How would I go about developing an organizational structure?-Wilfred Pasile, Student
To provide background and context to my response, I'd like to suggest that you read three articles on the Ask ACT Resources page: Mission/Vision/Values, Strategic Planning, and Organizational Development.
Above all, the structure of an organization is a direct derivation of the organization's mission, vision, values and strategy. In other words, who are we as an organization and what do we want to accomplish, both near and long-term? As a result, an organization's strategic initiatives may reflect both business and non-business objectives. For example, "we want membership revenues to increase 15 percent in 2007," or "we want to become an integral part of the community which focuses on childhood education," or "we want to become employers of choice."
Whether starting a new company or restructuring to meet ambitious new goals, the initial process is similar. You need to align the organization with what it wants to accomplish. This means you need to list each strategic initiative and map out what is required to meet it--the necessary functions, systems, processes, inter-relationships, people and leadership to get from here to there. You need to audit the capabilities that you have in these areas, and determine the "gap" between what you have and what you need. When you overlay the gap onto the organizaion, structure and leadership questions emerge. In terms of a new organization, you can start with compiling hiring requirements for a few key people who might spearhead each initiative, either individually or as part of a cross-functional team.
In structuring to meet initiatives, you may consider the following: How may peope/functions should report directly to the executive director/CEO? What constituency does this initiative serve? Internal or External? Customers? Community? All or part? What are the inter-relationships that it takes to succeed with the initiative? For example, an initiative involving customer sales may require the grouping of all functions related to sales--production, operations, marketing and sales. An initiative requiring highly visible community involvement may require one community relations person reporting to the executive director and collaborating with the organization. An initiative to improve internal IT may stay within an administrative area.
Where does the accountability reside for these "clusters" and how senior must the leadership be to achieve the results? Does the organization have the leadership within to lead a large multifunctional organization? If not, can it afford to hire new senior people? Shoud the organization implement the re-structuring in phases, so that it can be changed later? Will the new leadership have sufficient cross-functionality to assume leadership of larger or other areas if needed later on? Is this particular personnel movement sufficiently important to disturb a working / reporting relationship that has worked for many years? How will all of this change effect employee morale? What is the best way to socialize this change through the organization? Is this structure the right foundation for a future organization with broader, more ambitious initiatives.
In the case of a startup organization starting with little structure or leadership, the key question is the relationship between cost of salaries and seniority of leadership. The advantage of hiring senior people to lead organizations is that they can work as a cross-functional team, as well as lead their own areas, and later build larger organizations under them. Hiring below the senior level, while less expensive, can cause considerable displacement later as the organization becomes more complex, requiring new leadership capability.
Cost. Cost of new functions to support initatives is an over-arching factor in any initial structuring or re-structuring effort. Alternatives to developing inside capacity include outsourcing, joint ventures, alliances and partnerships.
Change Management. Any organizational change should be carefully "socialized" through the organization so that employees understand that the pending change is intended to help the organization as a whole best meet its goals.
This was intended to provide an overview of organizational restructuring. You may also wish to explore the subject in the references provided at the conclusion of my Ask ACT article.
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