In the prevailing business scenario, different organisations are facing a lot of competition for the efficient production at a lower cost with improved quality due to various low labor cost countries. The ability of an organisation to quickly produce new products and be innovative in their operations greatly influences its competitive advantage. Innovation is largely influenced by organisational design.
5) Provides Clarity:
Clarity can be obtained in decision-making, work processes, the flow of information, and reporting relationship with the help of a strong organisational design. Individuals will have clear information about their reporting superior, their work-related responsibilities, and the responsibilities of their co-workers with the help of a well-planned organisational design. An improved level of efficiency can be obtained with it particularly in large organisations. However, there are some disadvantages associated with such a high level of clarity. Employees are given the responsibility of performing a variety of dissimilar operations and tasks in small organisations or start-ups with no formal organisational structure. While in large organisations employees tend to decline the work which is not in their job descriptions.
6) Higher Growth Opportunities:
The various growth opportunities are well-capitalized by those organisations which have a well-designed structure in comparison to those organisations which are inefficiently designed. For example, an organisation with an efficient organisational design can have a strong technological infrastructure that will facilitate the addition of new workstation equipment in the organisational network. Contrary to this, if an organisational design does not have any technological planning, it will find a lot of difficulty in the addition of even a single employee.
7) Motivates Employees:
The employees of a well-designed and growing organisation with a formal progressive path can be motivated to attain a higher level of efficiency. On the other hand, the employees of a weak organisational structure can be convinced that there are no growth opportunities for them to get promoted to managerial positions. In addition to that, high performing employees can be promoted to supervisory positions in more loosely organised companies without having any formal structure. These organisations can also continue to increase the salary of frontline employees without attaining the limits of pay-grades.