WHY ORGANIZATION STRUCTURE MATTERS


An organization's structure describes how accountability for results and corresponding work tasks are distributed and managed in an enterprise. Responsibilities for outputs and task performance are clustered into jobs, jobs are grouped into larger and larger divisions, and divisions are arranged to drive the implementation of the organization's purpose. Moreover, an organization's structure must promote the efficient functioning of both its core business processes and enabling business processes and facilitate the effective deployment and development of its members. The central challenge in creating a new organization structure is to figure out which design best balances the disconnection that comes from distributing work with the connection required to focus all the organization's members on achieving its purpose together. For example, on one hand multiple management layers and narrow spans of control may be the most expedient means of controlling work and the resources needed to accomplish it, but on the other hand they may well make overall connection—and communication—within an organization difficult to attain.

Getting organization structure right is a tall order. Creating or changing an organization structure involves two interconnected activities: job design and organization design. Job design defines, sorts, and assigns the accountabilities and tasks derived from the outputs that must be produced by an organization's core and enabling processes. In addition, job design identifies the competencies—knowledge, skills, and abilities—required for an incumbent to perform at a high level. Accountabilities outline the "what" of a particular job's concrete results that contributes to achieving the enterprise's purpose. Competencies describe the "how" of that job in terms of the specific behaviors that drive outstanding performance.

Organization design creates an overall configuration that reflects vital interrelationships among discrete jobs and among groups of jobs. Design criteria for framing an organization structure are built from organizing principles, givens, and constraints, and a variety of both internal and external drivers. In short, design criteria must flow out of an organization's strategic framework: its vision, mission, and strategic directions. From the point of view of inherent design logic, an organization can be structured by customers, products, processes, strategic objectives, functions, territories, networks, and other dimensions, as well as by combinations of these dimensions, that is, a matrix or lattice. Of course the "right" structure does not guarantee success. Yet, the "wrong" structure can fracture an organization, isolate units and individuals, insulate management, block communication, and spark the flare-up of dysfunctional subcultures that undercut the organization's purpose. A structure that conflicts with an organization's vision, undermines its mission, or contradicts its strategic directions serves only to confuse, frustrate, and in the long run paralyze its members. An enterprise's organization structure must be aligned with its strategic framework.

In a case study of the creation of a world-class supply-chain organization, beginning on the following page, we see how a partnering organization can become the vehicle for implementing a smart partnering strategy. In part 1 of this five-part case, we discuss the vital link between developing a partnering strategy and then building a partnering organization to implement that strategy.

How an organization decides to structure itself has long-lasting implications for the competencies required to make that structure work, day in and day out. If, for example, a company wishes to "delayer" and broaden "spans of control," it will need to select candidates who display a specific set of competencies such as initiative, ownership and accountability, and risk taking. You don't enter a Clydesdale in the Kentucky Derby, and you do not strap Secretariat into a plow harness.

Here's the bottom line. If, as we have asserted, partnering is emerging as an essential business strategy for the twenty-first century, the Dual Age of Information and Connections, what are the implications of embracing a partnering philosophy on the structure of an organization? How might organizations be shaped differently not only to allow or even encourage partnering, but also to drive partnering as "how things are done around here"? That is, how do we use structure to help create a partnering culture?




Powerhouse Partners. A Blueprint for Building Organizational Culture for Breakaway Results
Powerhouse Partners: A Blueprint for Building Organizational Culture for Breakaway Results
ISBN: 0891061959
EAN: 2147483647
Year: 2003
Pages: 94

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