Factors influencing organizational design

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Factors influencing organizational design
Organisational design is about the structure of the business and its processes. (Visage/Stockbyte/Getty Images)

A business plan for a new organisation requires decisions about organisational design. Organisational design is more than just the command structure of the business. It also covers business processes, decision-making, people management and communication. It is all about ensuring that the business is structured in the optimal way to achieve the strategy. It is affected by both internal and external factors.

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Purpose and values

At the heart of any organisation is its purpose: a combination of what the business is for and what it does. Most organisations have core values that influence how they conduct themselves as businesses and how they expect staff to behave. An organisation that provides a service and declares itself people-focused is likely to develop a structure with a lot of customer-facing staff. In contrast, a manufacturing business with an emphasis on technical excellence will organise itself according to its manufacturing processes.

Factors influencing organizational design
A service business will place an emphasis on its customer-facing staff. (Digital Vision./Digital Vision/Getty Images)

Vision and strategy

Effective organisations have a vision of where they want to be in the future and a strategy for how they want to get there. This influences organisational design. Redesigning or restructuring the organisation is often part of the strategy. For example, a business might want to grow through selling a greater range of products to existing customers. It may structure itself in regional groups rather than separate teams that each focus on a single product.

Factors influencing organizational design
The future vision of a business will influence its design. (Comstock/Comstock/Getty Images)

Business environment

Good organisational design allows a business to respond to the needs of the market and other external factors, such as the environment for employment. An seasonal business, for example, might create a model in which it appoints its staff purely on short-term, seasonal contracts. A retailer might build in flexibility, expanding either its high street shops or its online business.

Factors influencing organizational design
Good organisational design will allow a business to respond to changes in the market. (Photos.com/Photos.com/Getty Images)

Regulatory environment

Some sectors are highly regulated. Organisations in those sectors have to ensure that they have a structure that will enable them to keep to the rules. An example might be a financial services company that has to respond to new rules regarding risk. As part of its organisational design it could create an independent risk management department that reports directly to the Board.

Factors influencing organizational design
Some businesses have to respond to sector regulation. (Hemera Technologies/AbleStock.com/Getty Images)

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