Once the strategy has been developed, the organization must be restructured to align with the new strategy. Otherwise, the new strategy implementation will be hampered by the older organizational structure that was put in place to support the earlier strategy.
Types of hindrances in strategy implementation caused due to organization’s structural misalignment:
- Delays in implementation
- Lack of coordination and collaborations among functions and teams
- Increase in interdepartmental conflict
- Administrative issues
- Increase confusion among employees
- Loss of employee motivation
The organizational structure serves as a foundation for all actions that take place within the organization. The structure is the vehicle that the organization uses to achieve its objectives. Imagine that, you have to travel from Singapore to Dubai. You may decide to go either by air or by sea. The vehicle that takes you to Dubai will differ based on the medium of travel. Similarly, the structure of the organization will have to be changed to meet the strategic goals based on the context or environment of the business.
There are many different types of structures possible such as functional, divisional, project teams, holding companies, and matrix structures. Failure to choose an effective structure has direct consequences for the organization because it affects the implementation of strategy as well as the effectiveness with which the strategy is operationalized. It also affects employee loyalty, motivation at work, and job satisfaction. As a result, while designing a structure, the organization must consider all aspects that relate to people and the strategy and how it will be effectively implemented in the organization.
The different factors when it comes to designing organizations for strategy implementation are:
- The level of centralization/decentralization the organization needs to have
- Span of Control for the managers
- Level of formalization that is shown in rules and procedures
- How the hierarchy is constituted
- Level of coordination and collaboration required
- The flow of communication
Organizational structure decides the level fop coordination control, collaboration and communication that happens in the organizations and among various units.
The change in Organizational structure will also in most cases necessitate a change in organizational culture as well.
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