[Solution] Organization Design
Created at:
Author: Sarah Bennett
Organization Design
The elements of an organization—job design, job groups, reporting relationships, distribution of authority, and coordination of activities—can be combined in different ways to create different organizational structures. For an organization to be successful, its structure must be aligned with its strategy. Managers take many factors into consideration as they make decisions about organizational design.
Designing Organizations to Support Strategy
Organization design is the way in which all the structural elements of the organization are arranged in relation to each other. Effective organizational design will put strategies into action and achieve goals.
Managers should keep two points in mind:
- Managers must continuously reexamine the organization's design and adapt it to changes in environmental conditions and shifts in strategic direction.
- Although universal models of organizational design are useful starting points, the design of larger organizations is too complex for one model (or even combination of models) to completely describe it.
Organizational Design Framework
Effective organization design requires alignment between structure and several key factors:
- Strategic goals - Structure should support the organization's mission and objectives
- Environmental conditions - Structure must be responsive to market dynamics and external pressures
- Technology - Production methods and technological capabilities influence optimal structure
- Size - Organizational scale affects complexity and formalization needs
- Culture - Structure should complement organizational values and norms
Organizations typically evolve through different structural forms as they grow:
- Simple structure - Minimal departments, centralized authority, limited formalization
- Functional structure - Grouped by business functions (marketing, operations, finance)
- Divisional structure - Grouped by product lines, geographic regions, or customer segments
- Matrix structure - Dual reporting relationships combining functional and divisional approaches
- Network structure - Flexible arrangement of specialized units connected through collaboration
Select the correct response to the following question.
Which term refers to the arrangement of structural elements and their relationships to each other to manage the overall organization?
- Organization design
- Distribution of authority
- Span of management
View Explanation
Organization design is the use of the structural elements of the organization and the relationships among them to manage the organization. Managers use organization design to implement strategies and plans, thereby achieving organizational goals.
Distribution of authority, or the delegation of authority to different jobs, is one structural element considered in organization design. Span of management, or how many subordinates managers have, is an aspect of reporting relationships, which is another structural element.
