Top Organizational Design Models: A Comprehensive Guide for HR Leaders

Organizational design models are essential for understanding and improving the efficiency of businesses. These models provide a framework for structuring an organization's operations, processes, and resources. Read about Organizational Design guide here.

This blog offers an ultimate overview of 5 popular organizational design models, along with their pros and cons. 

These 5 org models are categorized as:

Diagnostic: Jay Galbraith's Star Model™, McKinsey's 7S Design Model, Weisbord's Six Box Model

Transformation: The Burke-Litwin Organizational Change Framework

Experimental: McKinsey Helix Model

Understanding these five different organizational models will help you make informed decisions. As a HR leader, you will be able to choose the right model for your company's success by the end of this blog.

Diagnostic Models

Diagnostic models involve evaluating an organization's current performance using evidence-based methods. The goal is to find opportunities for improvement through a collaborative process. 

This process aims to identify the root cause of issues and develop interventions for planned or unexpected changes. Businesses can use diagnostic models to improve their efficiency, productivity, and overall performance.

Jay Galbraith's Star Model™

The Star Model™ framework,  developed by Jay Galbraith, is a model that strives to establish a harmonious relationship between five fundamental components: strategy, structure, processes, rewards, and people. 

The primary goal of this model is to achieve organizational effectiveness. This model ensures that these five components are seamlessly integrated and in sync with one another. 

Strategy: outlines organizational goals, objectives, values, and missions. It allows strategists to prioritize activities effectively.

Structure: involves organizing the company into departments responsible for specific tasks and objectives. It determines reporting relationships, the flow of communication, and decision-making processes.

Processes: the procedures, systems, and protocols in place to ensure that tasks are completed efficiently and effectively. This component encompasses the workflows and communication channels. Further enabling individuals and teams to collaborate and coordinate their efforts.

Rewards: involve designing a compensation and recognition system that aligns with the company's goals and objectives. 

People: refers to the management of the workforce, including hiring, training, retaining, and developing employees, as well as fostering teamwork and motivation through a positive work culture.

Pros:

• Its simplicity and ease of comprehension. 
• The model is straightforward to perceive how each component contributes to organizational effectiveness. 

Cons:

• Does not address all the complexities of modern organizations. 
• Less comprehensive than other models that take into account a broader range of factors.

McKinsey's 7S Design Model

The McKinsey 7S Design Model is a strategic management tool used to evaluate and improve the performance of an organization. It consists of seven interdependent elements that together make up the organization's success: 

1. Strategy: indicates the overall plan or approach a company takes to achieve its goals and maintain its competitiveness in the market. 
2. Structure: refers to the organization's formal and informal structure, including its hierarchy and reporting lines. This is reflected in the organizational chart of the company.
3. System: refers to the processes and procedures used by the organization to achieve its goals. 
4. Skills: means the competencies and capabilities of the organization's employees.
5. Staff: refers to the people who work for the organization and how they are managed.
6. Style: encompasses the leadership style, management style, and the organization's overall culture.
7. Shared Values:  serve as the guiding principles that shape behavior, making them the cornerstone of the 7s model.

The 7S Model highlights the interdependency between these elements and demonstrates how they impact organizational performance. For example, if the organization has a clear strategy but a weak structure, it will be difficult to implement that strategy effectively. Similarly, if the organization has skilled employees but a poor culture, it may struggle to retain those employees.

Pros:

• Provides a holistic view of the organization.
• Helps to align various components.

Cons:

• Can be challenging to implement in large organizations.
• Requires thorough analysis.

Weisbord's Six Box Model

Weisbord's Six Box Model is a diagnostic framework that assesses organizational effectiveness by analyzing six critical factors: 

1. Purpose: indicates the assessment of the business you are in and determines your mission, goals, and objectives.
2. Structure: refers to the company’s formal hierarchy, roles, and responsibilities - How do we allocate work among the team?
3. Relationships: are related to how team members interact with each other - How do we communicate, collaborate, and handle conflicts?
4. Rewards: can be both tangible and intangible and are used to motivate and incentivize employees.
5. Leadership: refers to the leadership type that executives possess and how well it maintains alignment among business elements.
6. Helpful Mechanisms: are the systems, processes, and tools that support the organization in achieving its objectives.

