**Organizational design** is a systematic approach to creating and implementing changes in a company. Organizational design embodies practical solutions: from restructuring the structure to changing decision-making processes.
## What is organizational design and why it is important
Organizational design helps to create a holistic design of a company, where each element supports a common goal. The process includes building the structure of the company, setting up business processes, distributing authority, creating mechanisms for interaction between departments and forming a decision-making system.
In business, organizational design is useful when it is necessary to rebuild the structure of the organization for new business models, to scale the team when entering new markets, to optimize processes when introducing innovations or to adjust communications in distributed teams.
It is important to distinguish between organizational design and related concepts in HR. For example, organizational modeling
is used to describe the structure of an organization, which is used to create a diagram of the company to analyze the current situation, and design brings the plan to reality. Modeling answers the question "how does it work?", design solves the problem "how should it work?".
Some companies call this process organizational development - this approach is a broader concept and includes not only the design of the structure, but also the development of corporate culture, change management, staff training. Organizational design focuses specifically on the design and implementation of organizational solutions. Understanding these differences helps to choose the right tools for a company's specific tasks.
## Key elements of organizational design
All elements of organizational design are interrelated, and changing one component entails adjusting the others. When the elements work in concert, a company has a higher chance of achieving success in organizational change.
![Организационный дизайн 1.png]()
**The organizational design process can encompass aspects such as:**
#### The organization's strategy and goals
Strategy sets the direction of the company and determines how the other elements of organizational design will be structured: the company's mission and vision, long- and short-term goals, how the goals will be achieved, and the principles of resource allocation.
#### Organizational structure
The structure defines how roles and responsibilities are distributed within the company:
- hierarchical levels;
- divisions and departments;
- reporting lines;
- decision-making centers;
- links between divisions.
#### Systems and processes
Organizational design helps to define and describe a company's core processes, such as operating procedures, document management, work in planning systems, quality control, and project management.
#### People and competencies
Organizational design helps to describe which employees should occupy certain positions. In the process, the company defines requirements for employee qualifications, develops a personnel development system, competency model and motivation programs, and assigns roles in teams.
#### Culture and values
Corporate culture forms the environment in which all other design elements work. It is important to define behavioral norms, company traditions, communication style in the team, attitude to innovations and approach to conflict resolution.
#### Decision-making mechanisms
If a company makes decisions quickly and efficiently, it can be considered agile. In order to create coherent decision-making mechanisms, it is necessary to determine the levels of authority and approval procedures, how responsibility will be distributed, delegation rules and task control mechanisms.
## Popular organizational design models
When choosing a model of organizational structure in the process of organizational design, it is important to take into account the specifics of the industry, the size of the company, the stage of business development, the existing corporate culture, the readiness of the team to change. Many modern companies combine elements of different structures, for example, a manufacturing company may use a hierarchical model for core processes and an Agile approach for digital transformation projects.
Common models of organizational structure include:
Hierarchical model
The traditional pyramidal structure suits companies with a stable environment and clear processes
strict chain of command
clear division of responsibilities
vertical communication channels
centralized decision making
Matrix organization
Combines functional and project management, creating a dual chain of command
flexible resource allocation
cross-functional interaction
balance between specialization and project tasks
development of professional competencies
Network structure
The model is based on the principles of decentralization and flexible linkages
autonomous working groups
horizontal communications
blurred division boundaries
Rapid reconfiguration of teams
Agile organization
Built around the principles of agile development and rapid adaptation
short planning cycles
self-organizing teams
constant feedback
rapid decision making
Holacracy
A radical approach to self-management of an organization
absence of managers in the traditional sense
distributed decision-making
dynamic roles instead of positions
transparent work rules
## **Digital solutions for managing organizational design**
Today's digital platforms are transforming the approach to organizational design, making it more flexible and manageable. Specialized solutions, such as [SimpleOne HRMS](), turn the complex process of organizational design into a clear and controllable tool for company development, while integrations with other corporate tools create a single information space for management decision-making.
[SimpleOne HRMS]() provides comprehensive capabilities for working with organizational structure. The platform allows you to create and edit hierarchical models of any complexity, track changes in real time and simulate various scenarios of organization development. Built-in directories and regulations ensure uniform standards of work in all departments.
