10 Organizational Structure Questions to Ask Before Starting Organization Design

Introduction

In this blog we will outline 10 key questions that you should ask before starting an organizational design exercise. But first, let's understand what is meant by organization design.

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What is Organization Design (OD)?

Organization design is the process of structuring an organization to achieve its strategic goals and objectives. It involves making decisions about how to arrange people and tasks within an organization to optimize its performance and adapt to changing circumstances.

The key components of organization design include:

1. Organizational Structure: This refers to how the company is divided into business units, teams, and reporting relationships. Common organizational structures include hierarchical, flat, matrix, and networked organizations. These structures differ based on the desired outcomes of the leadership team, industry-specific organizational activities, and often include factors from the external environment (e.g. changing market).
2. Roles and Responsibilities: This is focused on defining the roles and responsibilities of employees within the organization to ensure clarity and accountability. It is very important to provide the leadership team with a clear definition of their roles (e.g. level 1 of the org, such as the Chief Financial Officer) and the other leaders or managers who report in to them.
3. Decision Making Processes: Determining how decisions are made, the levels of authority, and the flow of information within the organization. This usually starts from the top (e.g. leaders) and filters down the organization through managers to all employees.
4. Communication Channels: Establishing effective channels for communication and information sharing across the organization. This is particularly important when there are changes to the value proposition, which require commitment from all of the resources within a business unit or the company itself to maintain a competitive advantage.
5. Culture and Values: Aligning the organization's culture and values with its structure and processes to create a cohesive and productive work environment. Design decisions that result in a more flexible organization are always welcomed to match the culture and values of the company.
6. Workflows and Processes: Designing and optimizing business processes to streamline operations and eliminate inefficiencies. This is especially important for organizational redesign, which usually involves a new strategy for implementing more information technology programs and automation of internal processes.
7. Resource Allocation: This involves allocating resources such as budget, manpower, and technology to support the organization's strategic priorities. Strategic goals by themselves will not be able to develop new capabilities. Therefore it is critical to get commitment from all of the resources available in order to deliver on the new work design and value proposition.

Organization design can be a complex and iterative process, especially for large or rapidly evolving organizations. It often involves analyzing data, conducting assessments, gathering input from stakeholders, and considering various design options.

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The ultimate goal is to create a structure that enables the organization to adapt to changes in its environment, enhance productivity, foster innovation, and deliver on its strategies effectively.

10 Organizational Structure Questions to Ask Before Starting OD

These questions are designed to help us understand the current structure, learn what factors are important to leadership, and begin to shape up the new organization. So, let's get in to it!

1. Can you describe your company's current organizational structure?

Start by understanding the strengths and weaknesses of the current organization structure. It is recommended that you spend time on this question by following up with clarifying or further questions.

2. What is the business issue your organization is trying to solve?

Most changes to the organization structure (e.g. organizational redesign) is to solve for a problem or prepare for an expected change in the future. So, it's pretty important to understand what this is from the beginning.

3. What are the business goals and objectives?

Knowing the company's strategic direction (e.g. vision) helps when designing the organization to ensure that it has the best chances to support these goals.

4. What is your company's size, and how has it changed in recent years?

Understanding how the business has changed in size over the years is one factor that can be used to determine how big it may become in the future. You can also leverage headcount benchmarking databases like ours to determine how many people are required by function in an organization (learn more about our data here).

5. What is the company's growth trajectory?

This links in to the previous question, however the future is likely to be impacted by changes in the value proposition, leadership requirements, and the market (very relevant in 2023-24).

6. What are the key functional areas or departments within the company?

Identifying core functions and services provided by the organization from the outset helps to focus your organizational design. Note that these functional areas may vary depending on which market that the business operates in.

7. How is decision making currently handled within the organization?

Understanding who has control of decision making can inform the distribution of authority in the current structure. It can also help you understand who should have control in the new organization structure (which is usually similar).

8. What are the key pain points or inefficiencies in the current structure?

Identifying problems can help tailor the new design to address specific challenges. Consideration for these problem areas in the new strategy, systems, and services is critical to the success of the new structure.

9. Have you conducted employee surveys or gathered feedback on the current structure?

Employee input can provide invaluable insights into what works and what doesn't in the existing structure. Hearing feedback on the current organization and gathering thoughts on the new structure from all employees can also be super insightful.

10. Do you have any regulatory or compliance requirements that must be considered in the structure?

Some industries have specific regulatory requirements that affect organizational design. Knowledge of these constraints is critical for the development and success of any new organizational design before you start.

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Conclusion

Organizational design is a process of structuring an organization to deliver on its objectives and strategic goals. This involves many factors such as creating the structure, defining the roles and responsibilities of staff, and outlining who has decision making authority.

Equipped with just these 10 key questions, our readers will be able demonstrate their skills and ability when they start the next organizational design process.