Organizational Design

Structure, Systems and Information

Organizational design assesses the internal structure and systems of the family business, its organization (including staffing structure, internal control systems and the condition and use of information) and its unique skills and abilities.

"The organizational structure for many family businesses is like an old country house where new rooms were simply added on to the house as the family grew," observes top family business expert Don Schwerzler.

"Over the years that old house served to accomodate the needs of the family - but now has become 'functionally obsolete'."

"Likewise, a family business organizational structure that has grown like that country house, the organization can become cumbersome and inefficient," according to Schwerzler. He has been studying and advising family business entrepreneurs for more than 40 years, and is the founder of the Family Business Institute.

Organizational Design - Basic Structure

Basic Structure evaluates whether or not a company's organizational design is conducive to achieving it's strategic intent. It evaluates an organization's structure and hierarchy in relation to its strategic plan. It also takes into consideration whether a company's structure is politically or strategically driven.

  • Structure Criteria for Organizational Design
    • Structure is conducive to strategy
    • Structure is based on strategic need, not "in-house" politics
    • Structure facilitates a "value chain" approach
    • Promotes collaboration between departments
  • Structure Evolution
    • Structure adapts quickly to change
    • Supporting innovation and change
    • Willing to reorganize, when necessary

Core Competencies

Organizational design's Core Competencies are the skills, knowledge and special abilities a company possesses that set it apart from other organizations. By effectively bundling these skills, knowledge and special abilities, a company can create a competitive advantage, enhance value, and expand their market position.

  • Identifying Core Competencies
    • Understanding a company's distinctive skills and capabilities
    • Clearly articulating the core competencies
    • Identifying how core competencies:
      • Create customer value
      • Establish differentiation
      • Expand product or service offerings
  • Leveraging Core Competencies
    • Expanding customer value proposition
    • Increasing competitive differentiation
    • Leveraging product or service offerings

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Information, Systems and Technology Component

Information, Systems and Technology is the organizational design element that takes into account the quality of an organization's overall communications and the effective alignment of technology with strategic intent. This component considers whether or not an organization has developed the means to obtain targeted market information, align internal communications systems to research and implement innovative technologies.

  • Organization Communication
    • Communicating the strategic plan throughout the company
    • Communicating key objectives to employees
    • Announcing key performance metrics
    • Communicating progress against key objectives
  • Targeted Information
    • Providing managers with the information they need to make informed decisions
    • Continually updating environmental factors that affect business
    • Using a company information system to regularly disseminate important market data
    • Providing management with timely updates regarding performance in their areas of responsibility
    • Using high-quality information to make rapid decisions
  • Enterprising Systems
    • Facilitating the flow of information across departmental lines to maximize performance and effective decision-making
    • Sharing information across departmental lines through an integrated system
    • Defining the specific components of a cross-functional information system
  • Applied Technology in Organizational Design
    • Ensuring that company technology needs are fully met
    • Strong commitment to acquiring improved technologies
    • Seeking to discover new or improved technologies
    • Effectively monitoring the role of technology within industry

Organizational Efficiency Component

Organizational design's Organizational Efficiency deals with establishing the necessary policies and procedures to ensure an appropriate level of discipline within the organization. It addresses clarity of roles and responsibilities, organization interdependencies, and management of outsourced relationships.

  • Balanced Oversight and Direction
    • Providing written policies and procedures to all managers and employees
    • Monitoring compliance with policies
    • Keeping procedures/ manuals brief and to the point
    • Minimal "red tape"
  • Synthesized Roles and Responsibilities
    • Employees understand how their roles relate to strategic objectives
    • Clearly defining management roles
    • Eliminating redundancy in roles or responsibilities
  • Managed Outsource and Strategic Alliances
    • Integrating outsourcing into the strategic plan, where appropriate
    • Closely monitoring outsourced activities
    • Managing strategic partner activities
    • Enduring that strategic partner performance is consistent with internal standards


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How Well Organized is YOUR Organization?

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The Practitioner's Guide for Organizing an Organization
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