Organisational structure and composition: shaping intelligent organisational structures and team configurations to enhance performance

Well designed organisational structures facilitate enhanced collaboration and autonomy, clarify expectations and accountabilities, and improve efficiencies. A common misconception is that a single structure should be applied uniformly across the entire organisation. In reality, structures can be tailored to certain layers or pockets of an organisation, such as functional areas or teams delivering specific work packages.  

For example, organisations could deploy a functional structure for engineering teams, allowing engineers to specialise in their areas of expertise, ensuring high technical proficiency and streamlined collaboration within the discipline.  

In contrast, the same organisation might adopt a divisional structure for project management across multiple regions. This structure allows for greater flexibility and responsiveness to local conditions and stakeholder requirements.  

By recognising the need for different structures tailored to specific requirements, organisations can create environments that support high performance and successful outcomes. High performing teams are only as effective as the structure surrounding them, making it essential to invest time and effort into organisational design to create optimal structures.  

Outcome focused structures 

Organisations often default to conventional hierarchical structures, which can limit their flexibility to reconfigure teams, roles and processes. A more effective approach is to design organisational structures with a results-centric focus, emphasising outcomes over processes. Outcome focused structures involve forming teams based on specific goals rather than traditional departmental lines.  

To reinforce an outcome focused design, Key Performance Indicators should be tracked not just at the organisational level, but also within each team, directly reflecting their specific contribution to overall objectives. This ensures accountability and aligns efforts with broader organisational goals.  

For instance, a Finance department could measure the accuracy of its forecasts, the procurement team could track supplier lead times. By defining specific KPIs for each team, organisations can ensure that every part of the organisation is accountable for its performance. 

This targeted measurement promotes autonomy within departments, enabling them to operate more effectively and make informed decisions that drive toward the desired outcomes. 

Organisational interfaces and RACIS 

Simply structuring organisations into separate functions, while intended to enhance organisation, manageability and oversight, can inadvertently create complexity and silos that hinder collaboration. A more effective strategy is to adopt a holistic approach that acknowledges the interconnectedness of functions and teams.  

The importance of establishing clear RACIs across functions is often underestimated, with many assuming alignment will occur organically. This assumption frequently leads in overlapping responsibilities, gaps in accountability and a siloed approach. 

Traditionally, RACIs are developed with a focus on individual projects, functions, or departments. Yet, to truly optimise collaboration and ensure alignment with broader organisational strategies, it’s important to extend the RACI framework beyond these boundaries. 

Size and composition of teams 

Designing optimal organisation structures requires careful consideration of team size and composition and striking the right balance of resources is crucial. Fine tuning resource allocation and determining appropriate team sizes yields several advantages, including greater productivity, more effective risk management and increased overall efficiencies. 

Additionally, evaluating team ratios relative to initiative values offers significant insights. Organisations should tailor their staffing and resource deployment based on their unique operational strategies, risk tolerance levels and efficiency metrics. The variations in composition reflects differing priorities and operational efficiencies, suggesting that organisations may benefit from benchmarking against peers to optimise resource allocation and enhance initiative execution effectiveness.  

The interplay between team architecture and governance 

An important aspect of designing effective teams is understanding the team architecture which refers to the strategic design and composition of teams, including how roles and responsibilities, decision making authority and workflows are organised. Unlike broader organisational structures, team architecture focuses on the internal dynamics of teams.  

Centralised and Decentralised approaches 

In a centralised approach, decision making authority is concentrated at the top levels of the hierarchy. This model typically aligns with a hierarchical organisation structure where resources are allocated in a top down manner.  

Centralised structures ensure that decisions are made by a small group of senior leaders, resulting in clear and consistent decision making processes across the organisation. However, centralisation can also create bottlenecks if decision making is too concentrated, slowing down response times and reducing flexibility. 

In a decentralised approach, decision making authority is distributed across various levels and functions within the organisation. This approach often aligns with a matrix organisation structure, where resources are allocated more flexibly. 

Decentralised structures empower teams to make decisions closer to the point of action, fostering greater autonomy and responsiveness to changing conditions. However, without clear governance and oversight, decentralisation can lead to inconsistencies in decision making and potential misalignment with organisational objectives. 

Span of control 

The span of control pertains to the number of staff a manager oversees and is an important consideration in organisational structure design. Determining the appropriate span of control significantly affects adaptability, communication and resource allocation optimisation. A narrow span of control means that managers oversee a smaller number of employees, whereas a wide span of control means that managers oversee a larger number of employees. This approach is more common in stable, routine, or BAU operations. 

Delegated authority  

Delegated authority defines the formal hierarchy of decision making powers and responsibilities, establishing the flow of communication from top management down to frontline employees. Considering the chain of command is critical when designing organisation structures, as it enables efficient decision making, strengthens reporting lines, clarifies roles and responsibilities, reduces ambiguity and enhances alignment with organisational goals. 

Conclusion 

Amidst growing challenges and disruptions, a carefully deliberated organisation structure and team composition proves invaluable in alleviating barriers to success. Neglecting the significance of organisation structures and team configurations, while failing to tailor requirements to address these challenges, can impede progress. This is especially true when navigating diverse pressures, such as the demand for expedited, cost effective delivery, addressing skills shortages and managing increased, complex regulations. To ensure continued effectiveness, it’s advisable to periodically conduct team effectiveness assessments.  

To read the full report “Rethinking Capital Delivery: A Blueprint to Success” click here.

 

Co-written by Felicity Thornley, Manager, PACE, MPA UK   

 

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