The system functionality in the field of organizational design covers the full cycle of company structure management. The organizational modeling module includes tools for working with staff schedules, allows you to flexibly configure role models and manage positions.
Organizational modeling in SimpleOne HRMS
[SimpleOne HRMS]() pays special attention to the processes of approving organizational changes. The system automates procedures for approving new positions, employee moves and structural changes. Built-in control mechanisms ensure transparency of all changes and compliance with corporate standards.
The platform's analytical tools allow tracking the effectiveness of organizational design. Managers get access to up-to-date information about the state of the organizational structure, can analyze the workload of departments and evaluate the effectiveness of decisions made.
Dashboards in SimpleOne HRMS
## Principles of effective organizational design
The basic principles of organizational design determine the sustainability and performance of the company in the long term, and their balanced combination ensures the harmonious development of the organization. Each principle helps to align a certain aspect of the company's work and creates a basis for implementing organizational change:
1. **Consistency with strategy**
Organizational design should support the company's business strategy: structure follows strategy, processes are aligned to achieve strategic goals, resources are allocated according to priorities, and authority corresponds to areas of responsibility.
2. **Simplicity and clarity**
Organizational design should be clear for all participants. Each employee should see clear areas of responsibility, transparent rules of interaction, clear decision-making procedures and unambiguous criteria for evaluating results.
3. **Flexibility and adaptability**
Since the business must react quickly to changes, the company needs to develop flexibility, for example, to create a modular structure of departments so that it can quickly rebuild teams and adapt processes.
4. **Scalability**
Organizational design should support company growth - when it comes time to scale, replicable processes and standardized procedures can make the process much easier.
5. **Balance centralization and decentralization**
When this principle is followed, a company's strategic decisions are centralized at the top management level, while giving departments enough freedom to manage day-to-day operations. Local teams have a better understanding of their market or line of business, so they need the ability to adapt processes to their specific work environment, while at the same time the company maintains consistent quality standards across all divisions.
## Organizational design performance metrics
When evaluating the results of organizational design, it is important to take a holistic approach. Individual metrics do not give a complete picture - only a combination of quantitative and qualitative indicators allows you to draw conclusions about the success of changes.
Also, organizational design assessment does not end with the implementation of change. Continuous tracking of metrics keeps the organizational model up to date and allows it to be adapted to changing business conditions in a timely manner.
The following metrics and indicators can be used for assessment:
- **Key Performance Indicators (KPIs) - **quantitative metrics help evaluate the success of implemented changes. The focus is on financial results, labor productivity, and the company's market position. The system of indicators is aligned by levels of the organization - from strategic goals to operational objectives.
- **Speed of decision making - the** time of passing managerial decisions serves as an indicator of the performance of the new structure. If approval cycles are shortened and projects are launched faster, we can talk about the success of the organizational design. It is important to track not only the average time, but also deviations from the norms.
- **Employee satisfaction - the **quality of organizational design directly affects the [eNPS index](). Regular surveys measure employees' understanding of their roles, satisfaction with processes, and willingness to change.
- **Operational efficiency -** when a company chooses the right organizational model, errors and duplicate functions can be reduced.
- **ROI of organizational change - **investments in organizational design should yield measurable returns. ROI analysis considers the direct costs of change and the long-term economic impact of implementing a new organizational model.
## Briefly about organizational design
1. Organizational design **creates a holistic structure for a company** \- from building the hierarchy to setting up decision-making processes. Unlike organizational modeling and development, design focuses on the practical implementation of change.
2. **All elements of organizational design are interrelated**: strategy, structure, processes, people, culture, and decision-making mechanisms. A change in one component affects the performance of the others.
3. **Companies choose different models of organizational design**, from hierarchical to holacracy. At the same time, many organizations combine elements of different structures to fit their objectives.
4. **The success of organizational design is based on five principles:** alignment with strategy, simplicity and clarity, flexibility and adaptability, scalability, and a balance of centralization and decentralization.
5. **Modern digital platforms help drive organizational design** through process automation, structure visualization, and change analytics.
6. **Organizational design performance is measured through a set of indicators: **speed of decision-making, employee satisfaction, operational efficiency and return on investment.
