Updated: Jul 27
When it comes to agile the organizational structure and organizational design are the most common terms we come in contact with. But considering both terms as one is a mistake as they define the different aspects of agile. They both are like a foundation and design of the building construction for agile.
Foundation and design are the important things for building anything. To make the structure stand strong requires building a strong foundation with the right design. With a strong foundation, you can build and rebuild anything in repetition. The same applies in agile, the organizational structure and design have the same relation as foundation and design. An agile structure is a foundation of business the roles and rules in the hierarchy. Organizational design is required for making it sustain in every change that identifies dysfunction of system and workflow to remodel the organization for proper fit with current business realities.
Many get confused about organizational structure and organizational design as they consider both as one. But when it comes to agile we must be sure about every term as small changes can make a big difference. Let’s get into the detail of both and understand them better.
What is Organizational Structure?
The basic functional logic of an organization that includes the scope and strategy translation to the activities that need to be performed at different units of the organization and this are interlinked and formed to achieve the required goal is what organization structure means.
What is Organizational Design?
The organizational design that is many times termed used as an organizational structure by mistake is broader than the organizational structure. The organizational design is deeper in scope and details than structure. It explains the team setup and how to lead teams in an organization.
The difference between Organizational Structure and Organizational Design
The organizational structure represents a static form of organization, that if needed can also be presented by drawing a diagram. Organizational structure helps in understanding the organizational relationship between roles, ranks of team members, managers, and leaders, links between job functions, and chain of commands. Whereas, Organizational design is an organizational dynamic representation that helps in representing the procedure of structure and restructure of an organization, workflows, and processes so that business is continuously operated in the best condition ensured.
The organizational structure is not a continuous process many times it occurs only once or twice whereas; the organizational design is a continuous process. Business needs to change continuously due to changing economy, customer taste, market forces, regulatory framework, and external business environment that put a lot of impact on business. The systems that are not anymore in use for reducing cost and strengthening performance in a ray of external conditions are tweaked with help of organizational design in a structured way.
The organizational structure describes the organizational hierarchy in terms of functions i.e. it describes the roles, functions, responsibilities, and supervision so that the employees are clear in their role function, job description, decision-making authority reporting structure, and allocation of tasks in department, individual, branch, project teams etcetera. It also helps in defining the information flow at different levels of an organization and employee fitment in the overall organization. Whereas, in organizational design restructure, design and defining organizational structure are aimed. The organizational design is focused on finding the types of dysfunction and defective element in an organization's system, process, structure, and work culture. With help of this identification, the defects and dysfunctions can be rectified to better fulfilling the business objectives. Organizational design helps in defining the responsibility of tasks and limitations, flaws of information, and reporting structure. Organizational design helps in identifying and eliminating duplicity of work, inefficient work, blame game, an obstacle in the decision-making process, improper customer dealing, shortfalls in the system, and processes that cause a decline in employee efficiency, trust issues, or lack of trust in subordinates and superiors.
Even though there is a difference in organizational structure and organizational design but still they are interrelated and cannot be separated. This interrelation of organizational design and structure gives an organization a static foundation and dynamic design that sustains the impact of change. As organization structure gives the static base to the organization and organization design provides change management that can easily and in minimum possible time implement the change in an agile organization.
About Advance Agility
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