What Is The Star Model? (Benefits And How To Implement It)

By Indeed Editorial Team

Published 6 July 2022

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Implementing an organisational model can help a company achieve its objectives. The Star Model considers all the essential elements that contribute to achieving a business's goals. Understanding these components and how to apply them to a business plan can allow you to derive maximum advantage from the model. In this article, we answer 'What is the Star Model?', discuss its benefits and components and share steps to help you implement this model in a business.

What Is The Star Model?

If you are exploring 'What is the Star Model?', it can be helpful to know this model includes strategy, structure, processes, rewards and people as its five core components. The Star model places the business at the centre of these five components and connects all components, creating a star shape. This model shows that the business is the focal point of all five aspects by keeping them together and making a star.

The objective of the star is to visually demonstrate that each component relies on the others to achieve the business's overall objectives and strategy. Many refer to this concept as the Galbraith Star Model, which to credit its creator, Jay Galbraith, an internationally recognised authority on strategy and organisational design.

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Benefits Of The Star Model

Implementing the Star Model into an organisational plan has several advantages. Here are some of the major benefits of the Star Model:

  • Develops the structure to sustain value propositions: Value propositions are essential to a business, as they inform potential customers of the reasons to choose a brand over competitors. The Star Method helps you evaluate every aspect of your organisation and determine what makes it unique.

  • Encourages organisations to assess how each aspect relates to the other: The Star Model also encourages businesses to evaluate how each component influences other business components. For instance, analysing specific business procedures can assist the hiring manager in determining what types of employees or incentives are required.

  • Allows a business to shape its team: An organisation can impact employee performance and culture by understanding its objectives and essential operations. Considering factors such as procedures and people, for instance, they can change the rewards to enhance the productivity and morale of their staff.

  • Helps a company meet its goals: The Star Model encourages businesses to analyse their objectives and the resources required to achieve them. This helps develop a plan that decides the particular actions to achieve their objectives and allows them to assess how certain processes may affect others.

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Components Of The Star Model

The Star Model comprises the following five components that connect and align to shape the decisions and policies of the organisation:

Strategy

An organisation's vision, mission and values and goals and objectives decide the strategy. The strategy defines the organisation's direction. It is the first component in the Star Model, as it sets important criteria for determining organisational design solutions in the remaining four parts. The strategy drives a business model. For example, if an organisation wishes to grow by 30% in new product categories, the business strategy can reflect this in new customer segments, marketing channels or key activities.

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Structure

The structure of an organisation establishes the type and number of required job specialisations and the number of departments and individuals under each department. It dictates the location and transfer of power and authority and serves as the foundation for a department hierarchy. The structure of an organisation can be highly centralised or decentralised.

Attributes of a business model help establish the most suitable organisational structure. For example, the human resource model and what activities individuals can perform can help decide the suitable structure for an organisation.

Processes

The flow of information and decisions characterises organisational operations. These flows may occur horizontally or vertically. Vertical processes are concerned with distributing resources and personnel through budgeting and planning. Horizontal processes often include the workflows and various departments execute them via lateral relationships.

Each business model requires distinct procedures. A low-cost business model has lean and highly automated processes. If a business strategy involves the sale of high-priced devices, stringent quality control procedures may be required.

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Rewards

Reward systems match individuals' objectives with those of the organisation. This system ensures proper incentives exist to drive team members to do their tasks correctly, which can allow the organisation to achieve its strategic goals. The reward system requires alignment with the other design elements to impact strategic direction.

Different business models require distinct incentive structures. The reward system reflects this dedication if the business strategy is strongly reliant on customer service. The compensation structure is heavily performance-based if a business model requires a direct sales team to gain new customers.

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People

Human resource policies control recruitment, promotion, rotation, training and employee growth. These policies help cultivate the personnel and develop the capabilities required to accomplish the organisation's strategic direction. They complement the other design elements.

Certain organisational strategies require individuals with specific skills. Some business models rely on employees with an entrepreneurial mindset to regularly provide new products and services to the market. In such scenarios, human resource strategies attract and retain proactive, trustworthy, free-thinking individuals.

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How To Implement The Star Model In A Business

Consider the following steps to implement the Star Model in a business:

1. Start with a Star Model graph

As the Star Model is a visual exercise, it is helpful to write out each component. Position the five component circles on vertices of an imaginary pentagon shape. Connect each circle with another with straight lines. In each of the five circles, write the name of a component, such as a strategy, structure, corporate processes, rewards and people. You may also include the organisation's name in the centre.

2. Develop a strategy

The first circle to consider is the strategy circle. A business's strategy comprises its vision, mission and core values. It may also incorporate the company's objectives. Before moving on to the other aspects of the Star Model, it is helpful to first write the company's strategy. Create a list of the business's most important goals before writing one or two sentences to summarise the strategy.

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3. Move on to the structure

The structure is the next circle in the Star Model. This relates to the structural logistics of the corporation, including the job roles, organisational structure and departments. Review the strategy to better comprehend how it might affect the structure. Depending on the plan, you can evaluate how to change the structure. For instance, if the business objective is to rapidly expand the operations, it may require a more competitive structure. You may require hiring more employees or increasing the hiring and incentives budget.

4. Note down the company processes

The processes circle is the next component in the Star Model. It refers to the movement of information and decisions in an organisation. Previous components, such as strategy and structure, can influence processes. Determine if each required process is vertical or horizontal. Vertical processes are often those that have to do with budgeting or planning. Horizontal processes include workflow and how a business makes decisions.

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5. Write the company rewards

The subsequent component of the Star Model is the processes circle. Processes refer to the flow of information and decisions throughout an organisation. Prior rings, such as strategy and organisation, influence processes. Determine whether each required process is vertical or horizontal. Vertical refers to budgeting or planning-related processes. Horizontal processes pertain to workflow or how a business makes choices.

6. Consider how people relate to the organisation

People are the last circle in the Star Model, yet they are one of the most crucial. This component refers to the policies and training programmes that enable an organisation to achieve its objectives. Some businesses may require employees with certain skills or specific education to meet their long- and short-term objectives. The people circle may also specify the special abilities or characteristics that enable individuals to perform well in their roles.

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7. Communicate the details with all team members

For the Star Model to function effectively, ensure all employees are well aware of it. After completing all components of the model, examine how to implement it in the organisation. You may include it in training or conduct a group discussion to help develop the model. Encourage team members to provide comments on every aspect of the model.

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8. Review the model as the business changes

When a company's objectives change, so can its Star Model. Continue to revisit the Star Model and make any necessary modifications. For instance, if a company's objective shifts from expanding its presence to a new location to delivering a new product, update the Star Model components accordingly. If there are also major changes to the team or organisation, it is helpful to examine and update each component.

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