How to Test an Organizational Structure

The wholeness of an organizational structure is greater than the sum of its parts.

Testing an individual part only gives partial knowledge of an organization's effectiveness, as a good organizational structure takes on an organic life of its own. The whole becomes greater than the sum of its parts. Some organizational structures are more effective than others. The most effective organizations structures function like well-coordinated, efficiently functioning machines. In a man-made organizational structure, knowledge itself creates organizing power to achieve success. Test an organizational structure on the basis of its success achieving goals. First gain knowledge of an organization's goals, then determine how effectively and efficiently an organization uses knowledge to connect parts to the whole.

Things You'll Need

• Original setup documents
• Articles of incorporation
• Loan support documentation
• Fund-raising offer documents
• Printed publications, literature and/or brochures
• Financial statements, balance sheet and financial reports
• Internet setup details and instructions
• Telephone and answering system setup details and instructions

Instructions

1. Understand the organization's goals. Read the organization's articles of incorporation, loan support documents, annual reports and owner agreements to learn the reasons behind the organization's establishment and discover how it is unique.

2. Review the organization's business marketing and expansion plans, paying special attention to time lines and financial projections. Identify any planned changes and determine when they will likely take place.

3. Once you understand the goals and plans, identify the main products or services. Read the organization's marketing and advertising literature and review its websites to learn more about its products and services.

4. Find out as much as you can about the key goals and problems of the business, and identify the main points the organization will need to execute well to create success. Understand the marketplace and investigate other organizations that offer the same or similar service or product. Read appropriate industry magazines and newspapers. Search for overviews and historical summaries of the industry in back issues.

5. Once you have an overview of the organization's goals, plans, products and marketplace, find out which directors, officers and employees are key to the organizational structure. The original setup documents---such as articles of incorporation, loan support documentation, fund-raising offer documents (for example, corporate SEC-required documents) give a good description of the management, directors and chief officers who are key to the operation of the organization. Find out whether any directors, officers or other employees in the organizational structure do not have well-defined or key jobs.

6. Examine the organizational structure's communications system. Understand the administrative hierarchy that requests and implements change. Also, look carefully at the physical parts of the communications systems such as the incoming and outgoing telephone and Internet service for each department, and within and between departments. Identify areas where communication occurs clearly and effectively and those where it does not.

7. Review the organizational structure's financial statements, balance sheets and methods of reporting profit and loss. Especially in for-profit organizations, correct interpretation of financial data proves the success of operations and tells us how efficiently and effectively the organization can achieve its goals.

8. Use different criteria to test nonprofit and for-profit structures, different stages of development and different types of organizations. For example, showing good cash flow and a profit is not as important for a service-oriented, volunteer-based nonprofit as it is for a newly established company seeking venture capital funding. A start-up or expanding structure looking for new business must be more flexible than a stable, well-established structure. And a hierarchical structure can have less direct interaction between labor and top management than can a matrix structure.

9. Many kinds organizational structures exist. All kinds of organizational structures, including hierarchical, linear and matrix, can accomplish their goals efficiently when appropriate knowledge organizes the parts and connects them to the whole.