Organization Design is a process for shaping the way organizations are structured and run. It involves many different aspects of life at work, including team formations, shift patterns, lines of reporting, decision-making procedures, communication channels, and more. Organization Design – and redesign – can help any type of organization to achieve its goals. Sometimes, a large-scale reorganization is necessary. At other points, more subtle shifts in structures and systems can ensure that an organization continues to thrive.

1. Effectiveness
Through
Strategy And
Organizational
Design
Seta A. Wicaksana
Founder and CEO
www.humanikaconsulting.com and
hipotest.co.id

2. Seta A. Wicaksana
0811 19 53 43
wicaksana@humanikaconsulting.com
• Business Psychologist
• Pendiri dan Direktur Humanika Consulting dan hipotest.com
• Anggota Komite Nominasi dan Remunerasi Dewan Komisaris PT Askrindo
• Sekretaris Prodi MM Program Pasca Sarjana Universitas Pancasila
• Dosen Tetap dan Peneliti di Fakultas Psikologi Universitas Pancasila
• Pembina Yayasan Humanika Edukasi Indonesia
• Wakil Ketua Asosiasi Psikologi Forensik Indonesia wilayah DKI
• Penulis Buku: Sobat Way (2016), Industri dan Organisasi: Pendekatan Integratif
dalam menghadapi Perubahan (2020), Human Faktor Engineering: Integratif Desain
Manusia dan Lingkungan Kerja (2021), Psikologi Industri dan Organisasi (2021),
Psikologi Umum (2021), Manajemen Pengembangan Talenta (2021), PIODiagnostik:
Pengukuran Psikologi di Lingkungan Kerja (2021), Transformasi Digital: Perspektif
Organisasi, Talenta dan Budaya Organisasi (2021), Psikologi Pelayanan (2021) dan
Psikologi Konsumen (2021).
• Dosen Tidak Tetap di: Program Pasca Sarjana Ekonomi di Univ. Pancasila, STP
TRISAKTI, Fakultas Psikologi Universitas Mercu Buana, STIKOM IMA
• Certified of Assessor Talent Management
• Certified of Human Resources as a Business Partner
• Certified of Risk Professional
• Certified of HR Audit
• Ilmu Ekonomi dan Manajemen (MSDM) S3 Universitas Pancasila
• Fakultas Psikologi S1 dan S2 Universitas Indonesia
• Sekolah ikatan dinas Akademi Sandi Negara

3. Modules
Organization And
Changing
The Organizations
Effectiveness Through
Strategy And
Organizational Design

4. Organization and Changing

5. Organization Design
• Organization Design is a process for shaping the way
organizations are structured and run.
• It involves many different aspects of life at work,
including team formations, shift patterns, lines of
reporting, decision-making procedures,
communication channels, and more.
• Organization Design – and redesign – can help any
type of organization to achieve its goals. Sometimes, a
large-scale reorganization is necessary. At other
points, more subtle shifts in structures and systems
can ensure that an organization continues to thrive.

6. The Impact of Organization Design
Increased efficiency.
Faster and more
effective decision-
making.
Improved quality of
goods and services.
Higher profits.
Better customer
relations.
Safer working
conditions.
A happier, healthier,
and more motivated
workforce.
Greater
preparedness for
future challenges.

7. If there are flaws in its
design, an organization can
suffer serious problems
• Ineffective problem-solving.
• Wasted time.
• Lack of coordination between different parts of
the business.
• Inconsistent quality of work.
• Failures of legal compliance.
• Reputational damage.
• Low morale, leading to high staff turnover.
• Missed targets and poor performance.

