5 Principles for Organizational Structure

We will talk about the 5 Principles for Organizational Structure. Before starting, you can click this article to learn the importance of human resources management.

Expectations of all internal and external stakeholders are increasing. Organizational designs that are almost entirely shaped by customers are now on the agenda. The structures are constantly improved to maximize the customer experience.

Advances in technology, disruptive innovations that change the rules of the game in the competition, movements in economic markets, natural disasters and epidemics, legislative changes, etc. almost constantly require us to change our daily routines. In order to keep up with these changes and stand out in the competition beyond the adaptation process, companies should definitely review organizational structures and processes at regular intervals.

Organizations should now be able to make very fast and precise decisions and to implement them in a very short time and in the most effective way. In short, the organizational design of a company must be done perfectly, keeping in mind the digitalization of functions, such as HR(HR Transformation).

In organizational design studies that will take all these issues into account, attention should be paid to the following five main issues:

Clarify Your Corporate Strategies

  • Organizational structuring should start with the clarification of corporate strategies. What is meant by clarification here is to concretize where the company wants to reach after 5-10 years. Which existing and/or new product groups will I serve to which customer segments in this term? What are the points that I can differentiate my company? What are my primary target markets? Which countries do I target abroad? Which sales channels I will focus on? On the other hand, the budget may be a very serious issue that has to be dealt with care.
  • Usually, questions like these require managers to leave their comfort zone. In order to get where you want in the future, you will have to do different things than you do every day. For this, it will be necessary to determine a bold direction, to dedicate your organization towards this goal, and to set the organizational design correctly.
  • We can summarize the main benefits of integrating Human Resources applications with Strategic Planning processes as follows:
    • It ensures that opportunities related to Human Resources are taken into account while determining organizational goals and objectives. The Human Resources department is positioned as a more strategic function.
    • It is prevented that strategies are determined solely based on the views and preferences of senior management. It provides a two-way dialogue between units and senior management.
    • Strategic goals are taken into consideration especially in the selection of managers and other employees. In this way, the long-term success of the strategies is secured.(Strategic Workforce Planning)

Examine Best Practices

  • Company employees often have little time to examine the best/most common practices in the world, especially because of the daily hustle and workload. But periodically examining issues such as what the leading companies in the world are doing, what they do well, what attributes they have that you can adapt to your organization, what you can do differently will prevent organizational inertia.
  • When looking at the practices in the world, it is important to look not only at companies that you see as direct competitors but also general good practices. The concepts of benchmarking and competition analysis are actually different. Although the first thing that comes to mind in the rhetoric of competitor analysis is a product / service-based analysis, benchmarking studies are more inclusive. Benchmarking studies can be used to research not only competitors but also non-competitors. For this reason, it will be beneficial to compare the subjects such as Strategy, Marketing, Supply Chain, Financial Affairs, Human Resources, Information Technologies, New Product Development with the processes in companies that have the best practices in their fields. Thus, both intra-sector and inter-sectoral synergies are benefited as much as possible.

Understand The Internal Dynamics Well

  • One of the most important things in employees' experiences, starting from the application process to the company, is corporate culture. Leaders play the most important role in the values, beliefs, and habits that make up the corporate culture. You are always behind the troubles and success stories of your organization; remember! Is s/he the right person for the organization? Is it the right organization for the employee?
  •  As you move towards future goals, you may fall into a dilemma of people based on your organization. In this case, the best decision would be to adopt a merit-based human resources management approach. However, while implementing this, do not neglect to benefit from people who are at key points in the company (rotations, assignments to different positions, etc.).

Design an Attractive Structure

  • Your organization should be a center of attraction for potential candidates outside. It should also increase the loyalty of your existing employees. An institution where all employees and even other stakeholders are brand ambassadors is always a reason for preference. One of the most critical factors for this is to design a motivating and sustainable organizational structure.
  • An end-to-end employee experience process design, happy and motivated employees will bring high productivity with it.

Continuously Monitor and Improve Performance

  • You cannot manage what you cannot measure. Therefore, one of the first steps to be taken is to activate an effective individual performance system according to the designed structures. The individual performance system has to be established in accordance with the company strategy. Otherwise, even if your employees show high performance, there may be deviations in your direction as a company. In this case, the low performance of the company may turn into a low motivation for the employees.
  • Along with the performance system, action must be taken on motivating career paths, development-enhancing training plans, and commissioning sustainability-providing backup systems. It is critical to identify high potential and performing positions within the company and take them into more specialized talent management programs to prepare future managers.
  •  Motivational recognition and reward systems can also be considered. Of course, this may differ from department to department. For example, sales teams can be more motivated with financial reward systems, while R&D teams can be motivated by project systems, external collaborations, and training in which they are the decision-maker.

The role of change management in the implementation of the designed structures is quite critical. A simple mistake made here can waste all the effort. In addition, the support and sponsorship of the senior management will contribute to the acceleration of the change management process. Before putting it into practice, it is necessary to make sure that what the restructuring means is fully and accurately understood by all parties concerned. Remember, as Antoine de Saint-Exupéry, author of The Little Prince, says: "If you want to build a ship, don't drum up people to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”