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Aligning the formal structure with core work processes is challenging since it requires designing the right degrees of integration versus separation at any level of the organization. It is especially a challenge when organization decision makers don't fully understand the work process interdependencies that are present. Without data and analytics about the interdependencies within a given business process, it is very difficult to decide which organizational units should be integrated and which should be separated. There are frameworks that make it easier to map the interdependencies in work streams at the operating levels of the business, and human resources managers can incorporate these data-based methods into their tool kits to provide better decision support.
Organization design inevitably includes a discussion about how and where to break up work into logical parts. The design process must determine what to separate and what to integrate among roles, functions and other units of the organization. Consider this example from an actual company:
The CEO and CFO of a large financial group argue that the group needs to save costs by consolidating backoffice functions in one common unit. The group comprises both retail and corporate banking units, as well as an insurance firm. The CEO and CFO recommend that all of the units transfer their operations staffto the group's common operations unit. However, the head of securities and investment banking argues that his unit cannot be compared to retail banking, as the back office processes in securities trading are closely integrated with the front-office processes. In addition, he points to the responsibility of leaders for ensuring compliance with new regulatory frameworks and argues that this will be more difficult if two different organizational units perform the front and the back office functions.
Similar debates occur in every company from time to time: Should marketing and sales be organized together and report to the same manager, or should they be organized as two separate units? Should software and hardware engineers be organized in the same unit? Should research and development be centralized at the company headquarters (i.e., integrated) or remain decentralized in individual business units (i.e., separated)?
The underlying challenge is creating alignment between the formal structure and work processes, or, more precisely, between the formal structure and work...