Do you have a well designed organization free essay sample

9 tests of organization design: framework to guide the evaluation of an existing organizational structure, or to create a new one. The organizational design of most companies is the result of an haphazard evolution rather than a systematic, methodical planning: as a consequence, strategic initiatives fail because responsibilities are unclear, and opportunities are not exploited for lack of managerial attention. This framework is a structured approach for analyzing all the key variables of organizational success. 4 â€Å"FIT† tests: initial screen for design alternatives, to evaluate whether the structure support the intended strategy 5 â€Å"GOOD DESIGN† tests: tool to refine a design by addressing potential problem areas, and establish the right amount of hierarchy, control and process. A] Getting the FIT right 1) The Market Advantage test (does your design direct sufficient attention to your sources of competitive advantage in each market? ) Organizational structures should be shaped in order to enable and support the market strategy, but in reality often they end up being an obstacle. Define target market segments Determine if the design direct enough attention to each market segment. The ideal situation is the one where you have a single unit dedicated to each segment/initiative. In reality, however, it is required also coordination across units, much more difficult to manage than collaboration within units. Therefore, the design should enable the unit managers to give enough attention to maintain the required cross-border links. 2) The Parenting Advantage test (does your design help the corporate parent add value to the organization? ) Corporate HQ play different roles in different companies. This test helps to make sure the design is tailored to support these roles. Define and list the corporate-level activities that provide real value to the overall company Determine if the design gives enough attention to these value adding tasks. This test helps to see more clearly the organizational implications of the strategy, in order to shape an organizational design that is aligned with the corporate-level strategy. 3) The People test (does your design reflect the strengths, weaknesses and motivations of your people? ) When an organization has troubles, executives are often quick to point the finger at people. In reality, if an organization is not suited to the skills and attitudes of its members, the problem lies with the design. Look at your key players (top management, people with critical roles) For each, ask if the design provides the appropriate responsibilities and reporting relationships. * when creating a new structure, you also need to look at the losers: employees who will lose status or power in the new setting. Losers can become blocks to change. You need to decide how to deal with them, either trying to buy their support or letting them go. 4) The Feasibility test (have you taken account of all the constraints that may impede the implementation of your design? ) All companies have constraints, both external (e. g. laws) and internal ( e. g. information systems). They need to be assessed early in any design effort, to understand their potential role as obstacles. Constraints can be divided in 4 categories 1. Government regulations: can preclude certain design elements (ex: in some countries, it is impossible to do businesse without a JV with a local partner). 2. Stakeholders’ interests 3. Information system 4. Culture B] Refining the Design 5) The Specialist Cultures test (does your design protect units that need distinct cultures? ) Inside companies, there may be units that should maintain distinct cultures: you need to make sure that those â€Å"specialist cultures† are sufficiently insulated. Identify specialist cultures Assess wether any of them is in danger of being dominated or contaminated. If there is this risk, first look for ways to protect it without changing the basic structure, for example granting the unit more autonomy or educating the rest of the company. If these protective measures fail, you will need to change the design. 6) The Difficult-Links test (does your design provide coordination solutions for the unit-to-unit links that are likely to be problematic? ) Some collaboration among units is often necessary. The majority of these links are best handled through self-managed networking among units: whenever possible, units should be left free to set-up coordination mechanisms, rather than impose them. However, sometime can arise â€Å"difficult links†, which calls for specially designed solutions. Similarly to the case above, you can make refinement to the basic structure, but sometimes it is necessary a substantial redesign, such as brigning the units involved into the same division, or set up a new unit. ? Taken together, the 2 tests help to judge how narrowly or broadly to define unit responsibilities, getting the right balance between specialization and coordination 7) The Redundant-Hierarchy test (does your design have too many parent levels and units? ) Big companies can have many parent units: it is important to determine whether each parent level is needed and, if so, whether it has the necessary resources. Identify each level and unit in the hierarchy of the company Evaluate if each one has clear and distinct parent propositions: if a level is redundant, you should think about removing it. ? as a rule of thumb, we can assume that a new level is worth keeping if it is able to improve the performance of the units reporting to it by 10% Determine if every level with compelling parenting propositions has access to the skills and resources it needs. The purpose of this test is to spot major problems, it doesn’t require too detailed analysis. 8) The Accountability test (does your design support effective controls? ) The purpose of this test is to ensure that every unit has appropriate controls over its performance. When assessing accountability, focus on 2 common sources of problems: a. Look at units with shared responsibilities. Shared responsibilities dampen accountability: each unit can easily blame the others in case of problems b. Look at units whose performance is difficult to measure: no objective outcomes, or too costly data collection (i. e. basic research). If full solutions are not possible, you have to rely on subjective judgment, that is satisfactory only if the manager in charge of the evaluation has deep operating knowledge; otherwise, you may need to change the design 9) The Flexibility test (does your design facilitate the development of new strategies and provide the flexibility required to adapt change? ) A well designed organization is fit for the present as well as flexible for the future. Of course, to ensure innovation and flexibility organizations need flexible minds, but it is also necessary a suitable design. The test is aimed at detecting any major organizational roadblocks along the path to the future. Start by assembling a group of managers from across the company Ask them to create a list of future opportunities Check if the current design would support or impede those opportunities. If you find that the current design could be an obstacle, explore possible modifications. * It is possible to follow a similar approach in examining flexibility, identifying a bunch of organizational changes that may be required, and identifying any part of the org. that would be resistant to changes. The power of this test is given by its iterative nature: once you’ve gone through the 9 tests, coming up with a number changes, it is possible to run the test again, to ensure that the changes made to pass one test haven’t caused the design to fail in other tests. To get the best design, it is necessary to take the broad view, working step by step through the myriad of trade-offs