Many people mistake Organization Design with Organizational Structure. In this chapter, we will understand the difference between both.
Organizational Structure is related to mapping out the different departments of an organization and the different teams working in each department, their hierarchical order, their goals and objectives. It also illustrates the roles and responsibilities given to different responsibilities.
A typical Organization Structure illustration looks like the following illustration −
On the other hand, Organizational Design is related to aligning functions, processes, strategies, responsibilities and roles to different members of team and departments within the context of the various processes and products that the company produces.
When asked to imagine an Organization, people tend to picture a big glass building in a big campus with state-of-art facilities, bright corridors and teams upon teams of people working on different floors. It brings a surprised look in their eyes when they are told that every one of them has worked in an organization irrespective of the fact that they have ever stepped inside an office or not in their entire lives. If you are surprised too, then you are in a good company, because people relate to organizations with names like UNO, World Bank.
This issue arises from a fundamental misunderstanding in the meaning of the term Organization. We know that organizations consist of people working in big buildings. However, it is interesting to think if the buildings themselves are a part of the organization, even if the company owns it.
The answers to such questions were answered up to a great extent by Jim McNamara, who said that an organization in its most basic definition can apply to a single person too. According to him, an organization is either a person or group of people with an organized approach to complete an individual or collective goal with either an individual reward or collective reward in expectation.
The mission of any organization is identifying and conceptualizing the common purpose that binds the team-members together as one enterprise. This mission statement is often shared between members of the company and stakeholders to make them aware of the purpose and objectives of the organization.
There is a difference between Mission and Vision, though.
Vision − A Vision or Vision Statement tells what an organization should achieve and be in (n) years. It is related to trying to accurately predict the future of business and make preparations from now on. It tries to set a benchmark that the organization is supposed to achieve in a given number of years. Companies without a vision are perceived as self-centered who are resistant in adopting to change with passage of time.
Mission − In simple words, a Mission or Mission Statement explains what an organization does as its basic function. A Vision Statement tells what an organization should achieve and be in (n) years.
For example, many companies, most notably Nokia, faced bankruptcy due to their being too fixated on their present success to design a framework for the future.
While the vision statement explains where the company should be headed in (n) years, business strategy is all about getting the business there. Strategy need not be long-term planning only; it may be short-term too and represents the methods through which a company’s vision is realized.
Business Strategies decide the products and services that an organization will produce, the choice of technologies using which the products and services are designed, the development of these products, their pricing, marketing and distribution. It also involves finding competitive ways to counter rival companies.
Once the organization draws out a mission and vision statement and finalizes a strategy on how to achieve these, the managers start to draw the framework, delegate responsibilities and recruit people as valuable resources and train them to deliver on objectives. The HRs take over these responsibilities after deciding upon the cost to the company (CTC) and the other motivation-oriented performance incentives.
Once the resources have been recruited, they are provided intensive training into the products and services and are inducted into their jobs. Their performances are subject to periodic informal reviews, during which their supervisor will identify issues in their working style and guide the employees, so that they can address these issues.
After the probation period, during which the newly appointed recruits are kept under guidance-driven observation, they will be subjected to a periodic formal review process, during which their performances will be evaluated and feedback will be shared.
In today’s world of globalized business-dealing, no company can afford to operate in strict silo structures. Every company has to keep a tab of its working process. It needs to keep conducting reviews and scans to its working environment to see what further improvements it can bring in its workforce.