How to design an optimal organisational structure?

Memory Nguwi

INDIVIDUALS are organised to get work done through the organisational structure. Structures look at individual power and responsibilities and reporting lines between individuals.

In practice, we have found that most organisations are not designed in a way that allows them to win. Consequently, most organisations are not designed in a way that is best for supporting the organisation's mission and vision. Instead, most organisations establish structures so that they can pay people. The first stage in developing organisational structures is determining the complexity of the managed value chain. You require a greater understanding of the organisation's vision, mission and strategy in the short and long term.  This is in addition to the complexity of the value chain, which must be navigated first. Examine how the value chain and strategy contribute to accomplishing the goal of providing value to the client. 

The structure should primarily follow your value chain and underpinned by the requirement to provide service to your clients. After you have reached this level of comprehension, you will need to classify the organisation into a series of levels known as levels of work that range from level 1 ("low complexity") to level 8 ("extremely complicated value chain").

Taking this into consideration will assist you in establishing the necessary number of management levels for the organisation. When I examine the value chain complexity of most organisations in Zimbabwe, I find that they do not reach level five.

This indicates that very few companies should have more than five management levels. If your organisation has more than five levels, it is most likely that your structures are poorly designed.

Your organisation's classification at the proper level guarantees that you place your chief executive at the appropriate level of work complexity. From here, you categorise each job into the appropriate level of work complexity.  This should be based on a comprehensive grasp of the responsibilities associated with each function. Once this has been completed successfully, you may discover that the manager and subordinate may be assigned to the same work complexity in some instances.

Such situations create confusion. In this situation, it is highly likely that the management and the subordinates compete for control of particular tasks or that the manager will exercise excessive control over the subordinate. Another situation that could result from the previous analysis is that there are significant differences in work complexity between the boss and the subordinate.

In this scenario, the manager will be unable to provide context and direction to the work of the subordinate, which will result in the work being performed poorly.

The subsequent step in designing structures, which is also an essential component, is to match the individual capacity to the level of task complexity associated with each role. This is where the majority of the difficulties come into play. People are typically assigned responsibilities beyond and above their "cognitive capability".

When this occurs, for instance, a person may be given a level 4 role despite their maximum capacity being only at level 2. This individual will reduce the role to level 2, where they feel most comfortable operating.

Beyond the uncertainty that such employees bring to your company, you lose money by paying them for more complicated work they cannot perform.  For example, you might discover that a person classified at level 3 is capable of roles at level 5 in certain circumstances. If they are not recognised and provided with a clear career path, such people may quit the organisation since they feel they have nowhere to go with their careers.

The most critical question for CEOs to ask themselves in this situation is how many individuals in your organisation are placed in roles for which they do not have the capacity? When the concerns mentioned earlier have been resolved, it will not make much difference whether your organisational structures are based on function, product, geographic location, or some combination of these factors.

To the organisation's detriment, traditional organisational structures have been developed based on function without the abovementioned issues receiving the attention and consideration they deserve.

After the problems above have been solved, the next vital things to look at are the average span of control per manager and the ratio between core business workers and support function staff. Both of these factors are extremely crucial.

As you clean up your structures, you should ensure no one-on-one reporting and no managers with only one subordinate. These kinds of structures are typically a sign of dysfunctional organisational systems.  When it comes to enabling work to be done efficiently, organisational structures are vital. However, they are not sufficient to drive long-term corporate performance.

As part of this process, you must pay attention to the individual workload. Other things that need attention are pay and organisational culture. No matter how much you tinker with the structures, you will not get very far if the other mentioned components are ignored.

Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and HR consulting firm. Phone +263 24 248 1 946-48/ 2290 0276, cell number +263 772 356 361 or e-mail: [email protected] or visit

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