8. The Triggers and Impacts
What Triggers
Organizational
Design?
Changes in
the
Environment
Launched a
New Strategy
Current
Design Is Not
Fit for
Purpose
1. Consider The
Impact
2. Create a
Collaborative
Plan of Action
3. Communicate
and Provide
Support

9. 1. Consider
the Impact
you'll need to consider the impact that a change in your organization's design will have
by assessing it against a number of factors. These include:
• Strategy. If your organization's strategy is built around innovation, a hierarchical
structure may be a block. But, if your strategy is based on low-cost, high-volume
delivery, then a rigid structure with tight controls may be the best fit.
• Size. You could paralyze a small organization by creating too many specialized teams.
Conversely, specialization in a larger organization can mean you benefit from
economies of scales. Your organizational design may need to change, too, as your
business grows. The Greiner Curve is a useful tool for recognizing growth milestones
and understanding the sorts of changes that need to take place to ensure your
organization continues to thrive.
• Environment. If your market environment is unpredicatable or volatile, your
organization needs to be flexible enough to react. However, elements of a more
rigid, hierarchical structure may still be important to protect you against turbulence,
and to ensure that key functions – such as compliance and financial accounting – are
carried out accurately and on time.
• Controls. Some activities need special controls (such as patient services in hospitals,
money handling in banks, and maintenance in air transport), while others are more
effective when there's a higher degree of flexibility.
• Incentives. These should support any new organizational design. For example, if you
want to grow by acquiring new customers, then you'll have to refocus the incentives
that you offer to your sales team accordingly. If you don't, then that team may be
working out of sync with everyone else.

10. 2. Create a Collaborative Plan of Action
Once you've considered these and any
other relevant factors, you'll likely have
a suitable structure in mind. So, the
next step is to ensure that you've
selected the most appropriate options
and to create an action plan to help
you put the new design in place.
There are a number of tools to help you
to do this, such as SWOT and PEST
analysis, using focus groups and
surveys, internal audits, and
collaborative process reviews. Doing
this will also enable you to gain buy-in
from people across the organization and
ensure that it suits the purposes of both
the organization and its employees.

11. 3. Communicate and Provide Support
Good Organization Design involves not
only changing the systems by which people
work, but also supporting people to adapt
successfully.
For example, your analysis might persuade
you to move to a matrix structure. But that
won't succeed unless people get support to
work outside their former departments.
You'll need to ensure that communication is
clear and effective, and that performance
management approaches are relevant and
fair.
With your ideal design in mind as a map to
follow, draw up a clear plan for the way it
will work in the context of your
organization. Be precise about roles and
responsibilities and define exactly how
your new systems and processes will
operate.
Then, organize your people to follow this
new design. There may be changes in
personnel and working locations. Make sure
that everyone's practical needs are met,
allowing them to perform their role in the
organization. You'll also need to check that
all the necessary support functions are in
place, and that you have a plan for
successfully managing change.
Whatever model you're working to, ensure
that the management structure is in place
to launch the new design, and to support it
in the long term.
And keep returning to your reasons for
changing. Ongoing analysis of performance
measures and business-level results will
show whether your new organization
design is working, and alert you whenever
further changes are required.

12. Tips
THE NEW DESIGN WILL HAVE
IMPLICATIONS FOR EVERY AREA
OF THE BUSINESS.
ENSURE THAT YOU TAKE INTO
ACCOUNT THE IMPACT ON
CUSTOMERS AND SUPPLIERS.
CHECK THAT YOUR IT
RESOURCES AND
COMMUNICATION PROCESSES
ARE FIT FOR PURPOSE.
AND THINK WHAT IT WILL MEAN
WHEN YOU'RE NEXT
RECRUITING AND ONBOARDING
NEW HIRES.

13. Key Points
There are three key steps that can help you to implement a new
organization design. These are:
Considering the impact.
Creating a collaborative
plan of action.
Communicating and
providing support.
Typically, there are three key triggers for Organization Design: a change in
the environment, a change in strategy, or a current design that is no
longer fit for purpose.
Organization Design is a process for shaping the way your organization
operates, to help you to pursue your strategies and meet your goals. It
involves setting up structures and systems, as well as helping people to
adapt to new ways of working.

