Organization design is the structural and operational design of an organization. This is an executive management function that can include the architecture and design of any internal aspect of a business. The following are common examples.
Organizational StructureArchitecting the structure of an organization including its divisions, departments and teams. For example, a startup that launches an internal customer service department to replace outsourced customer service functions.
Roles & ResponsibilitiesA critical element of organizational structure that specifies who is responsible for what. This often creates a hierarchy of reporting lines.
Business UnitsBusiness units are an element of organizational structure that specify what team is responsible for what products, services, revenue, cost and business risk.
PrinciplesPrinciples are foundational statements that are established to guide future decisions. These include values and statements of how you will conduct your business. For example, the principle that you will never sacrifice long term results for short term gains.
Policies Policies are rules that are specific enough to enforce. For example, a hotel chain that establishes a rule that staff will not speak of customers in a negative way at work.
ProcessesBusiness processes including overhead such as performance management and operations such as order fulfillment.
Internal ControlsInternal controls are implementations of policies and processes. For example, a disclosure form for managers to disclose existing relationships with new hires. This may trigger processes such as an independent review and approval to hire a friend or former colleague.
Business CapabilitiesMapping out what an organization does and how this is measured. For example, an ecommerce firm that identifies hundreds of customer service functions such as closing an account with metrics for each that flow into a dashboard.
Business ArchitectureBusiness architecture is essentially another term for organizational design. This tends to be somewhat detailed and may include things like how business capabilities map to systems and data.
Technology ArchitectureTechnology Architecture, also known as IT Architecture or Enterprise Architecture, is the structural design of your information technologies. This can be mapped to business capabilities. For example, mapping how a business capability such as billing maps to systems and data.
RestructuringRestructuring indicates a major change to the structure of a business. This can be driven by expansion or retrenchment. For example, a firm that closes a line of business due to risk, cost or failures.
NotesIt is a mistake to think that organization design is an HR function. It is in fact an executive function that cuts to the core of strategy and operations. However, HR is often, but not always, involved in implementing organization design.
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