Use trusted benchmarks to guide your org decisions.
Get BenchmarksDesigning the right organizational structure starts with asking the right questions. In fact, there are 10 key questions that any leader must know the answers to before diving into org design.
About to kick off org design? Get started with benchmarks
Before we get into the 10 questions, let's reconfirm our understanding of Organization Design (a.k.a. OD) - It is the process of structuring an organization to achieve its strategic goals and objectives. OD involves making decisions about how to arrange people and tasks within an organization to optimize its performance and adapt to changing circumstances.
Here are some of the key components and definitions that you should be aware of:
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.
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.
These processes relate to how decisions are made, the levels of authority, and the flow of information within the organization. Decisions usually start from the top (e.g. Management) and filter down to managers and all employees. But decision-making can also be decentralized, with authority distributed across teams or individuals to encourage autonomy and faster responses.
This refers to establishing effective channels for communication and information sharing across the organization. These channels are 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.
Aligning the organization's culture and values with its structure and processes to create a cohesive and productive work environment is critical to successful OD. Design decisions that result in a more flexible organization are always welcomed to match the culture and values of the company.
Workflows and processes should be streamlined for smooth operations and fewer 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.
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's critical to get commitment from all of the resources available in order to deliver on the new work design and value proposition.
OD 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.
Size up each function using trusted benchmarking data
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.
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.
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.
Knowing the company's strategic direction (a.k.a. vision) helps when designing the organization to ensure that it has the best chances to support these goals.
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. Some HR leaders turn to headcount benchmarking databases to quickly pinpoint how many people each function really needs - Learn more about benchmarking data.
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 2024-25).
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.
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).
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.
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.
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.
Looking for benchmarks to help with your OD? Search here
HolyMoly Dips, a fast-growing food production company, started to feel the strain as it expanded into new markets. The leadership team turned to these 10 organizational structure questions to help shape its redesign. Here they are, including quotes from team members interviewed:
1. Can you describe your company's current organizational structure?
“Our org chart looks neat on paper. For example, Marketing, Production, and Sales all line up, but in reality, roles often overlap, and it’s unclear who owns which decisions.”
2. What is the business issue your organization is trying to solve?
“Product launches are getting delayed, marketing campaigns are inconsistent, and accountability across teams is fuzzy.”
3. What are the business goals and objectives?
“We want to double our distribution footprint in the Northeast over the next two years while maintaining high product quality.”
4. What is your company's size, and how has it changed in recent years?
“We’ve grown from 14 employees to over 37 in two years. Rapid expansion is putting pressure on our current structure.”
5. What is the company's growth trajectory?
“Demand is rising fast, and logistics are becoming more complex. We need a structure that can keep pace without slowing us down.”
6. What are the key functional areas or departments within the company?
“Production, R&D, Sales & Marketing, Finance, HR, and Logistics. Each team is doing a bit more than its core responsibilities, which causes confusion.”
7. How is decision making currently handled within the organization?
“Right now, way too many decisions land on the CEO’s desk - pricing, marketing, hiring. Managers often wait on approvals instead of acting.”
8. What are the key pain points or inefficiencies in the current structure?
“Sales and Marketing sometimes duplicate work, approvals take too long, and some critical functions like supply chain analysis are under-resourced.”
9. Have you conducted employee surveys or gathered feedback on the current structure?
“Yes. Staff feedback highlighted frustration with slow approvals, unclear responsibilities, and a desire for more autonomy in local markets.”
10. Do you have any regulatory or compliance requirements that must be considered in the structure?
“Expanding into new area means we must comply with local food-safety regulations, so compliance oversight needs to be embedded in regional leadership, not just centralized.”
By systematically answering these 10 questions, HolyMoly Dips:
This approach results in a leaner, faster, and more agile organization that can scale while keeping teams accountable and empowered.
Explore relevant benchmarking data to size up your org
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.
.svg)
Download a copy of our latest all industry report with data to benchmark the Finance, HR, IT and Marketing functions.
Insights are just around the corner.
.svg)
.svg)
