If you want better performance, investing in your organization design will help you get there. Research and experience shows that better organization design is related to better financial performance, better customer satisfaction and better employee satisfaction. A strong organization design will support your company in sustaining an edge even in the most competitive markets. A weak organization design could undermine all of your other efforts.

The following are 10 important ways that you can design your organization for optimal performance.

1. Design your organization to deliver your business strategy.

Your organization design is one of the main drivers of your organization performance. Is it optimally aligned to deliver your goals? Do you have the best alignment of positions and accountabilities to reach your goals? Is your organization design flexible and robust enough to quickly respond to significant change?

2. Optimize the vertical alignment of positions.

Make sure that there are the right number of layers in the organization, and that every position is in the correct layer. Having too many layers is a waste of money, but too few can cripple your organization. The issue is not delayering… it is optimal layering.

3. Ensure that every employee in your organization has a manager who is exactly one level above.

This should be both in terms of the complexity of work done by the manager and the capability of the manager to work at that level. Research shows that this manager-direct report alignment is the single most important organization design factor, and is by itself related to organization financial performance, customer satisfaction and employee satisfaction. The research also shows that manager-direct report relationships are only aligned properly about 50% of the time, resulting in a horrendous waste of human resources. This is probably your single best opportunity for improved performance.

4. Eliminate redundant positions.

Research shows that between 1% and 2% of positions are redundant. Removing redundant positions not only realizes significant cost savings, but it also increases organization effectiveness.

5. Optimize the functional alignment of positions.

Ensure that core and support functions are properly established. Pay particular attention to Product Development and Information Technology, where some required positions are often unclear, missing or at too low a level. Note that the vertical and functional alignment of positions creates the spine of the organization. If the spine is not optimally aligned, everything else will be sub optimal.

6. Ensure that managerial and employee accountabilities and authorities are clear and appropriate.

Managers must ensure clarity and appropriateness of direct reports’ accountabilities and authorities. Within a clear accountability framework, employees will better understand their roles, and are in a better position to take initiative and apply their full capability in a way that is consistent with the organization’s overall strategic direction.

7. Break down silos!

Develop clear cross functional accountabilities and authorities. This is seldom done, and is virtually never even on position descriptions. This factor builds on the vertical and functional alignment of positions (the spine of the organization), and clear managerial accountabilities and authorities. We would consider this factor to be the difference between being world class or not.

8. Match the best people to the right positions.

The biggest opportunity for improvement in this area is ensuring that the individual’s information processing capability is properly aligned to the complexity of work required. A failure to do so is a major cause of the ‘Peter Principle’. While it may sound paradoxical, the highest performing employees may not have the highest potential capability to work at the next highest level.

9. Align tasks to the right level.

Research shows that individuals in professional positions are often working at too low a level. They are doing tasks that could be done as well, if not better, by someone in a lower level position who is being paid at a lower level. Research shows that this waste is conservatively estimated at $10,000 per professional position. This mismatch also leads to low morale because employees are not using their full capability.

10. Increase the success of projects.

Clearly link projects to the managerial accountability framework. Ensure that the head of the project has the information processing capability necessary to handle the complexity of the project.

These ten opportunities, when used in concert, can help executives realize new levels of success for their organizations. An investment in organization design is so much more than just a smart business tactic; it is a prerequisite for optimal performance.

Email us at info@capelleassociates.com, or call us at
416-236-3044 to learn more about how you can use Organization Design to further enhance your business
success.