Weisbord's Six Box Model helps diagnose organizational problems by highlighting areas that need improvement and providing a framework for change. The model allows business leaders to identify the root cause of the situation by analyzing each of those factors. It then suggests ways to improve the organization.

Pros:

• Emphasizes the importance of employee engagement, which is essential for organizational success.
• Focuses on organizational effectiveness.

Cons:

• Some of the factors may be oversimplified.
• May not suit every organization's needs.

Transformation Models

Transformation models are designed to help companies shift their focus from traditional hierarchical structures to more flexible and adaptable ones better suited to today's fast-paced business environment. 

This model can support leaders in identifying and addressing critical issues that can hinder organizational growth. It prioritizes the human aspect of organizational performance.

The Burke-Litwin Organizational Change Framework

The Burke-Litwin Organizational Change Framework is a comprehensive model for driving change within an organization. The model has 12 key dimensions, including the external environment, mission and strategy, leadership, and individual and organizational performance. 

This organizational design model is more comprehensive than most frameworks. It categorizes those twelve key dimensions into five groups, each influenced by the one above and below it. 

1. External Factors: which instigate change. 
2. Strategic Factors: include strategy/mission, leadership, and organizational culture. 
3. Operating Factors: consist of structure, management practices, and systems (including policy and procedures). 
4. Individual Factors: are composed of work unit climate, skills and tasks, motivation, and individual needs and values. 
5. Outputs: encompasses both individual and organizational performance measures.

Developing targeted and effective change strategies is crucial in achieving long-lasting and sustainable change. The Burke-Litwin framework offers a comprehensive approach to help organizations address leadership, culture, strategy, or structure challenges, leading to positive change and success. This framework can be powerful in driving change by utilizing cause-and-effect relationships. 

Pros:

• Emphasizes how important external factors are in driving organizational change.  
• Encourages a holistic approach to change management, which can lead to more effective and sustainable results. 

Cons:

• Can be quite complex for some types of organizations. 
• For example, smaller organizations may not have the resources or expertise to fully implement all of the model's dimensions, while larger organizations may struggle to integrate the various components into a cohesive strategy.

Experimental Models

Experimental models in organizational design are the innovative and untested approaches companies use to structure their operations. 

This model is developed to address specific challenges or opportunities that traditional organizational structures cannot accommodate. 

McKinsey Helix Model

In 2020, McKinsey found that modern matrix and agility models were causing businesses to become complicated, slow, and inflexible. In order to address this issue, they created the helix organizational model, named after the double helix structure of a DNA molecule. This model involves establishing two separate, parallel lines of accountability that are equal and interconnected yet distinct.

The framework comprises five building blocks essential for organizations looking to improve their agility and adaptability in an ever-changing business environment.

1. Strategy: refers to formulating and implementing a plan of action to achieve the organization's objectives and goals. It involves analyzing the market, understanding the competition, and identifying opportunities for growth and improvement. 
2. Structure: includes the hierarchy of authority, the division of labor, and the allocation of resources. The structure element also considers the company's culture, values, and leadership style, as they all shape how decisions are made and how work is organized.
3. Processes: refer to how a company's operations are structured and executed. 
4. People: relate to the human resources of an organization. The McKinsey Helix model recognizes that for an organization to be successful, it must have the right people with the right skills in the correct positions.
5. Technology: refers to using digital tools and solutions to enhance business operations and improve overall performance. This includes the implementation of advanced analytics, automation, and artificial intelligence to streamline processes and increase efficiency. 

Pros:

• Helps organizations respond effectively to dynamic environments.
• Allows organizations to have the right strategy, structure to support that strategy, efficient business processes, people in the right roles, and technology to support their operations.

Cons:

• Some organizations struggle to adopt this model fully.
• There might be a limitation of resources or a lack of understanding of the framework's benefits.

Wrapping up

Organizational design models can help businesses in several ways. Businesses can better understand their strengths and weaknesses and pinpoint areas for improvement. This helps companies optimize their operations and processes, increasing productivity, profitability, and competitiveness.

This blog post covers five popular organizational design models and their advantages and disadvantages. Understanding these models will help business leaders make informed decisions and choose the right one for their company's success. 

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