The 10 mechanisms of an organisation
Companies constantly acquire resources and then transform these resources into products. In order to ensure the collaboration of its resources companies need an organisation. Without an organisation the resources would not work together effectively and would not be able to best contribute to an overall company objective. A company with a poor organisation is wasting its resources and is neither working efficiently nor sustainably.
A complete organisational system is comprised of 10 mechanisms. Each mechanism serves a particular aspect. The task of (top) managers is to manage systems. If they want to have a good organisational system they need to define each of the following 10 mechanisms:
Purpose and direction
What is the value-added of the company and where is it headed?
Information, clarity, status & control
How do employees get the needed information and how is clarity ensured about objectives, statuses, decisions, rules, and procedures? What is controlled and how is progress measured and tracked?
Responsibility, decision-making & priorities
Who is the responsible for a task, area, product or a resource. Who can take decisions? How will priorities be set or derived or issues of importance be ranked?
Remuneration, incentives & promotions
How does the remuneration system work? How is its fairness achieved? What behaviour or achievements will be incentivized? What leads to promotions? What behaviour is undesired.
Structure and work distribution
What is the logic of splitting up work? How is work allocated across divisions, ares, departments, or teams? What work is internal, what is outsourced?
Alignment, compatible interests, cooperation and work connection
How does the company ensure alignment and compatible interests between the different resources and between the resources and the company objectives? How is cooperation fostered and how is work connection achieved across internal company borders.
Allocation & use of resources or assets
How are scarce resources allocated to challenges, products, areas or problem solving? Who manages the assets and makes sure that they become a resource to the company?
Learning, competence, deep knowledge and problem solving
How does the company ensure a constant learning and development of competences. How is deep knowledge acquired and retained at the company? What is the approach to problem solving?
Adaptation, innovation, change
How does the company make sure that it is staying modern and is not getting outdated? How do adaptation and change management processes take place? What room exists for exploring, developing, communicating and testing innovation and new ideas?
Processing recurring (daily) work
How is it achieved that day-to-day work is of high efficiency and quality?
The mechanisms of an organisational system are often not explicitly defined. On the contrary, most companies are organised in hierarchies and split into functional units.
If mechanism are not defined or clear, the organisational approach is that the boss then needs to decide or the boss of the boss and so on. It is obvious, that such a system leads to low efficiency and it will certainly not be an ideal organisation.