Models for Evaluating the Fit between Business Processes and Organizational Structures

Abstract

Fitting organizational units to business processes and vice versa is critical for designing optimal organizational structures and business processes. They are designed independently, however, since there are very few scientific and systematic methods of analyzing the relationship between them for their effective design. This paper introduces a novel approach to evaluating the fit between business processes and organizational structures. It also proposes formal models by which the fit could be precisely evaluated. First, models for representing business processes and organizational structures are formally defined. Then, a basic model for integrating the models and evaluating their overall fit is proposed in terms of the overhead incurred by organizational structures while transferring work in business processes. Then, the basic models are incorporated according to the magnitude of work performed by all business processes. Furthermore, normalized models for the relative evaluation of the fit are proposed in order to compare alternative processes and structures. To evaluate the fit more accurately and meaningfully, this paper extends the proposed models by reflecting various aspects of process and organization design. Finally, case studies are presented that illustrate the validity and applicability of the approach and models. The proposed approach and models will allow not only the rapid evaluation of alternative organizational structures and business processes but also the identification of problems that cause the misfit between them. They are expected to provide a theoretical basis for formally evaluating and optimizing organizations including their business processes, organizational structures, and strategies in an integrated manner.