What Is Organization Design? Key Concepts, Types & More

Meaning and Definition of Organisation Design

The manner in which an organization operates determines the design of the organization. The overall objectives of the organization are aligned with the managerial functions and organizational processes through an effective organizational design. Decisions related to the formation of formal and informal structures, processes, and systems are included in organizational design. 

The various patterns related to the relationships that exist among various individuals and groups can be treated as structures. In relationships that are structured and interact regularly, both physical and social contracts constitute the system. 

The specially designed sequence of stages, operational methods, and activities are termed as processes. During the process of organizational structure designing or modification, certain characteristics must be taken into account although there are variations among different organizations based on their industry and type. When any organization uses a traditional or rigid method of organization in place of identifying the innovative methods, the poor organizational design can be clearly recognized.

Key Concepts in Organisation Design

Key concepts in organization design are as follows:

1)Span of Control: It refers to the number of employees or subordinates who are accountable to a manager or supervisor. 

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2) Authority: It is a power that is delegated formally and deals with the power or right to give orders, make decisions, and enforce obedience in employees. In a managerial role, it is confined only to the degree that subordinates agree to bestow on this authority or obey the commands from the managerial position. 

3) Responsibility: It implies the duty to execute projects or perform a specific task. 

4) Delegation: It denotes the procedure of allocating a job to an employee of lower level in addition to the appropriate authority and responsibility to execute the task.  

5) Chain of Command: It refers to formal line of authority, responsibility, and communication within an organization, or who will report to whom. 

6) Accountability: It implies accountability for the result or the consequences of the tasks or the processes.  

7) Line Authority: These are occasionally known as line departments in which the departments are directly engaged in manufacturing goods and services. In this, managers possess a formal authority over the actions of their subordinates (the subordinates are represented below the managers on a solid line in the organizational chart). 

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8) Staff Departments: Staff departments are those which are suggested or assisted by the line departments. In this, line managers are influenced by the managers through specialized advice of staffs. For example, finance, human resources, sales production, etc.

Types of Organisation Design 

Organizational designs fall into two categories, traditional and contemporary, which are explained below: 

Types of Organisation Design

Traditional Designs

1. Simple Structure
2. Functional Structure
3. Divisional Structure

1. Team Structure
2. Matria Structure
3. Project Structure
4. Autonomous Internal Units
5. Borderless Organisation
6. Learning Organisation