14. The Organization

15. Dimensions of Organization Design
Structural dimensions provide labels to describe the internal
characteristics of an organization. They create a basis for
measuring and comparing organizations.
Contingency factors encompass larger elements that influence
structural dimensions, including the organization’s size,
technology, environment, culture, and goals. Contingency factors
describe the organizational setting that influences and shapes
the structural dimensions. Contingency factors can be confusing
because they represent both the organization and the
environment
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whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook
and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect
the overall learning experience. Cengage Learning reserves the right to remove additional content at any
time if subsequent rights restrictions require it.

16. Structural Dimensions
Formalization pertains to the amount of written documentation in the organization.
Documentation includes procedures, job descriptions, regulations, and policy manuals. These
written documents describe behavior and activities. Formalization is often measured by simply
counting the number of pages of documentation within the organization.
Specialization is the degree to which organizational tasks are subdivided into separate jobs. If
specialization is extensive, each employee performs only a narrow range of tasks. If
specialization is low, employees perform a wide range of tasks in their jobs. Specialization is
sometimes referred to as the division of labor.
Hierarchy of authority describes who reports to whom and the span of control for each
manager. The hierarchy is depicted by the vertical lines on an organization chart. The hierarchy
is related to the span of control (the number of employees reporting to a supervisor).
Centralization refers to the hierarchical level that has the authority to make decisions. When
decision-making is kept at the top level, the organization is centralized. When decisions are
delegated to lower organizational levels, it is decentralized.
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suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage
Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

17. Contingency Factors Size can be measured for the organization or specific components, such as a plant or
division. Because organizations are social systems, size is typically measured by the number
of employees.
Organizational technology refers to the tools, techniques, and actions used to transform
inputs into outputs. It concerns how the organization produces the products and services it
provides for customers and includes such things as flexible manufacturing, advanced
information systems, and the Internet.
The environment includes all elements outside the boundary of the organization. The
industry, government, customers, suppliers, and the financial community are key elements.
The organization’s goals and strategy define the purpose and competitive techniques that
set it apart from other organizations. Goals are often written down as an enduring
statement of company intent. A strategy is a plan of action describing resource allocation
and activities for dealing with the environment and reaching the organization’s goals. Goals
and strategies define the scope of operations and the relationship with employees,
customers, and competitors.
An organization’s culture is the underlying set of key values, beliefs, understandings, and
norms shared by employees. These underlying values and norms may pertain to ethical
behavior, commitment to employees, efficiency, or customer service, and they provide the
glue to hold organization members together.
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duplicated, in whole or in part. Due to electronic rights, some third party content may be
suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed
content does not materially affect the overall learning experience. Cengage Learning reserves the
right to remove additional content at any time if subsequent rights restrictions require it.

18. Performance: Major Stakeholder Groups and
What They Expect
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suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage
Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

19. Five Basic Parts of an
Organization
• Technical Core. The technical core includes people who
do the basic work of the organization. This part actually
produces the product and service outputs of the
organization.
• Technical Support. The technical support function helps
the organization adapt to the environment. Technical
support employees such as engineers, researchers, and
information technology professionals scan the
environment for problems, opportunities, and
technological developments.
• Administrative Support. The administrative support
function is responsible for the smooth operation and
upkeep of the organization, including its physical and
human elements. This includes human resource activities
such as recruiting and hiring, establishing compensation
and benefits, and employee training and development,
as well as maintenance activities such as cleaning of
buildings and service and repair of machines.
• Management. Management is a distinct function,
responsible for directing and coordinating other parts of
the organization. Top management provides direction,
planning, strategy, goals, and policies for the entire
organization or major divisions. Middle management is
responsible for implementation and coordination at the
departmental level. In traditional organizations, middle
managers are responsible for mediating between top
management and the technical core, such as
implementing rules and passing information up and
down the hierarchy

