Organizational Analysis 101: Your Comprehensive Guide for 2023

You are here:
Organizational Analysis 101: Your Comprehensive Guide for 2023

Businesses looking for a competitive edge should consider what an organizational analysis has to offer. The awareness gained from taking an in-depth look into the organization can disclose what needs to be done to provide a competitive advantage through effective use of resources and management of costs.

This article explores what organizational analysis is all about.

Contents
What is an organizational analysis?
Why is organizational analysis important?
An overview of OA models
Steps for approaching an organizational analysis
Best practices in conducting an organizational diagnosis

What is an organizational analysis?

Organizational analysis (OA) is a process for evaluating the state of an organization’s resources, operations, internal characteristics, and external environments. The goal is to gain the insight needed to make improvements that will increase competitiveness.

This diagnostic process uncovers information that reveals efficiencies and inefficiencies within the organization’s organization’s strategy and operations. Organizational models are applied to sort and draw conclusions from the data and determine a course of action.  

Typically, organizational analysis focuses on the following facets of an organization:

Related (free) resource ahead! Continue reading below ↓

HR Metrics for Organizational
Development Cheat Sheet

Organizational development is a critical process that should be monitored with the right HR metrics. These strategic metrics will help you manage your organization’s ability to change

Download the FREE metrics cheat sheet

  • Strengths: Identifying areas that you can count on to leverage in goal-setting.
  • Developmental areas: Knowing what needs to be improved to isolate certain objectives and allocate resources in strategic planning.
  • Opportunities: Being aware of what prospects are available helps leaders capitalize on whatever advantages they have to offer.
  • Risks and threats: Specifying any internal or external factors that can impact the business allows for more proactive planning and possible shifts in strategy to mitigate risk. 

Similar to an audit, some companies conduct an organizational analysis routinely to assess their current status. Others may apply OA as needed to formulate a strategy for responding to a crisis or upcoming changes.

Why is organizational analysis important?

The value of conducting an organizational analysis lies in its systemic and evidence-based approach that brings an understanding of the whole system within its context. Equipped with this knowledge, leaders can fine-tune their objectives to align with the organizational purpose for all stakeholders and drive effectiveness and sustainability.

Identifying the strengths and weaknesses within business functions reveals what should be fostered and what changes need to be made. This leads to the following benefits:

  • Better decision-making – Getting the big picture of how work is done and what the potential risks are to the business gives allows leaders to make more informed and targeted decisions.
  • Improved efficiency – Innovation and simple changes can eliminate repetitive steps or formulate new ways to help employees work more proficiently.
  • Improved employee satisfaction – Improving employees’ work processes helps them adapt to change and accomplish more, creating a positive and fulfilling environment.
  • Agility – Enabling leaders to understand how different parts of the organization can be leveraged to utilize untapped potential within the organization

An overview of OA models

There are various models used for organizational analysis that all have their own benefits and limitations. Following is a quick rundown of four OA models and some pros and cons of each:

1. Weisbord Six Box Model

This framework developed by Marvin Weisbord examines six aspects of an organization to evaluate its performance and execute a strategy. These areas of focus are:

  • Purpose: The mission, and vision of the organization.
  • Structure: How work is distributed across the organization.
  • Relationships: How individuals, teams, and technologies interact.
  • Rewards: How formal and informal rewards and incentives motivate employees and drive behavior.
  • Leadership: How leadership style and use of resources impact goals and operations.
  • Helpful mechanisms: The methods, systems, and tools that coordinate work effectually to meet goals.

These six criteria are systematically analyzed to discover where the organization stands in relation to where it aims to be.

Help Your Organization Thrive Organizational Development
Certificate Program
Learn to build a better, stronger, and more resilient organization.
100% online & self-paced.
Download Syllabus

Pros: 

  • A straightforward process without complicated terminology that works for a variety of organizations.
  • Diagnostic questions for each area help simplify using the model.
  • Acknowledges that inputs from the external environment affect these six areas.

Cons: 

  • Offers a limited view of interdependency.
  • The behaviors underpinning informal organization are not well defined.

2. Burke-Litwin Model

This model published in 1992 by W. Warner Burke and George H. Litwin guides organizational change initiatives and can also be used to understand how an organization delivers on its strategy. It identifies and links 12 critical factors influencing how change moves through an organization.

