Organizational design structures are a good way to start a new business as a pioneer or partner in order to quickly achieve its goals and objectives. Furthermore, organizational design will require the wise use of various resources to build a solid foundation for a successful and sustainable business. This, of course, requires an idea. This article provides readers with a clearer understanding of organizational design structures, principles, and examples.
What Is Organizational Design?
It is a formal method of joining people, information, and technology to produce a full, lasting organization. Similarly, organizational design also concerns handling and carrying out a company’s strategic plan. In sum, most organizations design their companies according to the direction of the company’s strategy, goals, and operations.
Organizational Design Examples
There are two major examples of organizational design, namely; traditional and modern. Simple design, functional design, and divisional design are examples of traditional structures. Team structure, matrix structure, flat structure (Flatarchy), network structure, and circular structures come under modern structures.
- Traditional examples of organizational design:
#1. Simple Structure
This type of design is common in small start-up businesses. It has a structure with a few formalities, procedures, a few small departments, and a lot of central power. For instance, in a small company with a few employees, the owner typically oversees every aspect of the business. Although staff multi-task while at work and across different skill areas, as the company expands with more departments.
#2. Functional Design
This is the first and most widely used of the four organizational designs. “Bureaucratic organizational design,” is also another name for functional design. It helps break up a company based on the field of its workers. Most small-to-medium-sized businesses implement a functional structure. Moreover, the act of sharing the firm into departments is made up of marketing, sales, and operations using a bureaucratic organizational structure.
#3. Divisional or Multi-divisional Structure
A divisional structure organization also includes separate business units and is common among large companies with divisional or multi-divisional structures. And the leadership team includes working on products, services, customer groups, and projects as a private company within the same organization. As a matter of fact, one of the biggest fast food chains in the world and a perfect example of a divisional organization is the McDonald’s Corporation. The entire company might split up into independent divisions, each of which has duties based on operational needs.
- Modern Organizational Designs
In a team-structured organization design, there is no ranking or chain of command. However, they determine the most practical and efficient means of reaching the company’s sole objective. Whole Foods Market and Fortune 500 companies like Google (and parent company Alphabet), where there are many employees and a great depth of talent across many specialties, are typical examples of a team-based organizational design.
#2. Flat (Flatarchy) Structure
A flat organization also referred to as a horizontal organization or flat hierarchy, has little to no middle management levels between employees and managers. As the name implies, it reduces the level of order and the chain of command. It also gives employees a lot of freedom and could easily serve as an organization.
#3. Matrix Structure
When joining two or more organizational design structures to manage multiple projects, you can use a matrix of organizational design structures. In contrast, matrix organizational structures are tools in project management because they address both the project’s end product and the management function that produces it. Usually, they have two chains of command, where project team members have two bosses or managers, and a project manager, to strengthen their flaws.
#4. Network Structure
A network structure is a type of organizational design in which several organizations work together to produce a service. In particular, these companies can partner up for a specific project or hire outside help for more of their functions, such as marketing, production, and sales. Also, In order to cut costs, firms use network structure. For instance, businesses move their production to China to take advantage of the low cost of labor there. Furthermore, In the network structure, managers play a crucial role. They have control over both internal and external relationships. Because they focus on reducing the number of management from between and their duties transferred to other organizations, the network structure is flatter and has smaller orders.
#5. Circular Structure
Every individual is in a position of authority, which is the main concept of a circular organization design. Additionally, each manager and supervisor has access to a board that includes the manager, the manager’s immediate superior, and subordinates. The circular organizational design aims at operating individually to increase organizations’ zeal, team spirit, and change to raise the bar of their working environment.
Organizational Design Structures
Organizing business ideas into something that will be valuable economically is what organizational design structure is all about. In essence, Organizational design structures are a formal method of merging people, information, and technology to produce a full, lasting organization. It shows the responsibilities and needs of each position and department and how they add to achieving the company’s goals. Furthermore, with the demands of the organization’s expansion, resources are shared appropriately in an organizational design structure.
Also, it helps with performance rate by bringing out the organization’s current physical strengths and flaws.
Goals of an Effective Organizational Design Structures
- Outstanding customer service
- Higher profit making.
- Lower operating expenses.
- Increased effectiveness and cycle time
- Build devoted and engaging employees.
- A well-defined plan for running and expanding your business.
Principles of Organizational Design
following Organizational design principles are important because they give meaning to what we are designing. According to Goold and Campbell, every principle has a specific test to determine whether the current situation is valid. The organizational design structures are founded on five principles, which help to align your team and partners on the overall purpose and plans of the project. If properly planned and executed, they offer a useful idea throughout your business’s various stages and circumstances.
#1. Principle of Specialization
This principle in organizational design structures exists to help focus and help your team develop and focus on their unique skills. Also, to see if any special processes that are different from the rest of the organization are sufficiently shielded from the influence of the controlling process.
#2. Principle of Coordination
The coordination principle helps to arrange tasks and also share duties within a single unit. These single units include shared service units, business units, and project units as required by the business. However, where normal networking will not benefit coordination, either coordination should be allowed or duty should be at the center.
#3. The Principle of Competence and Knowledge
The giving of duties to the person or group most fit to carry them out is defined by this principle. For instance, the CEO shouldn’t participate in every decision, especially ones that are made by experts who have a deeper understanding of the subject. Of course, the CEO’s role is to balance complex choices that have an impact on the organization and strategy while keeping the big picture in mind.
#4. Control and Commitment Principle
Keeping engagement and commitment while acting under control are all joined in this principle. At this point in the development of your company, you must learn how to inspire your employees while creating a balance within the organization.
#5. The Principle of Innovation and Adaptation
This principle in organizational design structures will help in the development of new strategies and also in adjusting to future changes. Here, the organizational structure is put to the test to see if it will aid in the creation of new strategies and also assist in future change adaptation. Furthermore, you will be able to maintain your market share and maximize your profit margin quickly if all these principles are applied to your organizational design.
An organizational structure is a visual representation of the various roles, levels of order, and other conditions existing within a business. In other words, it is the process that involves reorganizing and disorganizing roles, levels of order, terms, and conditions in line with organizational or business needs. Every organizational structure is built in line with the ideas and values that guide its operations. Also, a stable organizational structure cannot exist without an organizational design, and vice versa.
When all these organizational design principles and structure examples are applied to your chosen business idea, you will be able to quickly maximize your profit margin, keep your market share, and engage your company’s strategy and goals.
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FAQs On Organizational Design Structures
What Is the Difference between Organisational Structures and Organisational Design?
The process of creating organizational structures that support an organization’s goals, survival, and longevity is known as organizational design. Organizations use organizational design to create their organizational structure.
What Are the Importance of Organizational Design Structures?
Eliminate bureaucracy, simplify the working environment, encourage collaboration and the sharing of information, and get rid of bureaucracy. Put the best talent where the action is, and create the framework for seamless knowledge transfer.
Bureaucratic in Organizational Design Strutures and Its Examples
A management style known as “bureaucracy” has a pyramidal structure for its chain of command. Examples include the government, colleges and universities; police departments, departments of motor vehicles, healthcare facilities, and power authorities.