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Key Elements for Designing an Organization Structure (KE7- Approach)

The building architects visualize a structure to realize a significant goal or set of objectives, and then give a shape to their vision which is accomplished by joint efforts of several participants like structural, civil, mechanical, electrical engineers and contractors. In the like manner successful business architects visualize an organization structure to accomplish commercial objectives. The difference between two analogies lies in, building structure is built by static inorganic materials but organization structure is built around dynamic components in the form of human resource, a continuous variable. This key difference makes the organization design exercise more challenging and complex. For the benefit of the business managers, some of the key considerations are illustrated here

A. Purpose for Existence:

Identify the principal objectives for a particular department / organization’s very existence and filter out that there is no better alternative for desired objectives to be met but through creation of the department / division/ team/ organization. Industry practices and benchmarking can be useful tools before embarking on structure development. Identify core competencies, advanced knowledge and innovative knowledge anticipated for accomplishing the corporate mission.

B. Functions

Identify clearly defined and executable functions of the department and package them into logical blocks of rational work-scope. Remember functions are not descriptive but executable processes.

C. Inter-relations and Network Identification

Identify all possible present and future interactions with other departments, organizations, individuals or parties as relevant. Develop a network of relationships and identify the role played by the proposed entity. Conduct a critical analysis of the inter-dependencies and develop a profile with time sensitivity characteristics.

D. Cost-Benefit Analysis

Estimate realistically and objectively the contributions anticipated by the entity to the overall objective of the corporation. What can be the consequences if the specific department / element malfunction? How the repairs will be conducted? Is there any critical function of the department, which can bring down the entire corporation? Be aware and take adequate measures to safeguard stakeholder’s interest.

E. Modus-Operandi and Audit Functions

Identify all relevant policies, procedures, work methods, information flow & medium, feedback system, internal audit process, records management and environmental influences if any. The ideal approach shall be to develop “Business Process Model” before designing the structure.

F. Positions

Create positions to execute clearly defined logically organized work scopes and allocate to specific branch or node of the corporate/departmental network. Avoid overloads, bottlenecks and unique positions, when defining nodes. Unique nodes can cripple the function of the entire network, thus keeping in mind that no one shall become indispensable.

G. Position Design

Each position shall encompass unambiguous description of the following: -

  • Eligibility Criteria of a person for the position
  • Immediate Supervisor (Position Reports to)Resources (human and Capital) allocated to the position.
  • Roles
  • Responsibilities
  • Duties – routine tasks to be performed.
  • Accountabilities
  • Deliverables
  • KPI – Key Performance Indicators
  • Future Career Path (Employee Development Scheme applicable)
  • Cost vs value added (anticipated) to the bottom line results of the company.
  • Terms of the Employment contract with clear emphasis on confidentiality and non-competition clauses.
  • Performance Review /Appraisal System and periodicity
  • Alternative roles which can be managed by the position
  • Alternative positions, which can manage the functions of this position.


Quiz for the Readers of TMC’s “KE-7” Approach

  1. Do you think above elements are in chronological order? If yes please share with everyone for the benefit of the society.
  2. What can be wrong if the implementation is not in above sequence?
  3. Can it be applied to all types of departments in the corporation?
  4. Why must one follow such a complex process for simple production or routine function?
  5. Do you know of alternative approaches with better outcome?

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