20. Organic and
Mechanistic
Designs

21. Mechanical
vs Organic
CHARACTERISTIC MECHANICAL STRUCTURE ORGANIC STRUCTURE
Complexity
High – with an emphasis
on horizontal separation
into functions,
departments and
divisions.
Usually lower – less
differentiation and
functional separation.
Formality
High – lots of well-
defined lines of control
and responsibility.
Lower – no real
hierarchy, and less
formal division of
responsibilities.
Participation
Low – employees lower
down the organization
have little involvement in
decision making.
Higher – ower-level
employees have more
influence on decision
makers.
Communication
Downward – information
starts at the top and
trickles down to
employees.
Lateral, upward and
downward – information
flows through the
organization with fewer
barriers.

22. Mintzberg’s
Five
Organization
Types

23. Mintzberg’s Five Organization Types
Entrepreneurial Structure. The organization with an entrepreneurial structure, is typically a new, small start-up company. It consists mainly of a top
manager and workers in the technical core. The organization is managed and coordinated by direct supervision from the top rather than by middle
managers or support departments. Top management is the key part of the structure. Few support staff are needed. The primary goal of the organization
is to survive and become established in its industry. There is little formalization or specialization. This form is suited to a dynamic environment because
the simplicity and flexibility enable it to maneuver quickly and compete successfully with larger, less adaptable organizations.
Machine Bureaucracy. The machine bureaucracy is very large, typically mature, and the technical core is often oriented to mass production. It has fully
elaborated technical and administrative departments, including engineers, market researchers, and financial analysts who scrutinize, routinize, and
formalize work in the high-volume production center. The narrow middle management area reflects the tall hierarchy for control. This form reflects
extensive formalization and specialization, with a primary goal of efficiency. This form is suited to a simple, stable environment. It would not do well in a
dynamic environment because the bureaucracy is not adaptable.
Professional Bureaucracy. The distinguishing feature of the professional bureaucracy is the size and power of the technical core, which is made up of
highly skilled professionals, such as in hospitals, universities, law firms, and consulting firms. The technical support staff is small or nonexistent, because
professionals make up the bulk of the organization. A large administrative support staff is needed to support the professionals and handle the
organization’s routine administrative activities. The primary goals are quality and effectiveness, and although there is some specialization and
formalization, professionals in the technical core have autonomy. Professional organizations typically provide services rather than tangible goods, and
they exist in complex environments

24. Mintzberg’s Five Organization Types
Diversified Form. Organizations with a diversified form are mature firms that are extremely large and are subdivided into product or market
groups. There is a relatively small top management and a small technical support group for the top level. There is a larger administrative
support staff to handle the paperwork to and from the divisions. In the exhibit, four independent divisions are shown below the
headquarters, and the bulge across the middle indicates that middle management is key. Each of the independent divisions illustrates a
machine bureaucracy with its own technical and administrative support staff, but on occasion, a division may resemble the entrepreneurial
structure, professional bureaucracy, or even adhocracy. The diversified form helps to solve the problem of inflexibility experienced by a too-
large machine bureaucracy by dividing it into smaller parts.
Adhocracy. Adhocracy develops in a complex, rapidly changing environment. The design goal is frequent innovation and meeting continually
changing needs, as in the aerospace and defense industries. Shows the various parts (middle management, technical, and administrative
support) merged together into an amorphous mass in the middle. The main structure consists of many overlapping teams rather than a
vertical hierarchy. Adhocracies are usually young or middle-aged and can grow quite large. The organization has professional employees, and
the technical and administrative support staff are part of the mix of ongoing innovation teams and projects rather than being placed in
separate departments. Employees are engaged in the administration and support of their own teams. The production center, illustrated with
dashed lines, is separate from the fluid and innovative core above it. If standardized production is done within the organization, it would
occur in this operating core quite separate from the ongoing innovation in the professional center above it. In the professional center,
adhocracy is decentralized.

