The 10 Principles of Organizational Design and How to Use Them to Create Productive Spaces

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Freelance Writer & Nonprofit Information Officer

From the smallest grassroots nonprofit to a Fortune-500 company, every organization can improve its operations through organizational design or organizational architecture. Like anything, organizations thrive when they are given dedicated attention and when intentional decisions are made regarding operations and maintenance. While some companies fall into place, others are the products of careful planning and meticulous attention to detail and record-keeping.

A useful comparison when attempting to understand the importance of organizational design is that between an organization and a government. In the United States, we have three branches of government: there are separation of power, checks and balances, divided responsibilities and departments and other components that make it possible for the government to run. 

What is organizational design?

Organizational design is the mapping methodology of responsibilities and structures within a company or organization. Some organizations opt for a purely hierarchical design, while others get more creative with their task, power and feedback distributions. Companies often employ organizational design to deal with dysfunctional aspects of day-to-day workings and to improve company outputs such as customer service, profit, operating costs, employee morale and/or community impact.

The goal of organizational design is to match the form of a business with its purpose in order to increase the likelihood of success. A key component of effective organizational design is sustainability, which is only possible if the organizational design has internal elements to promote consistent reevaluation and renewal of its own structure. This is time-consuming: it involves drafting a baseline of where the organization currently stands; designing a new structure for core processes, tasks, functions, facility layout and equipment needs, support resources, management, etc.; implementing the new organizational design; and keeping up to date with evaluations.

According to The Center for Organizational Design, this work will pay off through dramatic improvements in quality, customer service, cycle times, turnover, absenteeism, productivity and so on, and, as all design-thinking interventions go, organizational design methodology is purposefully broad so that it can be adjusted to any type of situation.

What are some types of organizational design?

There are both traditional and more modern organizational designs. According to business operations theorists and professors Michael Lim, Gareth Griffiths, and Sally Sambrook, workplaces were traditionally hierarchical and a place where people came to do their job and go home. Now that workplace environments focus more on community, the traditional hierarchy model is being replaced by many “in-between” designs. 

Traditional design

Hierarchal, bureaucratic, mechanical designs are known to be the traditional organizational design. Common in small businesses and in the past, these simple structures often have low departmentalization, centralized authority, and few internal checks. Employees may wear multiple hats and there is little standardization of policies. There is low formalization and high centralization of power.  Businesses often opted for this form of organization because it fit the scientific models of behavior they had at the time, and it fit an organizational structure that many men in the mid-century were familiar with: that of the military. 

Modern designs

As postmodernism grew in popularity, unions grew in power, and worker fulfilment and innovation became the new priorities, people began to build on community-centric designs so that workers and employers would share power. A community, organic, flat, relational design was an obvious way to move away from traditional organizational design as it works the opposite way: there is an emphasis on community and formalization of tasks and relationships is high, while centralization of power is low. 

Instead of going a full 180, however, most modern organizational designs incorporate hierarchical and community elements and can be considered “In-betweens.” Building on the early simple structures, “in between” designs have more intentional organization. What an “in between” design looks like in the end depends a lot on what the organization believes should be the driving factor of the structure: the organization’s primary task? The key decision makers choices? The strategy of development? Politics? What the employees want? Weighting these factors will influence both how an organization is designed, and what the design looks like in the end.

Principles of organizational design

According to Forbes, the following are the ten most important principles of organizational design leaders can use to create more productive spaces.

1. Declare amnesty for the past.

This is the “baseline” stage from above. Without self-reflection, building a new organizational design won’t go very far. What is your organization's vision? Mission? Objectives? It’s ok if these have changed from what they used to be, the important part is noting the changes. Forbes suggests declaring “amnesty for the past,” by neither blaming nor defending the design in place today or any organization designs of the past.

2. Design with the “DNA.”

Simplify the confusing elements of organizational design by sticking to some basic elements. Remember the basic elements you have chosen and don’t try to change too many of them at one time, use them to guide your incremental steps.

3. Fix the structure last, not first.

The organizational flow chart, especially ones that define power relationships, can seem like the most important thing, but to make lasting change you need to start small and think sustainable. Structure should be “the capstone, not the cornerstone,” of your organizational redesign. Otherwise, the change won’t last.

4. Make the most of top talent.

Job descriptions are an important part of organizational design and should be drafted in conjunction with one another to utilize the strengths of the people in the positions, especially if they are in management. Leadership structures and dispersion of power are important for employee morale and the span of direct reports should be considered carefully within the context of the organization’s goals and mission.

5. Focus on what you can control.

Be aware of your limitations and challenges, whether they are in your control or not. For those you can address, do so, for those you can’t, don’t waste time or energy on them. Instead, check back at the list periodically to see if the situation has changed and if you may have more control. These challenges will always be in flux so make sure your solutions are adaptable and easy to evaluate.

6. Promote accountability.

Accountability is easily a superior design tool to micromanagement and communication is an important piece of this. Employee morale is vital to creating a culture of accountability that is efficient without being tyrannical. Even after it becomes the culture, accountability is not sustainable unless there is a practice of talking about it and promoting it from within.

7. Benchmark sparingly, if at all.

Organizational design is unique to each organization, while there are general structures that can be followed, no two designs will look the same and for each to run it’s best it has to cater to its own strengths, not those of its competitors. Benchmark design successes in reference to your baseline and other internal measures, not to an organization whose vision, mission, and people look very different from your own. Every change in value, objectives, or personnel will affect organization design, and it is extremely complex to analyze how each of those components lines up across companies. If you do need to benchmark externally, the elements to observe and record should be directly relevant to the capabilities you prioritized in setting your organizational vision.

8. Let the “lines and boxes” fit your company’s vision.

The organizational design may, in the end, come down to a complex flow chart. But they are unique complex flow charts and should encompass a company’s vision, mission, and objectives all the way through. Layers of power and spans of control are especially important to consider when it comes to aligning organizational design with the company vision. If power dynamics are hypocritical to the rest of the organizational design, none of the design will be very sustainable.

9. Accentuate the informal.

Tangible elements of organizational design, such as structure and reporting relationships will always be appealing to change and focus on, but they aren’t always the most important. Informal, intangible elements such as norms, commitments, mind-sets, and networks are essential in getting things done, whether or not these things are intentionally decided or voiced. These abstract elements affect the ways people think, feel, communicate, and behave within the organization, affecting the way organizational design plays out in real life. If these latter elements are not in sync with one other or the more tangible elements, then the organizational design won’t work as it should and will lack sustainability.

10. Build on your strengths.

Redesigning an entire organization is a lot of work. But every organization has strengths, whether it is in the culture, the people, the structure, or the history. By looking to these strengths you can gain inspiration on how to fix less successful elements of the organization’s design. Whether it is a person, a practice, or a program that is working well, drawing attention to success, and using it as an internal guide for redesign innovation, will help grow the whole organization's design. 

The bottom line

“Organizational design” has been talked about as a method for mapping organizational structure for many decades. There are additional designs, relevant histories, and helpful details that aren’t found in this article but are nevertheless relevant to the conversation. If you have resources dedicated to organizational design, or any relevant knowledge, please consider sharing it here with the FairyGodBoss community!