The 4th Key Function of the CEO: Implement The Right Organization Design

Dwight Mihalicz,

Mihalicz_CEO Function 4

Most writing on organizational theory looks at organization design as a form of high level “art”. Should the right design take into account the organization’s functions? Does it reflect products and services, or perhaps a divisional alignment? Or should it follow a hybrid or matrix structure? While there are countless ways to design an organization, there is in fact a science to the process.

Beyond The Basics

Scholars recognize Newton for his work on gravity. People understand if you hold an object at arm’s length in front of you, when you open your hand it will fall. The brilliance of Newton isn’t in demonstrating that if an apple falls from a tree it will hit the ground, but in understanding the most fundamental scientific principles of gravity. By creating that deeper understanding, it became possible to predict the consequences of actions. As a result, science was able to predict how different bodies have mutual attraction and that opened the further scientific discovery. The same is true with organizational design.

Take it a Step Further

You’re reading the article and recognize there’s room for improvement, now what? It’s time to talk to Dwight. In one phone call you can learn how Organization Design can benefit your organization.

Understanding Complexity and the Science Behind Organization Design

Over fifty years ago Elliott Jacques described the scientific principles related to complexity of work, which can be used to design an organization. The process ensures that an organization has the appropriate number of layers for the complexity of work that needs to be done. Complexity in this context is driven by two factors:

  1. How much actual direct output work is being produced (number of workers).
  2. Strategy for the future (timeframe required to implement strategy).

These two factors together determine the correct number of layers required for the best organization design.

Using Scientific Principles Appropriately

As CEO, it’s important to understand that there is a science to this process and that the principles can be used to design an organization that can accomplish its goals. Failure to do so results in an organization that grows in an organic manner. This leads to a situation where the organization has too many layers, or worse, too few, resulting in a missing layer of management! Extra layers cause overlaps where two managers do similar work causing conflict. By contrast, too few layers results in a missing position and a missing level of capability, which leads to inappropriate delegation and low quality.

Definite scientific principles drive organization design and when applied successfully, can be of great use. The right design is essential, creating the foundation on which all other organizational systems are built. Whether it’s managerial systems, company-wide processes or cross-company accountability frameworks, success in every facet depends on the right organization design – and the CEO is the one who must define it.

Dwight Mihalicz

Dwight Mihalicz has over 40 years’ experience helping local, national, and international organizations achieve greater productivity, efficiency, and performance.
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