Organization Design

Talented individuals cannot contribute to their full capacity and potential in a top-heavy organization that stifles initiative. Why is the crucial connection between effective organization design and successful leadership development often ignored?

Organization design involves the creation of roles, processes and formal reporting relationships in an organization. One can distinguish between two phases in an organization design process: Strategic grouping, which establishes the overall structure of the organization, its main sub-units and their relationships and operational design which defines the more detailed roles and processes.

It is important to distinguish between organization design and organization theory. The latter is a descriptive discipline, mainly focusing on describing and understanding organizational functioning. Organization design is a more normative, design-oriented discipline that aims to produce the frameworks and tools required to create effective organizations.


Key Concepts in Design of Organization

Span of control: the range of employees who to report to a managerial position

Authority: the formally-granted influence of a position to make decisions, pursue goals and get resources to pursue the goals; authority in a managerial role may exist only to the extent that subordinates agree to grant this authority or follow the orders from that position

Responsibility: the duty to carry out an assignment or conduct a certain activity

Delegation: process of assigning a task to a subordinate along with the commensurate responsibility and authority to carry out the task

Chain of command: the lines of authority in an organization, who reports to whom

Accountability: responsibility for the outcome of the process

Line authority: the type of authority where managers have formal authority over their subordinates' activities. The subordinates are depicted under the manager on a solid line in the organization chart, departments directly involved in producing services or products are sometimes called line departments

Staff departments: the type of authority where managers influence line managers through staff's specialized advice; departments that support or advise line departments are called staff departments and include, e.g., human resources, legal, finance, etc.