"The golden rule of organizational design is that structure always follows strategy"

-Anonymous

Too often, organizations take shape based on the strengths and personalities of the leaders. While with strong leadership, these structures can be made to work, on occasion during the good times, and more often during tough times, the weaknesses are exposed.

Why? Because organization charts drawn up separate from and in many cases without thought being given to how these align with and actively contribute to the longer-term success of the organization expose the organization to risks of sub-optimal productivity; difficulty in recruiting new talent, and the potential loss of key talent already in place.

Following are a few of the more important considerations for leaders when thinking about setting up or changing the organizational structure: 

1. Strategy Alignment: Indicates the degree of alignment between organizational design and the stated mission for the organization. As an example, a technology company whose stated mission is to delight the customer through industry leading customer service, would, if there's a high degree of strategy alignment, reflect this in the job titles and stated responsibilities for one or more of the senior management team. If one has to go down several layers into the organization to find a champion for Customer Service, then there is a poor connection between stated mission and the organizational structure needed to deliver on this. Note: It is possible to have customer service as a core value and key expectation for the entire company, and if so, and working, one can simply substitute "delight the customer through industry leading customer service" with another example, such as owning the services business or having industry leading relevant applications knowledge.
2. Redundant Hierarchy: Indicates how much clarity there is around roles and responsibilities. As an example, an organizational structure that has co-CEOs and/or co-COOs, or co-heads for a geography or matrixed leadership roles or multiple heads for a function, may create the risk of there being a detrimental impact on decision-making; productivity; and resource allocation, due to confusion regarding roles and accountabilities.
3. Span of Control: Speaks to the number of individuals who report to one leader. Typically, the more senior the role, the fewer the number of direct reports one finds, so that the leader is able to both manage an increasingly broad set of responsibilities and provide meaningful guidance and support to his/her directs, each of whom also has a broad set of responsibilities. Organizations with a span of control of between 5 and 10 direct reports at more senior levels are typically the norm. Too few means that there is sub-optimal leveraging of the leaders' skills, knowledge, and experience in guiding key leaders in the organization; too many means that the leader is being stretched too thin to effectively engage and create buy-in for the company's strategies.

In the end, there is no one right way to organize. Organizations are of different sizes (e.g. in terms of revenues; customers; people); compete in different markets (e.g. geographically; by product type; by selling model), and have differing levels of financial and market success.

Despite and regardless of these differences though, fundamentally, in looking at many different organizations, there are only a few organizational models (e.g. organizing functionally; organizing by geography; or via a hybrid model) that exist, with little differentiation in job title and in most cases, with strong organizing principles at work.

It all does come down to leadership. A strong leader will make any organizational model work, regardless of flaws in the organizational design, and any misalignment between organizational strategy and structure.

Building for the longer-term however, there are ways to improve upon organizational design and reap benefits in terms of further improved productivity and employee engagement.