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Six Organizational Design Principles to Foster a Healthy Culture

Posted on April 16, 2014 at 12:35 AM


Over my 20+ years as a consultant and executive, I’ve learned many lessons about how to design a new organization or redesign an existing one. I have summarized those lessons learned into the following six organizational design principles you may want to consider if you are designing a new organization.


Levels – In general organizational design, flatter is better. Set a goal for how many levels you want between the head of the organization (e.g., the CEO) and the most junior staff member.


Span of Control – How many people should a manager have as direct reports? On one hand, you want to have each manager to have as many direct reports as possible to help keep the manager layers as lean and flat as possible. On the other hand, fewer is better so each manager can devote the time to each direct report to provide the appropriate level of management. Finding the balance between those two ends of the spectrum is the key. It also is dependent on the type of work – some types of work inherently require more manager time. A good idea is to set a range of a minimum and a maximum number of direct reports for each manager. Depending on the work, you might want a minimum in the 3-5 range, and a maximum in the 7-10 range. You want to rigorously look out for examples of the “I formation” in which there are managers with only one direct report.


Career Paths – You want to ensure you can see career paths embedded in your organization chart. Look at the most junior roles and think about what their career progression would be in that organization. Where you see any small, niche branches on the organization chart that leave no clear path for career progression, think about ways you could fix that through some organizational changes.


Titles – Job titles are an interesting decision. There are two schools of thoughts on how organizations should do job titles. One school of thought is to have a very consistent structure across all parts of the organization. This will make things like setting job expectations simpler. For example, what should and should not qualify as a “Deputy” or “Assistant” role. If you are keeping your organization flat, your job titling nomenclature can be pretty simple. The other school of thought is that job titling is something that provides value to employees at no real cost to the organization, so it should be pretty free form. If you are considering this direction, think through how this will play forward and how you can manage potential “title inflation” in the future.


Location – While you are doing position descriptions, it is a good idea to think about if there is anything inherent in that job that would dictate whether it should be based in the headquarters, in the field, or home-based. By making that decision based on the job content, you can avoid having to make it a case by case decision, which can leave you open to looking unfair or playing favorites.


Process – Finally, as you are building your organization and adjusting it in the future, it is a good idea to have a clear process for approving changes in the org chart. Whenever someone wants to make significant changes to the org chart (e.g., making a job to be a higher pay grade), you may want to have a central authority approve that. It adds a bit of bureaucracy, but can help maintain consistency and fairness across the organization. It can also help manage your overall payroll costs.


If you have any questions, feel free to email me.

Categories: Organizational Design, Organizational Values