The key points of the Burke-Litwin model are as follows:

  • The model evaluates how the external environment interacts with the organization to guide response to market needs and demands by leveraging internal pillars

Pros: 

  • A comprehensive model that explains the cause-and-effect relationship of all the included factors.
  • Balances transactional and transformational elements of change leadership.
  • Encourages communication and collaboration among various stakeholders in the organization.

Cons: 

  • A complex model that can be overwhelming.
  • Assumes that external environmental factors are the main drivers of change despite internal factors playing an influential role in some cases.
  • Can be difficult to work with due to its depth of analysis and stakeholders can struggle to identify the required actions based on the analysis 

3. McKinsey 7-S Model

This framework was first featured in the 1982 book In Search of Excellence by Thomas J. Peters and Robert H. Waterman. The premise is that an organization’s effectiveness is influenced by the alignment of interrelated factors.  

Instead of focusing on structure, this model emphasizes the coordination of these seven elements:

  • Strategy: The business plan for achieving success that incorporates the company’s mission and values.  
  • Structure: The company’s organizational chart and workflows.
  • Systems: The infrastructure of decision-making, procedures, and workflows.
  • Skills: The necessary capabilities and competencies that equip employees to achieve business goals.
  • Style: The way management operates and interacts and how it influences performance and culture.
  • Staff: The way company decisions relate to human resources functions.
  • Shared values: The mission, values, and accepted behaviors of the organization.

Pros: 

  • A practical and widely-used strategic planning tool.
  • Scales easily to accommodate large and small organizations.
  • Enables departments throughout the company to sync with each other.

Cons: 

  • Focuses on internal factors with limited external environment context.
  • Can only be used for long-term strategies. 
  • Some concerns regarding the depth of the underpinning research to show the validity of the model.

4. Congruence Model

This model was developed by David A. Nadler and Michael L. Tushman in the early 1980s. It asserts that an organization’s success is based on the following four elements being compatible or “congruent:”  

  • The work being done.
  • The people who do the work.
  • The structure of the organization.
  • The culture and work environment.

The model uses six steps to explore how information flows through these entities to evaluate how effectively they all work together. By comparing the current circumstances to the desired condition situation, it identifies performance gaps.

Pros:

  • A simple-to-follow tool for getting to the root causes of performance issues.
  • A holistic approach that addresses both formal and informal structures.

Cons:

  • The model does not always take into account the complexity of larger organizations
  • Implementation can be complex for larger, dispersed organizations.
Steps To- Conduct An Organizational Analysis

Steps for approaching an organizational analysis

An effective organizational analysis takes careful thought and planning. The following nine steps provide some guidance on how to handle the process:

Step 1: Define the need and scope of the analysis

Establish the boundaries of the organizational analysis, or in simple terms, what will or won’t be explored.  For example, ‘we will focus on the sales teams, but for this phase, we will not focus on our inbound customer service centers processes’. Set boundaries for what will and will not be included in the analysis.

Map out your
HR Career Path

Determine the direction in which you want to progress based on your HR career goals and capabilities. Try our new tool.

Get Started

Additionally, name the likely constraints, such as cost and time. This will help you form a realistic depiction of what it will be like to conduct the analysis.

Step 2: Determine the purpose of the analysis

Understand your reasons and set goals for performing the analysis so you know what data will need to be collected. Gather input on whether the goals are achievable and what the timeline should be. In simple terms, what questions are you aiming to answer through the analysis?

Step 3: Identify the stakeholders involved

Anticipate all of the individuals or teams who will be directly involved or be affected by the analysis procedures or outcomes. Identify the contact persons and decision-makers you will need to connect with before and during the analysis. It will be crucial to engage them throughout the entire process and bring them on board at the start of the process to position the rationale and objective of the analysis.

Step 4: Choose the appropriate methods and tools

Review different organizational analysis models and decide which will work best for your company and objectives. Assess whether you have all the tools required to carry out the framework or whether you will need to secure more resources.

Step 5: Collect the data

The data collection phase gathers data through quantitative and qualitative approaches such as surveys, interviews, desktop analysis, and focus groups.  Data will be collected against the OA model that you have selected to use as the guiding framework for your analysis. Methods for gathering the necessary information may include surveys, interviews, focus groups, archival research, or transactional tracking.

