HR Role in Organizational Design
Comprehensive Analysis & Self-Assessment Quiz
Based on the SHRM Instructor’s Manual by Steve Weingarden, Ph.D.
Introduction & Purpose
This SHRM case study provides a comprehensive overview of organizational design (OD) and HR’s strategic role in it. Designed for advanced undergraduate students, particularly in HR but also general business, the material helps students understand how organizations gain sustainable competitive advantage through human capital strategies like organizational design.
Learning Objectives:
- Identify how organizations gain sustainable competitive advantage through human capital strategies such as organizational design.
- Describe HR’s role in developing human capital strategies and HR’s effect on an organization’s success.
- Apply an organizational design consulting model to an organization.
Organizational Design: Definition and Purpose
Organizational Design centers on the organization’s human resource needs to achieve its specific goals. It answers the question: “What is the best organizational structure?” with two primary objectives:
- Facilitate the flow of information within the organization
- Integrate organizational behavior across different parts so behavior is coordinated
While simplified for this case, scholars define organizational design more broadly as all aspects of the relationship between organizational work and employees, including strategy, structure, work processes, and leadership.
The requisite organization model exemplifies this connection through an eight-step integrated management system:
- Build the senior leadership team
- Design the organizational strategy
- Determine structure needed to implement strategy
- Design working relationships between functions
- Ensure people are in the right roles
- Manage performance; ensure managerial leadership skills
- Strengthen role of managers managing other managers
- Build the compensation system
HR’s Strategic Role in Organizational Design
HR practitioners serve as strategic partners in organizational design with three core aspects:
- Structural Diagnosis: Identify root causes of organizational performance issues
- Design Evaluation: Help leaders evaluate design options with clear criteria
- Strategic Alignment: Ensure design decisions align with short-term and long-term strategic goals
HR contributes by:
- Providing measurement tools for internal/external environment and current structure
- Offering knowledge of various organizational structures with pros/cons
- Reinforcing strategy as a cornerstone in design decisions
Most organizational design work occurs when changes in the competitive environment necessitate redesign to maintain or achieve alignment between structure and strategy.
Organizational Life Cycle
Understanding where an organization is in its life cycle is crucial for appropriate design. The Adizes model identifies 10 stages:
Organizational Life Cycle Stages:
Courtship → Infant → Go-Go → Adolescent → Prime → Mature → Aristocratic → Early Bureaucracy → Bureaucracy → Death
Each stage has distinct characteristics that influence design decisions. For example, “Go-Go” organizations move fast and intuitively but risk having too many priorities, while “Bureaucracy” stage organizations accomplish very little despite being peaceful and friendly.
OD consultants must recognize indicators of risky or unhealthy stages and help organizations make adjustments to reach healthier stages.
Measuring Organizational Structure
Internal Environment – Structural Dimensions:
- Specialization: Degree to which activities are divided into specialized roles
- Standardization: Degree to which standard rules/procedures exist
- Formalization: Degree to which instructions/procedures are written down
- Centralization: Degree to which decision-making authority is at the top
- Configuration: Shape of role structure (chain of command, span of control)
External Environment – Contextual Factors:
- Origin and history of the organization
- Ownership and control structure
- Size (employees, assets, market position)
- Charter (nature/range of goods/services)
- Technology integration in work processes
- Location and geographic dispersion
- Interdependence with customers, suppliers, etc.
Models of Organizational Structure
1. Vertical Structures
Functional Structure: Divides work by specialization (e.g., all HR professionals in one department). Provides technical expertise in one place but resistant to change and difficult cross-functional promotion.
Divisional Structure: Divides work by output, geography, or other variables (e.g., food manufacturer with candy division and frozen foods division). Provides focus/flexibility on core competencies but loses efficiency through duplication and lacks centers of excellence.
2. Matrix Structure
Combines functional and divisional structures creating dual command (e.g., employees report to both functional manager and product/geography manager). Creates functional/divisional partnership but hard to manage and requires greater interpersonal competency.
3. Open Boundary Structures
Hollow Structure: Outsourcing model dividing work by core/non-core competencies. Organization maintains core processes internally but outsources non-core processes.
Modular Structure: Outsources components of a product while keeping core parts in-house. Helps with efficiency/speed but risks quality compromise if parent organization removes itself from quality checks.
Virtual Structure: Collaboration organizations forming partnerships with external organizations (often competitors) to complement competencies. Created for exceptional/temporary marketing opportunities but risks lack of trust and organizational identification.
Models to Apply Structure Principles
Goodd and Campbell’s Toolkit
Nine tests of organizational design that help balance hierarchy, control, and process:
- Market Advantage Test: Does design direct sufficient attention to competitive advantage sources?
- Parenting Advantage Test: Does design help corporate parent add value?
- People Test: Does design reflect strengths, weaknesses, motivations of people?
- Feasibility Test: Have constraints impeding implementation been considered?
- Plus five more tests covering specialist culture, difficult links, redundant hierarchy, accountability, and flexibility
Galbraith’s Star Model
Links strategy to structure through five interrelated categories:
Strategy → Structure → Processes → Rewards → People
(All interconnected in a star formation)
Ensuring alignment between these five categories is crucial for effective organizational design.
Structured Exercise: Applying the Concepts
The case includes a comprehensive structured exercise where students act as organizational design consultants. The exercise includes:
- Selecting an organization as a consulting client
- Using the Organizational Design Consulting Survey to gather information
- Brainstorming design models fitting the organization’s strategy
- Forming recommendations using the Organizational Design Recommendation Form
- Preparing for and participating in an Internal Review Meeting (2-3 minute presentation plus 5-8 minutes Q&A)
Key Takeaways from the Overview:
- Organizational design should be linked to strategy
- HR’s role in organizational design is strategic and sets the foundation for additional HR work
- Consider the organizational environment
- Open your mind to internal and external design models
- Use models and tools to lead the organizational design process
Instructions: This quiz covers the key concepts from “HR Role in Organizational Design.” Select the best answer for each question. After completing all questions, click “Submit Quiz” to see your score and review the correct answers.
Note: The quiz consists of 15 questions covering all major sections of the material.
Quiz Results
0%