25. Two
Organization
Design
Approaches

26. EFFICIENT
PERFORMANCE
VERSUS THE
LEARNING
ORGANIZATION
From Vertical to Horizontal Structure
From Routine Tasks to Empowered Roles
From Formal Control Systems to Shared
Information
From Competitive to Collaborative
Strategy
From Rigid to Adaptive Culture

27. Effectiveness
Through Strategy
And
Organizational
Design

28. The role of strategic direction
in organization design
The primary responsibility of top management is to determine an organization’s
purpose, goals → strategy → design → effectiveness.
• Purpose: Each organization exists for a purpose, which is referred to as the overall
goal or mission. The mission describes the organization’s vision, its shared values and
beliefs, and its reason for existence. Sometimes it’s called the official goals.
• Strategy is defined by the top management. They define the purpose and strategic
direction. This purpose and strategic direction is translated into organizational design
choices. The effectiveness of organizational efforts is evaluated. This is not always
rational, but often a political process.
• Design: reflects the way goals and strategies are implemented, it is the
administration and execution of the strategic plan. It influences the prospects of
success. The design also influences strategy, because strategy is often determined
within the current structure, so the current design constraints put limits on goals and
strategy.
• Effectiveness of organizational efforts is evaluated: the extent to which the goals
are realized. These performance measurements feed back into the internal
environment. Past performance is assessed when setting new goals and strategic
direction for the future.

29. How
strategies
affect
organization
design

30. Other Factors Affecting Organization Design
A poor fit with the contingency factors can lead to decline or even the demise of the organization
Organization design is a result of numerous contingencies
Strategy Environment Size and life cycle Technology Culture
Typologies are ideal types. In practice, it is messier: hybrid elements and different strategies are
often pursued in different divisions or product lines.

31. Assessing organizational
effectiveness
• Organizational effectiveness
• Broad concept
• Evaluates the degree to which an organization
realizes its goals
• Efficiency
• Limited concept
• Number of resources used to produce a unit of
output
• Effectiveness
• Evaluation of multiple (official and operative) goals
• Overall effectiveness can be difficult to measure as
organizations are large, diverse, and fragmented.
• Managers determine what to measure (based on
goals, strategy, and design)

32. An integrated effectiveness model
Two value
dimensions
(focus and
structure)
Four approaches
(open system,
rational goals,
internal process,
human relations)
Usefulness

33. An integrated
effectiveness
model
All three of the approaches above have something to offer →
competing values model balances a concern with different
kinds of aspects of effectiveness rather than focusing on one
approach.
• Indicators:
• Two value dimensions (focus and structure)
• Focus
• Internal focus: a management concern for the
well-being and efficiency of employees.
• External focus: an emphasis on well-being
with respect to the environment.
• Structure
• Stability: a management value for efficiency
and top-down control.
• Flexibility: a management value for learning
and change

34. An integrated
effectiveness
model
Four approaches:
• Open systems emphasis
• Dominant value is a good relationship with the environment to
acquire resources and grow.
• Similar approach to the resource-based approach.
• Rational goal emphasis
• Similar to the goal-based approach.
• Internal process emphasis
• Organizations that are well established in the environment and only
want to maintain their current position would reflect this emphasis.
• Similar to the internal process approach, less concerned with human
resources than with other internal processes that lead to efficiency.
• Human relations emphasis
• Management’s concern is for the development of human resources.
• Employees are given opportunities for autonomy and development.
• Emphasis is more concerned on employees than on the
environment.

35. Four
Approaches

36. An integrated
effectiveness
model
• Usefulness:
• It integrates diverse concepts of effectiveness into a
single perspective, incorporating the ideas of output
goals, resource acquisition, and human resource
development as goals the organization tries to
accomplish.
• The model calls attention to effectiveness criteria as
management values and shows how opposing values
exist at the same time. Managers are understood to
decide which values and goals will take priority in the
organization. The four competing values exist
simultaneously but not all will receive equal priority.

37. Learning and Giving for
Better Indonesia
www.humanikaconsulting.com