You can determine which data collection methods to use according to the following criteria:

  • What question you’re trying to answer.

Who or what you’ll collect data from.

  • The timeframe and budget you’re working with.

Step 6: Prepare the data

Data will be gathered from multiple sources and must be validated and organized within a standardized format. This allows you to narrow down the results by reconciling discrepancies and omitting errors, and identify outliers within the data.

Step 7: Analyze the data

Modeling, visualization, or other data analysis techniques and tools point out the trends, correlations, and relationships in the data. Charts, tables, and graphs transform the data into pictures that provide valuable insight by reflecting what’s happening in the organization.

Step 8: Interpret the data into preliminary findings

The results of the data will reveal key insights into what the organization does right and where the gaps are. Compare these to the original objective and see what types of conclusions you can draw. Compile ideas for the next steps to address what the organizational analysis exposed.

For example, addressing the root causes of problems, refining processes and procedures, adjusting the organizational structure, or redesigning certain job functions. It is important that your recommendations are actionable and provide organizations with tangible outcomes to consider.

Step 9: Convey final recommendations

At this stage, you can communicate the results of the process and your recommendations for moving forward to the appropriate stakeholders. Provide a concise written report and visual presentation that makes the data clear and understandable. Request feedback and welcome stakeholder questions to build their trust and reach a consensus. 

Best practices in conducting an organizational diagnosis

There are many intricacies to organizational analysis, and we’ve given you a quick summary of the process. To expand on that a little more, here is some additional information to keep in mind:

More methods and tools to use in organizational analysis:

  1. SWOT Analysis: This technique’s name is an acronym for strengths, weaknesses, opportunities, and threats (SWOT). It evaluates internal and external elements for these four areas to help an organization leverage its assets, identify and reinforce vulnerabilities, explore opportunities, and minimize threats.
  2. PESTEL Analysis: This framework is an acronym for political, economic, social, technical, environmental, and legal (PESTEL). These factors influence the risks and opportunities in a business environment, and this technique allows organizations to recognize and measure them while assessing their overall status.
  3. Cultural Analysis: Cultural assessment surveys and tools help leaders understand what the organization’s dominant culture is, how procedures, behaviors, and decisions shape this, and which aspects should be reformed to reach the preferred culture.

Tips on analyzing and interpreting data

1. For best results, it will be necessary to collect both quantitative and qualitative data

  • Qualitative data are qualities that can be observed and expressed in words but not as numeric values. It interprets the “why” and “how” questions. For example, open-ended questionnaires, focus groups, or observations.
  • Quantitative data is expressed by a numerical value. It answers the “how many” and “how much” questions. For example, headcounts, turnover rates, or ranking surveys.

2. Don’t confuse correlation with causation

Two independent variables might correlate but not directly affect each other. Take for example a situation where several employees resign around the same time a competitor business opens nearby. It would be easy to assume that the other company is attracting your talent, but there may be other factors at play. You could review exit interview data to validate this theory.

3. Let the data tell its own story

Since you will have set goals for the organizational analysis, you may have certain assumptions about what the data will reveal. You might first notice and be tempted to focus on trends that support your expectations.

The way to counteract this confirmation bias is to look for data points that don’t align with your expectations. Some of these may be complete outliers that you don’t need to factor in. On the other hand, there could be subtle trends that you didn’t anticipate but should take a closer look at.

Key takeaways

  • Definition of organizational analysis: A diagnostic process for understanding the inner workings of an organization to identify what serves it well, what needs improvement, and what to watch out for.
  • Benefits of organizational analysis: Recognizing what helps and hinders an organization gives leaders what they need to make better decisions, improve workflows, and create an environment where employees can thrive. 
  • Organizational analysis models: There are numerous frameworks HR can follow to conduct an organizational analysis that all have pros and cons. Four of the commonly used techniques are the Weisbord Six Box Model, Burke-Litwin Model, McKinsey 7S Model, and Congruence Model.
  • Organizational analysis process: Conducting an organizational analysis requires setting parameters and goals, including relevant stakeholders, and interpreting data to make recommendations.
Subscribe to our weekly newsletter to stay up-to-date with the latest HR news, trends, and resources.

Are you ready for the future of HR?

Learn modern and relevant HR skills, online

Browse courses Enroll now